Hello BP - I have an opportunity where I can build 3 to 4 two stories duplexes in Austin land area. And may be 4 to 5 more in future (1 to 2 years). However, I need to find out couple of things;
1) Loan==> process of loan for new construction?
2) Builder ==> where/how to find reputed and trust worthy "new" construction builder?
Do you already own the land? Is it zoned correctly?
Make sure your construction lender is used to this type of structure. Cash-flow can be an issue when paying subs.
I would highly recommend multiple referrals for each builder you are considering.
Yes, I already have the land and it's zoned correctly.
I can't speak for Austin specifically but I imagine construction loans are handled similar to how they are in Washington state.
For the construction loan the bank will need building plans and a budget. They'll order an appraisal based on those plans. They usually give you a loan for 75% of the total budget including the land. So most often you pay cash flow the land and the bank will finance the construction. If done right, you can refinance at the end and recoup your 25% down.
Smaller local banks are the best to work with.
For builders you'll want to ask around, or you can check the building permit records and see who is building other multi family projects around town.
Hope this helps, sounds like a great project.
I think Jennifer is correct. I am building a few spec homes in the Austin area and you will want to contact local banks to see if they do the loans you are looking for. Chances are it will be a 12 month interest only loan based on prime plus. You will also probably need to hire an architect unless you can create and submit the plans yourself.
Thanks Jennifer and David. It make scene.
When vetting your potential builder make sure they've done duplexes in the past (obviously). If the builder has only done single family I would be cautious. Depending on municipalities there are several huge differences.
In Arlington TX we have to 1) install fire suppressant systems in each unit (attic suppressant systems in attics), 2) you will also need a "firewall", we use a 1/2 DensGlass application, 3) fire rated decking within four foot of "firewalls", 4)and non-vented soffit within four foot "firewalls." Again, this is for Arlington TX, not necessarily Austin.
I've built single family homes and duplexes all the way up to six unit homes for developers in DFW.
I hope this gave you some useful info when vetting potential builders.
Thanks David - yeah, as I am gathering info on building up duplexes, it's coming out as very daunting task/project :). Construction is just a single element to it. :), and selecting "right" builder put things in "make it or break it" situation.
Have you thought about selling of part of the land to pay for some of the duplexes?
Keep us updated! I want to know what you run into if you go ahead with it or what dissuades you if you don't.
I had the same question and came across this thread. @Sal Zafar did you end up finding any good duplex builders?
No @James K. I didn't. It seems like really hard to find reliable builder unless you pay high high dollars. Then you say, does it really worth doing the project if there is no "meat" left for project.. I am going through a rehab project which should have been done in 3-4 weeks into 4th month.
Would it be worth getting a contractor liscens and subibg out the work?
I’m doing this exact same thing in Cape Coral FL and am working with an amazing builder!! I found him on Craigslist advertising for $289 and managed to haggle him all the way down to $250!! They are out there u just got to be creative in your approach and if u invest out of state, I’ve got the man for the job!! Good luck!
Hi, Sal! I just went through the process of obtaining a new construction loan for a duplex in Cape Coral, Florida. It is much harder to get a loan for an investment property, most lenders won’t do it for risk reasons. There was only one local community bank that offered it here. Be careful what builder you use, they must be reputable. Visit their other building sites, make sure they pay their subs so you’re not stuck with liens on the property, make sure they build enough they know how to easily navigate the local county and city permitting process, make sure they’re aware of local building restrictions (for example in Cape Coral we have burrowing owls which are protected), etc. Lots of stuff to consider!
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