All Forum Posts by: Earl Burl III
Earl Burl III has started 2 posts and replied 8 times.
Post: Private money for new construction and land acquisitions
- Investor
- Texas
- Posts 8
- Votes 4
Quote from @Joey Zawacki:
Also, I can help you on Creative Financing with land so you don’t use your own money or private lenders. Novation Agreements! Master Lease Agreements, etc!!!!
Joey, interested in learning more about your process. Currently, my largest hurdle/hold up is depleting my cash reserves to purchase land for development. If I can avoid using my own capital that would make me sleep a little better at night.
Post: Using Seller-Financed Land as Collateral to cover 20% DP for Construction Loan...?
- Investor
- Texas
- Posts 8
- Votes 4
Quote from @Noel Dixon:
@Earl Burl III
I would like to know that as well. Especially seller financing land?
I will delete this post after your confirmation
Post: Using Seller-Financed Land as Collateral to cover 20% DP for Construction Loan...?
- Investor
- Texas
- Posts 8
- Votes 4
Quote from @Brian Burke:
I would start by asking the seller (or agent), "Are you (or your client) willing to entertain a joint venture?" No sense in spending time writing anything if this isn't something the seller will do.
Brian, thank you. I really appreciate the information. This is already helping me move in the right direction.
Post: Using Seller-Financed Land as Collateral to cover 20% DP for Construction Loan...?
- Investor
- Texas
- Posts 8
- Votes 4
Quote from @Brian Burke:
I agree with Robert here, this is a very unlikely scenario. The way this is more commonly done is to partner with the seller where they contribute the land to an entity that you manage (and the seller becomes a member). Then the entity can borrow and use the property as equity. You'll most likely still have to bring some cash to the deal for reserves and perhaps some soft costs, and any gap between loan amount and construction costs. Then, when the construction is completed and the property sells, the land seller gets paid the value of the lot and typically some split of the profits in the deal.
How would you best communicate this deal to the seller? Direct call/contact or work through realtor?
Would you send over the offer terms in a seller-financing contract or send over the potential returns for seller based on analysis?
Post: Using Seller-Financed Land as Collateral to cover 20% DP for Construction Loan...?
- Investor
- Texas
- Posts 8
- Votes 4
Quote from @Brian Burke:
I agree with Robert here, this is a very unlikely scenario. The way this is more commonly done is to partner with the seller where they contribute the land to an entity that you manage (and the seller becomes a member). Then the entity can borrow and use the property as equity. You'll most likely still have to bring some cash to the deal for reserves and perhaps some soft costs, and any gap between loan amount and construction costs. Then, when the construction is completed and the property sells, the land seller gets paid the value of the lot and typically some split of the profits in the deal.
Brian, thank you for this insightful answer! Very creative way to get the deal done. Definitely adding this to my notes/toolbelt
I appreciate your "how can this work" mindset instead of only stating why it won't work.
Post: Using Seller-Financed Land as Collateral to cover 20% DP for Construction Loan...?
- Investor
- Texas
- Posts 8
- Votes 4
Quote from @Robert Rixer:
Possible but in practice it would be tough to pull off. At acquisition the seller would be in first position on the property - you're then proposing to have him bumped down to second position by bringing in a construction loan. The bank will likely look very unfavorably to you having none of your own cash in the deal. The bank would also have to be okay with having subordinated debt on the property and the seller okay with being in 2nd position. Possible but very tough to pull off.
Robert, thank you for the response. Looks like I will need to start with a smaller lot & build a single duplex instead of a larger lot and building multiple townhouses. This way I will have a bit more control of the deal.
Post: Using Seller-Financed Land as Collateral to cover 20% DP for Construction Loan...?
- Investor
- Texas
- Posts 8
- Votes 4
Hello BP Family,
I am looking to acquire land in Houston for first multifamily development project. I would like to know if I can preserve some/all of my liquid capital by avoiding an all cash deal for the lot/land.
My thought process is... Acquire the land through a seller-financed deal for the deed to the land and use it for collateral to cover the 20% down payment needed for the construction loan.
Once construction is completed and cash-out refinance complete I will pay off the seller I financed the land from.
Is this feasible?
Post: Using Seller-Financed Land as Collateral to cover 20% DP for Construction Loan...?
- Investor
- Texas
- Posts 8
- Votes 4
Hello BP Family,
I am looking to acquire land in Houston for first development project. I would like to know if I can preserve some/all of my liquid capital by avoiding an all cash deal for the lot/land.
My thought process is... Acquire the land through a seller-financed deal for the deed to the land and use it for collateral to cover the 20% down payment needed for the construction loan.
Once construction is completed and townhouses are sold I will pay off the seller I financed the land from.
Is this feasible?