Advice for a foreign national flipper who wants to start in new construction

[Lior Golan]

Hello everyone.

I will give you some background on me :)

I have been in the US real estate business since December 2019. I did 4 flips at that time, some of them were with partners, and some of them by myself. My last one was my biggest one which included a 1000 sqft extension to an 1100 sqft single-family house. In addition, it had a full gut with all-new plumbing, electricity, HVAC, etc... the renovation cost 250K+

All projects were done remotely with a back-and-forth arrival to the states. Even though it wasn't necessary because I always had a team that was doing the work that needed to be done physically. Mainly my realtor as my boots on the ground checking the job done by the contractor, and my contractor who was doing the work. Some of the projects were with a local partner as well and then the managing chores were split between us.

The lending perspective was stiff in the beginning, as I didn't have any experience at all, also no credit score, and that project was only by myself, so the leverage was low, but I could work on a low-price property to start.

Fast forward 5 years, I have built a credit score with 2 credit cards under my ITIN of more than 650, and done 4 properties as experience. After doing the last project that included extensive extension, I realized that New construction was something that I was to pursue. Also because of my passion, and also because flips are really hard to find nowadays that have a good margin of more than 10% profit from the selling price.

I started to do some digging in the main market that I am operating at right now and found a nice option that I liked:

Find an old house in a good area in the city metro, demolish and build a new one on top of it a medium to high-end home.
Why? Because the land already has all the utilities infra that it's needed water, sewer, electricity. The area is already developed. And would be an area that people would more like to buy because of the proximity to the city.

But I stumbled on some obstacles:

* Lenders are not lending upon the dwelling if the dwelling is planned to be demolished.

* In Some jurisdictions takes even 3 months to just get a demolish permit (even though permit expediter can be used)

* Because of these 2 above reasons, I would have to come with high money upfront as I would need to buy the property in cash. But even if buying it cash and then financing it, lenders won't finance the dwelling portion... which means more money.

Now, I am trying to pivot and thinking of the next good option. I thought about buying a non developed lot in cash, subdividing it, clean it (take out trees and bushes), get permits, and start building 1 property sell it and then build the second one...

The problem is that I am afraid of going this route because of messing with sewer, water, electricity... I heard that these expenses are really high. Maybe doing a septic tank instead of a sewer, but still, there is a need for water and electricity. Also, the areas that have raw land for that kind of project, are not close enough to the metro city center, hence I am afraid of the demand to buy. And finally, the profit gap can be low as these houses are sold for the median home price


What you guys can suggest/advise from your own experience? Any special lenders that you were using that accept foreign nationals?

Thank you.