No experience GU loans ?

Question

Hey, I have someone ive been working with for a while. They finally purchased their first investment property in FL. Owns it free and clear and put a few hundred thousand into it. Currently sitting vacant. Great credit, good liq, but zero experience. He partnered up with a local GC but he only has experience building, never owned or flipped anything so no connection on title (but he does have similar GU experience) which I know a lot of lenders dont consider as true experience. GC is willing to PG. Project is shovel ready

Anyone lending on something like this with reasonable LTC/LTV ratios ? Trying to stick to private/bridge

Thanks

Anyone lending on something like this with reasonable LTC/LTV ratios ? Trying to stick to private/bridge

Thanks

John Mason · Answer

@Clayton Silva awesome contact, their website is very clear and detailed, thanks so much!!

Clayton Silva · Answer

My pleasure! I've worked with Joseph Morley over there a number of times, he's good people and a straight shooter

Clayton Silva · Answer

Park Place Finance does them for non-experienced investors.

Things to know to request accurate terms:

• Address (if no address in mind, at least an area like City/State):  
• 
• Property type (1-4 unit residential, 5-12 unit residential, commercial office space, retail, industrial, mixed use, multifamily, etc):

• Intended Use (investment, owner occ, owner user, 2nd home, etc):

• Rural? Acreage? (Yes/no, if yes what is acreage):

• Purchase Price of land:

• Purchase date of land:

• Cost spent to date:

• Estimated construction/rehab cost:

• Rehab included in loan (Yes/no?):

• Estimated ARV:

• Liquidity: (For downpayment, closing costs and reserves):

• Estimated Credit Score:

• Under Contract yes/no?:

• Experience: (How many GUC’s have been completed in the last 3 years):

• Experience: (How many Fix & Flips have been completed in the last 3 years):

• Experience: (How many rentals have been bought/sold in the last 3 years):

• Closing in an LLC (Yes/no?):

• Loan term requested (30 year, 15 year, 18 month, etc):

• Exit Strategy (sell, refinance and hold, etc):

• US Citizen/Green Card Holder or Foreign national US Citizen:

Questions to ask the lender:

Dutch vs non dutch (most construction loans are non dutch which will save you a lot in holding costs)

LTV/LTC requirements

If you can add an experienced investor to your LLC to hit the experience requirement and get more favorable terms (confirm whether or not they are going to require the other person to be a personal guarantor on the loan and what % ownership of the LLC they need to have)

Closing time frame

Doc requirements

ETC.

(Edit not sure why it numbered everything as 1 lol)

Deborah Wodell · Answer

Without experience is definitely possible. Rates & terms will be more favorable if you guys have good credit.

Jason K. · Answer

Tier 1

Zach Berry · Answer

Hey Jason, we do GUC loans for brand new GUC investors at 75% LTTC of the project. Depending on how the numbers shake out with the lot purchase, you can use the cash currently in the deal to satisfy the 25% equity requirement, meaning potentially less out of pocket if they have already paid out of pocket for the lot.

Feel free to give me a shout if I can be helpful, happy to get something real over to you. Good luck with this!

Chris Seveney · Answer

I just got back from the NPLA conference and met with a few lenders who do GUC with no experience. As others mentioned requires more down payment and will be more expensive but its available.

Jason K. · Answer

Rate and origination isnt a factor here, the hefty down payment is though for sure. Curious to hear about those lenders if you dont mind sharing

Erik Estrada · Answer

You should still be able to do a ground-up loan. It will require a heavy down payment though.

Erik Estrada · Answer

You will see favorable terms with 5+ Ground Ups completed in the last 36 months.