Financing 1st Spec Home

[Trevor Davis]

I bought a 5 acre property through the tax sale in June and finally getting title work finished. The property had an a small house that was falling in but the well and septic on it are all good. The land by itself appraised for $60,000. I am wanting to build a spec house on it but am curious about financing options. I have worked as a commercial project manager, have done live in flips, and have built my own house but I have no record as a builder. What are the chances that a bank will finance my project? What other options do you suggest. Thanks for the input. 

[Tim Delaney]

I just finished my second spec home. I did not have much luck with traditional banks even though my partner is a GC and has done multiple additions and garages. We have also flippped a dozen homes and BRRRRed 40 units. Luckily I had lines of credit and private lenders I could tap into. The hope is to build experience and open more doors in the future for new builds.

I also just had lunch with a banker on Friday who said they have been opening up and relaxing on real estate again…for everything except non-owner occupied construction - that is still a no go for them. I’ve heard from others it is still a ough thing to get lending on.

The suggested way that bankers have given me is to have the end buyer apply for the loan and we build the house for them. Obviously that’s different than a spec home though and we have opted to not want to deal with a home owner and bank during the build process at this point.

Hope this helps some. Good luck, look forward to hearing how it goes.

[Michael Ohara]

Hi @Trevor Davis, I might be able to help. Sending a connection request.

[Paul Sofia]

Quote from @Trevor Davis:

I bought a 5 acre property through the tax sale in June and finally getting title work finished. The property had an a small house that was falling in but the well and septic on it are all good. The land by itself appraised for $60,000. I am wanting to build a spec house on it but am curious about financing options. I have worked as a commercial project manager, have done live in flips, and have built my own house but I have no record as a builder. What are the chances that a bank will finance my project? What other options do you suggest. Thanks for the input. 

 I can have a lender I've used on multiple occasions contact you.  I just need to know where the proposed project is first

[Daniel Baccarini II]

Hi Trevor, the main question is going to be how close is the new construction to a urban/suburban area? There are business purpose lenders that will finance ground up construction, but they will be more particular about the location of the build especially since it will be on 5 acres.