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Arizona spec home financing: A Brief Guide to Speculating
Many spec home builders might spend all their time speculating, and continue to speculate long after they’ve begun their projects. Learn how you can avoid these pitfalls when it comes to .
Many first-time spec builders are tempted to, well speculate. They might buy a piece of land in the middle of the desert hoping one day to build a house there. They might plan to construct a postmodern citadel, with floor to ceiling windows, in the middle of a working-class neighborhood.
Worse they might continue to speculate well into their project, deciding against a particular set of finishes, or deciding to shift a window over three-quarters of an inch because they prefer a slightly different view.
When it comes to building spec homes, you can’t afford to speculate this way.
Here's some things you shouldn’t do with spec-home financing1. Find a developed parcel of land- The land you purchase needs to be connected to electricity, plumbing and road networks. Only finance the purchase of developed land. Don’t waste your money buying acres of wilderness.
2. Plan your project based on market realities- Keep your plans in line with homes nearby, because whatever features you add need to be in line with homes in the area. After your plans are in place hook up with realtors, do extensive online searches about the value of homes close to your chosen lot and find out how quickly homes in the area are selling. This data will give you a sense of whether your finished home will pay back your initial loan and how quickly you’ll be able to pay it back.
3. Develop a detailed plan and stick to it- Establish a specific schedule for how work will proceed on your project and don’t change your plans halfway through.
Following these tips will prevent you from spending thousands on useless dirt, building a home that won't sell and from running out of money in the middle of your project.
Make a plan in line with the realities of the market, and stick to that plan no matter what, because, if you want to succeed in the spec business, you need to be realistic and decisive.
Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
[email protected]
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.
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