Tear down rebuild numbers

[Darnell Holland]

Hello, I am looking to do my first tear-down and rebuild development deal in Nashville.  Experienced developers, could you tell me how the process/financing works? How do you finance the tear down do you add it to construction? What would standard down the payment be? Please see the rough numbers below :

Tear down house price 350k,

Construction cost 165 sqft * 2 build=627k

[Ben Trageser]

I don't work in Nashville area but $165 per sq ft seems quite low to me.

In terms of financing, I would speak with a few construction lenders and also hard money lenders. It all depends on what you are looking for. There a number of good references on this site.

[Allan Smith]

Quote from @Darnell Holland:

Hello, I am looking to do my first tear-down and rebuild development deal in Nashville.  Experienced developers, could you tell me how the process/financing works? How do you finance the tear down do you add it to construction? What would standard down the payment be? Please see the rough numbers below :

Tear down house price 350k,

Construction cost 165 sqft * 2 build=627k

 Darnell, did you get your questions answered? I develop land in Nashville from finding the deals, getting all the entitlement and permits, financing it, to building it in house with my GC license. Give me a shout if you have questions, but here's the short of it.

Best financing is going to be from a bank or a conventional construction loan. I get commercial loans from banks.  They will look at the ENTIRE cost of the project and calculate what they can offer you in loan amount. Some don't like to loan on the land at the beginning, but can later on. You will need probably 20% of total cost (Not including financing costs. 80% LTC) as the down payment. I've done a few so I'm typically offered 90% LTC.

[Darnell Holland]

@Allan Smith

I would love to connect I have a few more questions also to discuss if you can build the project out. 

[Robert Ellis]

Quote from @Darnell Holland:

Hello, I am looking to do my first tear-down and rebuild development deal in Nashville.  Experienced developers, could you tell me how the process/financing works? How do you finance the tear down do you add it to construction? What would standard down the payment be? Please see the rough numbers below :

Tear down house price 350k,

Construction cost 165 sqft * 2 build=627k

 too much for the land unless your exit is 3 million. don't reinvent the wheel. no single family home builder is paying 300k for land. that's miami florida prices where I live. we buy land 50k and under in Columbus Ohio. keep land at less than 10% of after built value. DR Horton and Lennar combined build more than 100,000 houses and they are buying 1 acre or more for that.