All Forum Posts by: Ed O.

Yes, you're overthinking this. There's plans all over the place and no one can get you a price without seeing them. It would be extremely unlikely that someone would try and build your plan somewhere else... your preferences and everyone else's are not always going to be the same....

With custom homes, the customer typically finances the entire project from start to finish in my market. 

1. I think the contract could be completed either way, I would personally do 2 different contracts. 

2. Negotiable. 

3. I would never do this. A sharp customer would be weary and would run from a situation you describe. Only a foolish person would sign up for a deal like this. What if you got into an accident right after the foundation is poured - the homeowner is completely screwed. Additionally, I would be surprised if any lender would approve this set up. There's nothing but upside for you and only downside for the customer. 

@Jim Froehlich

Boom! Great stuff! Congrats on getting it across the finish line! 

Thanks for the update on this.

I'm on the front side of a good size development - can you describe how you handled the reservation part of the lots from start to finish? The group I'm working with has discussed this, but we haven't come up with a full idea of how we'll be managing this piece. 

Thanks!

@Jack Elliot

I'll send you a dm with a good contact & also the local reia info. 

Ed

I would not be a fan of comingling funds. This is a pretty obvious one. 

On the subject of completion times and penalties:

I would turn down anyone demanding a guarantee and penalties. There's plenty of things out of the builder's control that can destroy a timeline. The list is endless and in many cases out of the hands of the builder. 

If you require promises, let me tell you about a distant acquaintance. His mid size local builder made a lot of promises and commitments to him. They then proceeded to not even complete the rough ins on his home (long distance owner) and drew 100% of the construction funds from him.  I saw the home myself and was asked to finish it. The work was trash. I declined the job, as I wasn't comfortable finishing up the poor canvas that he had. 

He ended up paying more than 200% of his original price to finish the job. The corrupt builder tried to claim bankruptcy and is under criminal investigation. 

But, he did make promises. 

My point, good, experienced builders won't make promises they can't keep (or won't die to keep) unless they're a slam dunk or there is a lot of money to be made for doing so. A desperate one will be happy to take a nice deposit and promise you the moon.  

There's no nice way of saying this. 3 years on the market - 5 contractual offers - are you indicating you've been under contract 5 times? 

You don't have a strong agent based on what your indicating here. Time to change listing agents to one that will do their job and not take contracts from iffy buyers ready to run away. 

I would avoid private or hard money lenders. It doesn't sound like you would need them in your situation. Call local / regional banks and tell them what you're after. Some banks want loans like this and will get you a good deal. Some don't want loans like this and as a result, will offer you terrible terms. 

On our builds we -ALWAYS- get, at a minimum, 12 months interest only + 48 months amortizing for a total of a 5 year note / balloon. Our rate is set the day we start and does not float until completion. Banks will do this, not all of them will. Someone posted recently about the regrets of floating a rate on a build here - their rate went from the 3s to the 8s. If a bank won't keep the same rate for all 5 years, find one that will. 

A lot of terms are negotiable and your situation is very unique. You could also consider using a heloc or unsecured line of credit for the assumed balance of 60k. Considerably less fees and red tape to get these and use them for this situation. 

I wouldn't begin the process of clearing the land until you're 100% ready to build on the site. A lot of things change, people, situations, etc. The worst thing you could do is complete the land clearing and then not build for some reason. 

The tree clearing would best be done by a company that does this every day. A construction crew will not be as efficient and as a result will likely charge more for an inferior result. 

2 kitchens does not alone make the a home a duplex. The underwriter could be a fool.  What city is it in?  They all have their own rules and levels of hassle.  

do you have to convert it ? I'd push back on the underwriter and ask to see their guidelines that say every home with 2 kitchens is declared a duplex.  That would make no sense.  

Work with a title company..they can handle and process all lien waivers and can protect you. Also, underwrite your builder. Look at their court records, ask around. Don't be fooled by larger operators tho... I know a guy that is paying almost 2x the cost of his build because of a filthy builder. You can also talk to the subs on the jobs. If they're not getting paid or getting slow paid, they'll be happy to talk about it. There's no perfect way to avoid issues, but working with reputable vendors and paying material suppliers directly will be the best approach you can take.