All Forum Posts by: Brandon K.

Thanks for your responses, @Steve Kuptz and @Edgar Rodriguez. It's good to know that the LTARV that we'd need--43%--is in the right ballpark for generating some interest. I will definitely follow up on your suggestions. 

@Mike Wood That's very helpful, thank you for the response. 

Can I tap your expertise on a scenario? 

My wife and I own a single-family home outright in a desirable part of South Tampa for $150k, and have our sights set on doing a tear-down and new build with a $215k single family spec home by a reputable local builder. We own a home elsewhere and don't want to move: this would be a non-owner-occupied project with the intent to sell once completed. We know the area well: the property is currently a single family home that we rent out, and we follow the market closely. There are a number of other comparable infill projects in the neighborhood; using conservative estimates, the proposed new build should fetch $500-525k, leaving a large cushion in the project. The numbers work, but the question is obtaining the financing for the deal. Part of the issue is that, while we have extensive prior experience with multi-family investments and remodeling projects up to $80k, we have not done a prior new build. Thus the plan to use a known builder with tested models to mitigate risk and potentially allow us to replicate the process in the future. 

I've seen forum posts mentioning that one can use the value of the land as the collateral to obtain a construction loan--but I haven't found a lender who wants to do so on a non-owner-occupied build. 

I looked into hard money lenders, but it seems that many (all?) in the post-COVID world are looking for at least three prior builds within the past three years. This would be our first. Several have suggested taking on an equity partner, which is unattractive for obvious reasons. 

I've considered crowdfunding, but those all seem to be dominated by larger REITs and less tilted toward small operations. 

We do have about $150k in equity in a separate multi-family property, $140k equity in our private home, and about $40k in cash reserves. We have excellent credit. 

My preferred options:

1: Hard money or private lender: any recommendations for a lender willing to loan on a first new build, or for that mystical lender willing to issue a construction loan using the build site land as collateral? 

2: Some combination of HELOCs or similar on existing equity to finance the deal. I assume getting a HELOC on a rental property is more of a headache than on one's personal property.

3: Crowdfunding the funds through a site that is friendly to smaller "mom and pop" operations as opposed to groups with larger portfolios. 

Distant 4th: Moving across town for 6 months to a year into the new home after completion so that we can qualify for owner-occupied new construction loans. 

Distant 5th: Taking on equity partners, hitting up family and coworkers. Both of these seem like ways to make a straightforward deal exponentially more complicated. 

Any ideas? Thank you!

@Mike Wood Can you elaborate a little more on your comment earlier? I'm in a somewhat similar position to the original post--my wife and I own land in a desirable part of South Tampa for $150k, and have our sights set on
doing a $215 single family spec home build. The numbers work with a large cushion, but the issue has been finding the capital for it--all of the new construction lenders I've spoken with don't want to touch a new build that isn't intended for a primary residence, and the hard money lenders I've spoken with all want 3 builds in the past 3 years (this would be our first). Any suggestions on how to make this work without using the new build as our new primary residence?

Depending on which part of NW San Antonio you're in, that $1600/mo figure could be feasible. The question will come down to whether you think it's worth the effort for the $250 per month (before maintenance, any utilities, vacancies). On the plus side, you'd at least be paying down the mortgage. Even though you're a contractor (with easier ability to make cheap upgrades), I'd be careful about the renovations you're considering unless you really think it will increase what someone is willing to pay to rent the place. In any case, renters are rough on hardwood floors. Best of luck!

That's very helpful, Greg. Thanks so much!

Hi all,

I'm a long time lurker on BP, and I now have a few multiplex properties and some extensive renovation work under my belt. I have been interested in branching into small new construction projects for some time, and think that I have the right opportunity.

I have an offer accepted on a piece of land in St. Petersburg, FL where the numbers appear to work for building a single family home: I'm able to buy the land with cash, it's in a great location with rising home values, and homes very similar to the one I'd be building going for $220/sq ft. The area could support a 3-4 bedroom home in mid-grade finishes at 2000-2400 sq ft.

I want to make sure that I do my proper due diligence during the option period to make sure I've covered all the bases. The lot appears okay from a zoning and flood plain standpoint. Before the end of the option period, my first step is to get a buildable lot letter, then to check with utilities to make sure they are available at the site. Anything else that I need to do before the option period is complete?


Thank you in advance!

Hi all,

I'm a long time lurker on BP with a few multiplex properties under my belt (thanks to your help!), now looking to branch into small-scale development. I have an offer in on a piece of land in Tampa/St. Petersburg FL where the numbers work for building a single family home. However, I don't quite know what steps I need to do during the option period to make sure I've covered all the bases. The lot appears okay from a zoning and flood plain standpoint. My first step is to get a buildable lot letter, second step is to check with utilities to make sure they are available at the site... anything else? I assume there was a house on this lot previously; how does one determine where the utility hookups are on the site?

Thank you!