I've done about 6 fix/ hold deals in the past year. I want to get into new construction & ANY inside info would help.
I've bought 2 residential lots in established neighborhoods that I'm holding onto. I have general knowledge of how the construction deal (ACV, LTV) etc is set up
How much (more than actually build costs) should I fund for?
HML vs bank for funding?. I've used HML on most of my buy/holds
references for builders in DFW area
references for funding sources in Texas
It may a tough place, but it will be a hard place. You must have to work harder. If you get a god deal in a good location will probably have a contract the next day. You need to find a motivated seller.
Congrats on your fix/hold deals! New construction is hot right now and if you can find lots in good areas to buy for a decent price I think you can make some good money. I have worked with smaller builders for the last three years who build on lots in existing neighboorhoods. I have sold over 40 new builds in the past 2 years and these guys are making great money.
Most of them get construction loans from banks. Typically they are lending about 80% of the pre construction apprisal value. So if your apprisal comes back at $200k, they will lend you up to $160k and space it out over several draws. I can send you some references for guys that do construction loans in Texas.
Where in DFW are your lots that you are looking to build on? Depending on where you are at I can send you some builders as well.
Colin, thanks for the reply. I will be building in existing South Oak Cliff neighborhoods.
Any idea of cost per sqft on construction with lower end finishes?
Any building resources would be appreciated.
Hello! I live just outside of Dallas in a small town named Coppell. Congratulations for joining this place. Just about everything you need to know is learned here. I have been a free member for about 3 years and being bedridden has allowed much time to learn and this site, YouTube, and all the free webinars off of my email have provided me with about all I needed. I have witnessed in that many growth changes on Biggerpockets but most has been good. I was born and raised in Dallas and been here for 61 years except for those college years up in Denton. Growing up in Dallas, my construction, and a Broker license for about 30 years have allowed me to learn very much. and understanding it. If you think I could help you with anything you can reach me through Biggerpockets. I am there just about everyday. I will tell some major things that will allow you to be safe and productive.
Beware off all communication on the Internet, especially if you don't know them. There are many crooks on their trying to sell you whatever they are trying to sell through emotion or fear. Be careful about those Items being "free" is usually raising a red flag. Freedom is not really free. It is usually just a sales gimmick and most of those people the word "limited" really is usually not "limited" in any way. Again, it is usually a sales ploy. Once you think you have learned enough take action to be an investor. There are many options on being with real estate. Pick something you like and are within your ability. Get use or know that you will hear "NO" more than you will hear "YES". Do not try to do everything yourself. Using an experienced "Team" professionsal that has done or understands your goals and have done what you want to do. Develop some system that you can hire things out to other people when the time is right for you. Start off investing close to home and expand once you have closed a few and have some real experience. Never hope that something will succeed after you buy. Use the Biggerpockets calculators to help you with estimating the costs and they also will print out to help you get a loan.
Always do a cost evaluation before you make an offer and see it too.. Also, do not trust an employee or a Team member to get something done, especially when the Government is involved. Explain to a current owner of the benefits of being a financer to you like delay the income for tax purposes, making the spread, and keeping some control, Take out the insurance as soon as you close. Know any Federal, State, or City laws that may effect you or what you plan to do. Remember that your parents and grandparents grew up in a different world than you did and their beliefs may not be current. Education goes on forever. Try to hang out with those that have succeeded in what you are trying to do. Go to local real estate investor club s and events to learn and network. HML's are usually a final choice but a necessary source of loans. I hear that they look more at the property and banks look more at your credit and experience but do usually have lower rates. My main points on new construction is its location and demand it needs speed with a good scope of work and plans and good contractors. Your past experience is good and unusual. Good luck to you!
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing