Rent to Own on Land for custom home development
Here's the scenario: I am trying to get into the STVR market in Bend, Oregon. After some research, I think I found a niche that would make good returns, but that involves building a custom home in an expensive area. I found a lot that meets all my requirements. It's been on the market for about 500 days and recently took a price drop to a pretty competitive level. I would like to secure the lot (because it's a rare find) but do not have the cash to buy it outright. I looked at construction loans but they require having a solid bid from a builder. The builders require having house plans to give a bid. The architect needs the land to design the custom house around. But I can't secure the land without a loan. Catch 22. The natural solution would be to take out a land loan then get a construction loan after I have the plans/bid. This seems a bit risky and expensive. I was thinking an alternative option would be to ask the seller for a short-term rent-to-own contract. I think this would enable me to give sufficient time to design the right house and find the right builder. Has anyone done this before? Are there any big downsides to this scenario?