All Forum Posts by: Travis Sperr

All depends on the lease - Further - good luck in court if you have a dispute  - 6 years for paint and carpet in a rental is likely past the economic life in a rental (regardless of when they started smoking). Especially in a tenant friendly state. 

 Matt Behrens

C3 Group
Public Adjuster

720-212-9410

Most of the time we are getting contracts on deals with long closings - 6 mos or more to get all diligence dine including at a minimum a concept meeting with the city. In order to have a concept meeting you will need an architect to draw up the proposed build with set backs, height, bulk planes, parking, etc. to see that the plan fits the requirements of the city or any other local controls. Most banks are wanting to see you are pretty far along in the process before stepping in for the construction loan - permits in hand or darn close. You could use bank financing to acquire the lot - usually 35% down then work through the other items if you are confident that what you are building will not be an issue - I wouldn't recommend that since you haven't done this before. This project may be too big for you unless you can bring someone in that has the experience in the process, even better with the experience in the immediate area. 

@Max Johnson higher flips and high end new construction are going to be too different for most lenders unless you partner with someone who has the expertise. Some lenders will also underwrite the architect and builder in addition to the borrower. Anything is possible but you really need to get your whole team in place. 

I am seeing 25%+ equity required for bank financing without pre sales, which could be more than the land costs. $200 a ft should cover all costs from dirt to completion with architect, engineers, permits, landscaping, etc. everything but finance costs. I don't think the owner occ of one unit will be attractive to the bank, experience will be a big play on a project like this and as @Bill S. pointed out, $1.5 MM attached homes can be supported in very few locations in Denver. 

Go conventional with 5% down - PMI is expensive on FHA loans and as you mentioned it doesn't drop off without a refi. One of the reasons you see so many people discuss FHA as an entry is because it has been a low down payment product for so long. Conventional down payments have varied some after the recession and are not back with the low down products.

Network, Network, Network. 

Biggerpockets, local Reia's, see how other investors are getting deals done, search the interwebs. There are a lot of events and lenders in your area - in and around the belt way. 

Find people in your area doing ground up deals - drive areas where it is going on. Most will probably share what you need. The challenge with getting information from across markets is the difference in costs, municipalities, timelines, etc. Local is best for details. 

Do Hard Money typically brokers the loan to a hard money lender in your area and scrapes some points off the top. Almost always best to find a local HML in your area. If you can't find a local lender it might be a decent play, but you probably aren't looking hard enough.

As a part of the contract/closing package an affidavit has to be signed saying that the buyer intends to occupy the property. This is a tricky one because where do you cash out? probably the best way is if he does a cash out refi when the work is done and it will appraise. I believe cash out refi on an owner occ property is 6 months. Fannie Mae has a construction loan product that you can pick your own contractor, might be an opportunity to cover costs. Taking a lien position as lender with the expectation of being paid a portion of profit could get very complicated especially in an owner occ situation. I think there may be a way to do this and do it right, but it is going to be very tricky even if you guys are friendly now - who knows what happens. Maybe there is a way to get paid for managing the construction or consulting on the deal.