Great Barrington, MA · Member since 2024 · 2 posts · 4 votes
I am looking at 1 acre of land with a well and a septic already installed. The lot is cleared and pretty much buildable. The market is in the Berkshires in MA between Great Barrington and Catamount ski area. I want to buy it and build a prefab home 3/2 around 2k sq ft. I was told it's about $250 /sqft around $500k plus $50k for the garage(2car). I have about $80k in a HELOC on my current home where I live. I have excellent credit. The sold comps are around $875K-1M. The comps were under contract in 15-30days. What are my best loan options?
Lender · Nashville, TN · Member since 2024 · 700 posts · 284 votes
1y
Well, how much is the lot for sale for?
At the end of the day; you need more money to do something like this.
MAX LTV on new builds is 80% LTC, Meaning if the build is $550,000 and Land is X
Add ($550,000 + x ) * .8 = LOAN AMOUNT
You would need to come in with MINIMUM 20% of the cost in addition to closing costs and reserves, $80,000 is not going to cut it for this project. Something like this would be in the range of needing $200-300k to get done.
Specialist · Frederick, MD · Member since 2017 · 474 posts · 454 votes
1y
One way would be to get the real estate under contract, then bring an experienced partner in who also has access to capital, and stay in the deal as a minority equity partner. You'd learn and potentially earn a profit at exit.
I am looking at 1 acre of land with a well and a septic already installed. The lot is cleared and pretty much buildable. The market is in the Berkshires in MA between Great Barrington and Catamount ski area. I want to buy it and build a prefab home 3/2 around 2k sq ft. I was told it's about $250 /sqft around $500k plus $50k for the garage(2car). I have about $80k in a HELOC on my current home where I live. I have excellent credit. The sold comps are around $875K-1M. The comps were under contract in 15-30days. What are my best loan options?
any lender wants to know how you plan to service the debt. How much money, after expenses and taxes would he property make yearly? How did you arrive at those numbers?
Financial Advisor · FL · Member since 2024 · 442 posts · 99 votes
1y
This is a good opportunity in a strong market, and with your excellent credit and HELOC funds, you're in a great position to make this project happen. The best option would likely be a construction loan, which can cover both the purchase of the land and the build. Your $80K HELOC can serve as the down payment, as most lenders require 20%-25% of total project costs upfront. With comps ranging from $875K-$1M and your estimated build cost at $550K, the after-completion value gives you a significant equity cushion, making this project highly attractive to lenders.
If you plan to hold and rent the property, you could refinance into a DSCR loan after construction, which bases lending on rental income rather than personal income. Alternatively, a private or hard money loan could provide faster funding if traditional lending timelines don't work, with the option to refinance once the build is complete. Let me know if I can help.