CONTEST! Help me structure this spec/development deal!

[Elaine Lai]

Hi BP Community! 

This is my Very First Post. Goes along with stress right now in trying to figure out how to structure my Very First Project. I wanted to put this out there as a contest to ramp up responses and ideas for creative financing approaches to see who can help me in figuring how best to structure the deal to minimize my risk, increase learning opportunities during the process, and maximize returns in light of minimizing risk. If your approach is something I had not considered and end up pursuing, I'll hook you up with a $50 Amazon gift card as my thank you. 

The details:

Location: Denver, Colorado located in very hot real estate market in an excellent location within 2 miles to downtown.

Land cost: $475,000 currently with small 900sqft home on property

Mortgage/holding cost: mortgage is $2800; I will be renting home on property for $1750/month (so I will be paying $1000/month out of pocket holding cost) while we go through the permitting process

Permitting process: estimated to run 6-8 months in Denver before build can begin

Looking to build five, 3-story townhomes on the lot, 1550 sqft each (about 500 sqft per floor), with detached covered garage in rear of lot for four of the units. Average construction cost $175/sqft, so construction cost for all five units ~$1.4 million.

Thus, with land ($475k) and construction cost ($1.4 mil) = $1.9mil, approximately running $380k/unit

Sales price, will be about $500-$525k conservatively.

Any thoughts on how a newbie might best approach financing the construction phase with partnerships? I will need to pay off the existing mortgage ($451k) with a construction loan; at most I can put in $180k toward the build but not sure if that is wise to put so much of my own money in.

So far my best option seems to be to partner up with an experienced developer/builder who can put down cash towards the construction downpayment *and* qualify for a bank construction loan.

Other options seem to be working with investors and financing via hard money - but I worry the cost may eat me up if we slip on time/runs longer than anticipated.

Any more creative options on how to do this to minimize risk, ensure working with someone that can get it done in a timely manner, and minimize cash I need to put into the deal? Thanks so much for any thoughts!

Elaine