Have come a cross a pontentially good situation. I have been trying to acquire some info. about construction loans. Have found out plenty; cant get one. The reason being that I have been self employed for less than two years. Need two years of tax info. income. Anyways, Want to build new, its what I know best. Well, I have run into an investor, realitor, mortgage officer. Has money may buy lot. Dont know each other very well yet. Anyone partner up with another, Pros and cons, please.
Saftey first, Quality second, Production last.
Jacobelly
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Ive built several specs that were financed entirely by a realtor. He pays for lot, all draws are done through his office manager,he sells house. At closing we get a check for sale price minus lot costs, construction costs(draws),taxes and assessments, fees due title company for closing,and realtors commission-usually 6%.
Pros - No capital outlay on my behalf, less paperwork as draws are done by realtor, multiple listing service
Cons - some legal and accounting aspects get very confusing,realtor has millions in property listed at any given time and my project is but a small piece of his pie, 10-15,000 in commission on each house makes it very difficult to compete with spec builders who can self finance and sell by builder, no money until sale(last one took 18 mo from time we started until check in hand)
If I had the capital I would definitely self finance and sell by builder(my wife has great sales talent). We try to put better quality into our homes but the commission is a killer on the profits. That said, I also would not be working in this trade if this realtor hadn't taken a chance and brought us into his group. All in all Im better off for having done it.