*
Thanks for all the good advice in the recent past…
Been considering entering a very busy spec home building boom here in NY suburbs, about an hour from NYC…Figure to build a $350-400K home, with property, need roughly $250-300K.
Wondering where a small businessman like myself might go about financing such a venture, or is the old addage about having money to make money going to shut down my plans? Are there building mortgages available? Do I need a wealthy benefactor to give a young ambitious dude a break? What are my options…Would like to hear from others who have gone that route.
By the way, any house around here that isn’t a piece of crap stays on the market for about five minutes before selling at or near asking price…Would be a shame NOT to capitalize on that!
Thanks,
Mitch Barr
Replies
*
Mitch
I do some spec home building here in Western Montana. Have been doing it for about 6 years. The average "days on market" here is almost a year! Oh how I would love to sell them as fast as I could build them, but noone does that around here. We started out in the $130,000 range (just above average cost for a house in this area). Built a couple in the $180 - $190K range to see if they moved sooner. They didn't. Built a couple in the $120K range. They didn't fly off the market either. There is very intense cutthroat competition here and frankly a glut on the market. If it wasn't for some custom work that the specs buy us, it would really be a tough row to hoe. We love it here and basically do what we need to to be able to stay. We advertise in the paper (doesn't seem worth much, but it keeps our name public), put signs on all our construction sites, run a Yellow Pages ad, and usually use a realtor so we get listed in the MLS (also doesn't seem worth much!)
As far as spec financing, I use a local bank to obtain a construction loan. The loan is for 12 months, and a 6 month extension is possible for a fee. Interest rates run about 9 to 9 1/2% and we put about 20% down. Sounds like the risk would be a WHOLE lot less where you're at. The bank also wants a pretty clear, up-to-date financial statement, so keep good books.
Hope that helps. RayT
*Ray - "...Western Montana..." you're talkin' "God's country" there, man. - jb
*It's so beautiful...we just love it. But you have to really work hard and smart to stay ahead of the wolves.RayT
*The best advice I could pass on to someone planning to spec build is to choose a great lot. I have learned the hard way that a great home on a marginal or lousy lot is a hard sell. An average home, on a great, lot will usually sell faster. I started spec building using private investors to finance the homes because banks were reluctant to lend me the money. Years latter, I have a different banker every week offering to buy me lunch to discuss my financing needs.
*
Thanks for all the good advice in the recent past...
Been considering entering a very busy spec home building boom here in NY suburbs, about an hour from NYC...Figure to build a $350-400K home, with property, need roughly $250-300K.
Wondering where a small businessman like myself might go about financing such a venture, or is the old addage about having money to make money going to shut down my plans? Are there building mortgages available? Do I need a wealthy benefactor to give a young ambitious dude a break? What are my options...Would like to hear from others who have gone that route.
By the way, any house around here that isn't a piece of crap stays on the market for about five minutes before selling at or near asking price...Would be a shame NOT to capitalize on that!
Thanks,
Mitch Barr