Hard money is best at a year or less so what's the best way to get "hard money" for a purchase that will take over a year to subdivide? The potential for profit is there in just the sale of the lots alone but even better if you can pre-sale them and do the build as well. I am a realtor and my husband is a general contractor and I have partitioned properties for us before so I know the process and can do much of the work for the subdivision process and he can build homes that we would pre-sale. Any suggestions or advice from someone who has done a project like this before?
We recommend purchasing land with cash (equity) rather than debt. This is because delays can happen and bridge financing is short term. Land doesn't cash flow and lenders will give you a very low loan to value ratio. If you can raise half the money, you might as well raise all the money. You then can put the land up for collateral as you get the construction loans for the horizontal and vertical construction.
Thank you for the reply Victor! Who do you recommend raising the money from? Friends and family is an obvious choice but if they can't/won't be able to come up with it then where else should I look?
Yes hard money can be a good solution. You would need to structure a longer period of financing .
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