Boston 3 family construction financing

[Brien Tal-Baker]

First post.

I own a plot of land in Boston that was considered "unbuildable" due to zoning constraints, but after a long appeals process I have a permit in hand for building a 3-family. Unfortunately, I don't have financing and don't have experience getting it for a project like this. I have flipped a property ($60,000 profit) and recently built my own home for $250,000 (appraised at $380,000). My income is not very high, so debt-to-income assessments won't get me the financing I need.

I need $450-500k for construction. My builder is willing to bring $200k to the table, although I'd prefer to finance the whole project myself if possible. I own the land outright, have paid permit fees, have engineer drawings, etc. The land is currently assessed by the city at ~$30k (because "unbuildable"), but the property next door is smaller with a 3-family on it and is assessed at over $100k for the land and over $330k for the building (smaller units than I have planned).

I'm trying to avoid hard money because of the high financing costs. Any ideas for multifamily construction financing? Let me know if additional info is needed and thanks in advance for any help.

[Ann Bellamy]

Well, strictly from a practical perspective, paying hard money rates is likely to be cheaper than the alternatives.  But if you are determined to avoid hard money, you can partner with an experienced developer or real estate investor.  That will likely be more than the 12% hard money, but will offer another option for you to explore.  I strongly recommend you don't partner with your builder, as that can lead to more issues than you can imagine.  You'll never know under those circumstances the actual cost of the building, because you can't tell from his invoices how much is actual cost and how much is in his pocket.  Or whether the project is paying for materials going to another project.  

I am not interested myself in partnering, but I can connect you with some reputable real estate investors locally who you can talk with.  Emphasis on reputable.  Of course I recognize the humor in that statement, (a hard money lender talking about good reputations) but I actually do have a good reputation and am careful to recommend only people I trust.  PM me if you are interested.  

You can also pursue commercial financing, but with no experience it's going to be tough.