Suggestions for land/construction deal?

[Joehn B.]

Hi,

A friend has a very old, paid off derelict home on a large lot in a class A area.   I want to buy the property on terms and demo, build a new house.

I want to structure an owner finance deal with him where I either pay him interest only on the lot or no payments for 18 months (or until the new house completes and sells whichever is earlier). 

How would you structure this?

Also, once on title, what are my construction loan options?

Thanks!

[Andrew Postell]

@Joehn B. thanks for posting.  Always great to hear from a fellow Texan.

Now, if you are buying the lot from your friend...there would almost no reason to put this under a seller financed structure.  Your construction loan would wipe out any liens that you have on the property when you get that product.  Usually, we just buy land WITH the construction loan and wrap everything together.

Now, getting a construction loan will require construction experience - not rehab experience.  But new construction experience.  New build lenders want to see your 3-5 year experience with this type of a project.  If you don't have any, then you would need to partner with someone who does.

Hope all of that makes sense but feel free to ask anything additional.  Thanks!