yeah... you gonna be your own general contractor and hire all the subs yourself? or do you have a builder?
each lender will have their own rules as far as when checks get cut, and to whom they're cut.
Basically you and the lender go over your plans, they insure that when you are done the house will appraise at more than the amount they lend to you.
they are going to want to make sure you borrow enough money to complete the project, (they don't want a 1/2 or 3/4 finished house, too hard to liquadate) and of course you need to have the ability to repay the loan.
you pay interest on the money that you have borrowed to date.
example: total loan amount $1,000,000 you start building today and need to pay the bulldozer guys $10K to dig the basement. The lender cuts a check for $10k you pay interest on just the 10k (not the whole $1,000,000) you keep going like that till the house is done or you borrowed up to your max.
usually the lender will also set a time limit to finish the house (1 year)
don't stress out too much, life is suppose to be fun, shit will happen to piss you off big time. that is the time to step back and laugh at it.
good luck
each lender will have their own rules as far as when checks get cut, and to whom they're cut.
Basically you and the lender go over your plans, they insure that when you are done the house will appraise at more than the amount they lend to you.
they are going to want to make sure you borrow enough money to complete the project, (they don't want a 1/2 or 3/4 finished house, too hard to liquadate) and of course you need to have the ability to repay the loan.
you pay interest on the money that you have borrowed to date.
example: total loan amount $1,000,000 you start building today and need to pay the bulldozer guys $10K to dig the basement. The lender cuts a check for $10k you pay interest on just the 10k (not the whole $1,000,000) you keep going like that till the house is done or you borrowed up to your max.
usually the lender will also set a time limit to finish the house (1 year)
don't stress out too much, life is suppose to be fun, shit will happen to piss you off big time. that is the time to step back and laugh at it.
good luck
Yeah its me on this one that needs to grow up.
Anyway as far as the question I did a construction loan with Indy Mac a few years back for $100,000 to do an addition and it worked out well. The financing is not the problem its all the construction and making sure people do what they are supposed to do.
I have a great piece of shore property, the only problem is that its an old house, 2 mortages and I have bad credit. I can sell it now and make a nice profit but its sitting on a double lot and there is pleanty of room for two 3,000+ sq condos....would prob..need 600-700k to build two condos though...
the payments start as soon as you take a draw.
an example would be, you agree to a loan of $1,000,000 but your first draw against the $1,000,000 is only $10,000. You have to make a payment based on you borrowing $10,000 at whatever rate was agreed to.
then say your next draw is another $10,000, your next payment is [($10,000 minus principle paid)*interest rate] + ($10,000 * interest rate)
depending on how many draws you take and when, your final loan principal will be lower than $1,000,000... then it converts to a standard mortgage...
there is also a way to make interest only payments on a construction loan... I'm not familar with that.
an example would be, you agree to a loan of $1,000,000 but your first draw against the $1,000,000 is only $10,000. You have to make a payment based on you borrowing $10,000 at whatever rate was agreed to.
then say your next draw is another $10,000, your next payment is [($10,000 minus principle paid)*interest rate] + ($10,000 * interest rate)
depending on how many draws you take and when, your final loan principal will be lower than $1,000,000... then it converts to a standard mortgage...
there is also a way to make interest only payments on a construction loan... I'm not familar with that.
well u can certainly go with a heloc if you are going to be your own General Contractor, but general contractors (and lenders) will want those checks made out to you and your GC) most construction loans are set up to protect you in the case of subs filing liens against your property. of course if you demand a lien waiver from your subs on payment you shouldn't have a problem.
Quite true Tpay.
Wether it's a construction loan or heloc, if I'm a GC or sub, I can still lien your property either route.
After each trade is finished and paid in full, have them sign off "partial lien waivers" at every chance you can. This is basically having them sign off on part of their claim vs. the whole thing. Very valuble if it goes wrong with someone.
Wether it's a construction loan or heloc, if I'm a GC or sub, I can still lien your property either route.
After each trade is finished and paid in full, have them sign off "partial lien waivers" at every chance you can. This is basically having them sign off on part of their claim vs. the whole thing. Very valuble if it goes wrong with someone.
HOw much is your land worth? Take a loan against it.... Even if you can only build one condo, build one, sell or rent, then the other....
Once you build the 1st condo, your value will be up and you can increase your loan.
Do you have any friends with good credit? If so, form a partnership and pay them 10% of the profits or something like that - will come out far ahead of paying subprime rates...
sean
Once you build the 1st condo, your value will be up and you can increase your loan.
Do you have any friends with good credit? If so, form a partnership and pay them 10% of the profits or something like that - will come out far ahead of paying subprime rates...
sean
