Seeking for New Construction Funding Ideas/Suggestions

[Amily Yi-Chieh Tseng]

Hi everyone.  We're seeking for construction funding ideas/suggestions in our case...  

Me and my husband are looking into starting a residential assisted living business.  My husband is in the medical field and I'm in the real estate field.  For us this is a perfect idea, an ultimate cash flow real estate investment that combined both of our profession & passion.  

At first I was looking into BRRRR method, but the pricing in our market (Northern Illinois) is too high we can't afford to buy (nice size, nice neighborhood) and then rehab into a suitable home/facility. I've also considered renting a place to at least get the business started (gain experience & business history) but suitable house is hard to find. So we switched to potentially build our own, also live in there for a little bit while we stabilized the business (instant equity + House Hacking + high cash flow business).

I have one paid-off investment property (MV about $210K and will NOT sell) so I was hoping to utilize that to pay for the land and some other little stuff using HELOC. But that fell through due to my husband's credit history years ago and my self-employed income not enough to help. Seller financing is possible but the main problem is construction loan. We have some stock & retirement saving we can potentially pull out but I'm trying to save it for our last resort (and it's not enough to fund the whole project). I estimate the construction would cost around $400-450K (+ land $87K), est. ARV maybe around $600-700K (we plan to do 8-10 rooms and there's no similar comps nearby). But obviously construction loan is the issue here.

One of the construction loan officers I talked to, he wouldn't even like to take a look of our documents and just rejected me nicely after our chat about our situation.  I also looked into SBA loan but it require direct business experience.  Everything starts to make me think twice if we should even keep looking and just wait a year while we build up the credit and income more.  

We currently are under contract for this really nice piece of land with a pond on it and we have to decide either to give up or not soon.  Any suggestions would be greatly appreciated!  Thank you!