All Forum Posts by: Kresh Shehu

It always makes me wonder why builders would not use banks. However, I met with a banker friend (VP of loans) and he let me know that very few banks loan on specs these days. Their primary target is the home owner for the new construction and not the builder for a spec waiting to be sold after finished. He also let me know if a bank does spec financing, they will only do 2-3 per builder.

This particular builder owns the lots. No bank involvement. He is looking for private investors (hard money) and is good with doing draws. From different investors in the past I have heard that they involve a real estate attorney to be the go between (release the draws) and receive subcontractor invoices/confirmation of payments. Are any of you familiar with Attorneys in Austin doing this? 

Just recently I have come in contact with builders looking for private investors to finance spec homes. Since the housing market around Austin is very good at the moment, they are offering 10-12% interest. Seems very enticing but I don't have experience on how the legal process would be to set it up so the investor is strongly protected. I know that the best way would be is to set up a 'draw' schedule, etc. However, I am looking for some advice on the details. How is the investor protected if the builder leaves town? What liability coverage does the investor need to see from the builder so the investment is protected as it is getting built? Your advice is greatly appreciated. 

If you have a wholesale property in Bastrop (TX), let me know as I am interested in purchasing them. You can email me at [email protected]

Thank you!