All Forum Posts by: Account Closed

@Jay Hinrichs

Fantastic project. Especially like the fact that you can walk to the ball park. Your buyers from your previous 2 across the street should be so happy their values are climbing. Since this is the last one with 4 stories, that should be an excellent selling point. 

Questions:

What are those low-lying buildings in back of your build? Did they affect how you priced your build?

Was it a challenge in terms of natural light to not have windows in the back (aside from top-floor balcony)? 

In regards to escalator/escalation clause - in NC, we had our attorney draft one for us (fill-in-the-blanks) since we started submitted our offers with them. We started doing that because on all the offers we submitted, the response was always the inevitable "multiple offers, submit highest/best". So, we thought to cut to the chase. However, none of the agents/brokers we've submitted to have accepted the clause. Or, they say that they no longer accept escalation clauses. Bummer. Nevertheless, we'll continue to use it. It's legit strategy, but most of the agents/brokers we've run into are not quite accepting of it. Note - we do residential only, so this comment does not apply to commercial.

@Josh Stack

As you know, in NC, the Due Diligence period affords Buyers the time needed to perform all inspections, firm up financing, etc. The DD fee is paid to the Seller, for keeps. So whatever your contract states as the DD fee, you cannot get back. 

During DD, Buyer can terminate the contract for whatever reason and get the Earnest Deposit back, not the DD fee. That includes not able to secure financing, appraisal's too low, the yard is too small, neighbors are awful, etc. If DD period is over, THEN Buyer terminates, Buyer does not get the EMD back.

What you could have done to better protect yourself is put in a longer DD period. Or your broker can do that with an Agreement to Amend Contract.

Since the NC forms are written and approved by the Bar and Brokers' Association, it would be in your best interest to talk to a NC RE attorney, if you want to add/delete language. 

Best of luck!

@Account Closed

Happy to help!

Might be beneficial to talk to some lenders in the area while you do your research. If you build on spec, they want to see prior experience - that's key in getting those spec loans from the few that offer them, as well as being properly capitalized. Presale would be easier to fund, as well as build to rent. 

Keep us posted and best of luck!

@Account Closed

A lot of what can be done with the lot depends on the zoning and availability of city services and utilities. That should help you in determining highest & best use. 

At the end of the day, if you are looking to build to rent or build to sell, you need to find out the zoning (commercial? industrial? single families only? How many? Apartments allowed? How many stories?, etc.), is the lot infill, do you need to re-zone, are water/sewer available (if not, get a soil scientist to test the soils), impact/tap fees, etc. 

Once you know what you can and want to build, start interviewing architects/draftsmen, builders, etc. Walk their past projects. Ideally, they should be able to steer you in building and designing to your aesthetic and can advise on how to save on construction costs.

Nail down funding. Spec loans are hard to come by. However, owning the lot outright usually is good enough equity. However, it is nearly impossible to get a spec loan with no prior experience. You might want to then partner up with the builder. If building as a home-owner, different story.

Sorry not able to get into too much detail here. I would advise you first to talk to Planning. 

Best of luck!

I find the stricter requirements and longer underwriting with banks are likely worth it for new construction loans. HMLs usually charge interest against the entire loan amount, whereas banks usually charge interest again what is drawn. That can work out to be a huge difference in terms of interest paid out. This is not even counting the points HMLs charge.

I would be very careful with using your personal home as collateral. Some people do, some don't. Personally, I just don't feel comfortable with mixing personal and business, especially since it's a family home.

In any case, if you go ahead - make sure the builder has a stellar track record. Did his several specs deliver on profit/time/budget projections? You should detail out not only the split of duties, responsibilities, contributions, but also what happens if project runs over budget, over time-line, what happens if one of you stop performing, are you counting your realtor commission separately from the profit, who pays the interest on the loan, etc. Keep in mind lender will vet you and as well as builder track record when they review this deal.

Best of luck!

For spec loans to new LLCs, the lender will likely require your personal guarantee (your income, credit, bank accounts, etc.) and might require you to be a borrower and hold title, as well as your new LLC. Not all, but some lenders will. Depending on the lender and their underwriting, they might lend a certain % of construction cost only (you need to bring in the equity with the lot/land/dirt), or a % of total construction cost including the lot or a certain % of ARV.

Some might roll in closing costs, some won't. Some allow for interest reserves, some don't. They want to see a good amount of reserves in the bank, after closing. For a newer LLC borrower, they will likely want to get to know you (talk them through your experience, show your past projects, what you plan to do, what your numbers look like, what you have going on right now, your knowledge of that specific market, etc.). They will want to know who the builder is and their depth of experience, as they need to be vetted by the lender, as well.

Each lender is different and will have a different set of guidelines. Lending criteria will not only differ by lender, it might vary based on how well the lender knows you or if you already have some sort of relationship with them (maybe you have had prior loans or bank accounts with them, etc.). 

Best way is to reach out to them and get a feel for what the lenders are looking for - what types of projects interest them, what is their lending profile, etc. 

Best of luck!

@Uriah D. @Dawn Brenengen 

This is such a great & fun idea! 

Gorgeous. 

Knowing @Account Closed, this house is solid, beautiful and built with utmost care, heart and soul. Killer attention to details. He doesn't play around and it shows. 

Great job - some lucky end buyer will end up with this fantastic home soon. 

I don't believe an Absentee Owner list (assuming no other criteria was used) would be an effective list. Just like @Anthony Gayden mentioned, I also get letters because I am an Absentee Owner myself. However, that in itself in no way means I am motivated. 

There should be at least one more qualifying criteria in combination with Absentee. Have you thought of Absentee + behind on mortgage, Absentee + eviction, Absentee + recently inherited, Absentee + delinquent taxes, or any combination thereof? 

Best of luck!