Waterville, ME · Member since 2015 · 269 posts · 53 votes
I own the land in Maine near a major city with a value of about $42,000. I am looking into building 4 seperate cabin units at a cost of about $195,000. I talked to a local realtor he thought it was a great idea, that the area is condusive to it with the colleges and hospital near by. It would be a inc business/ accomodations ran like a motel of short term fully furnished housing. At 30% occupancy it would bring in about $60,000 a year; upwards to $200,000. Cost of running would be estimated around $36,000. on low end. And as a escape route it could be rented as monthly houseing in bring in about $6,000 a month, which would well cover a loan and cost.
Not to mention the value of finished units would be around $500,000-600,000 giving it a high equity value.
Will these factors make it more marketable for finding financing?
Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
10y
@Annette A., if you can build each cabin for $50k on land worth $10k pro-rata, and sell each for $125k minimum, well done. Even better if you can get up to $50k income from each of them per year (ie. why sell straight away)?
Is owning the land, with no extra deposit, enough equity to convince a Lender to lend you the $200k you need? One way to find out: ask them.
Who owns $40k worth of land but has not a cracker extra to their name? That would be one of my questions if I was a Lender.
Are those numbers you quoted REAL? That would be another question I would be asking. Make sure you have good answers to both those questions. Cheers...
Waterville, ME · Member since 2015 · 269 posts · 53 votes
10y
thank you Brent. yes those numbers are real based on the area... and talking to a local realtor. the low end of $50,000 a year is for all four units combined... and one 2-3 bedroom new home in the area the realtor told me would sell for $180-280,000 each. so my projections are shooting at the low end. each cabin would be on 1 ac of land.
the realtor also told me i could get $1200-1500 a months straight rent out of one unit.
also i have an option that I can add my son to the business as he has a great income, decent credit and is military.
Private Money Lender · Buena Park, CA · Member since 2015 · 80 posts · 41 votes
10y
Assuming that your figures are correct you should be able to get construction and a takeout financing from a local bank. To improve your chance of success I would first find out if you could subdivide the land into 4 separate lots. If that is not possible the project still makes sense. Next you should talk to the local bank and find out what they need in loan request package. Naturally you should have well prepared loan request that including at least the following:
1.Complete job cost estimate prepared by a license contractor that is familiar with city requirements.
2.Rent study of the area so you can support the rents in your plan.
3.Market study showing that if the units are sold bank would be paid off and you would make a decent profit.
4.Your financial statement. Showing your income, net worth, cash reserve etc.
If you get “go ahead” from the bank there will be some conditions like the following:
a)You will have to obtain permit ready plans. That cost most likely will have to come out of your pocket.
b)You will have to have a signed bid from reputable general contractor showing a total coast of the project.
c)Etc.
This is just general approximation and true requirements might differ and be more demanding
Good luck,
George
Ps, I prepared my answer before I saw your answer to Brent and I did not bother changing it to reflect things you already answered.
Waterville, ME · Member since 2015 · 269 posts · 53 votes
10y
thank you very much George. Your answer was encouraging. i have been sitting on my land for years now and would of done something sooner but i did not have the confidence. I just finished 2 yr degree in business and interned for a Texas company. I have been making needed contacts and research... with lots more to do to pull together a business plan. I have been checking my options and after talking to a local realtor and you I have made up my mind to try. again thank you george. :D