Financing Spec/New Construction Homes for New Investors

[Sawyer Lubke]

I'm looking to have a discussion on how new investors can acquire financing to build a spec home. Here is what I have come up with:

1. Bank Financed. The bank informed me they need me to live in the home for 1 year before selling, which is not going to work. Has anyone out there worked with banks using personal qualifications (credit/income/down payment etc.) opposed to having the "relationship" to do a spec build? This seems to be the most affordable method. 

2. Hard Money Lender. This is a readily available option, however the going rate here is 4 points and 15%. 

3. Private Money. I would prefer to have a track record of success before pursuing this route. Without one I think raising funds would be very challenging

How are you financing your spec builds or how might you recommend a new investor jump into this type of investing? 

Thanks for your input!

Sawyer

[Account Closed]

I think the easiest thing to do is find out where builders are currently under construction and look up what banks lent to them through your register of deeds.  Then, cold call those banks if they're small and local.  These banks already understand the spec model so there's no need to try and convince them of something they're unfamiliar with.