All Forum Posts by: Page Huyette

Moving this to another forum to see if I can get some feedback.

This is an older post, but relevant to my current situation, so I'm bumping.

It sounds as though you've been talking to big banks (US Bank, Wells Fargo) instead of local banks. The experience I've had is that local banks tend to have better terms when building in the community, although their requirements vary quite a bit.

I recently got approval for a construction loan for a rehab property. The terms were:

20% of total loan down

6 months int only payments during construction period

After 6 months, loan rolls over into a conventional.

This was to be an income property, so the ARV and potential rents were factored in. I'm not an expert in this area, so maybe someone else can chime in, but if its designated as a rental, I'm not sure why they wouldn't allow that to factor into your ability to make payments.

As for the Wells Fargo option, what I've been told by them is you can't use their rehab loan for a property without an existing structure. In other words, building on raw land is a straight construction loan, not a rehab loan.

I would set a meeting with at least two local banks to get a clear idea of what they'd look for in this type of loan. I think you'll be surprised.

Curious where you are with this deal.

Update:

Have been working with hiremyvirtualassistant.com (also known as mydailytask) and have not been pleased AT ALL.

Tasks are arbitrarily processed, regardless of the deadline I set, and time estimates for work are triple what my former local VA was doing.

I'm not discouraged from using a VA, but I cannot recommend this one. I've found a few US based VA's that I'll be talking to for the next project.

Are you purchasing as an investor or owner-occupied? Fannie prefers owner occupied and won't even look at investor offers until the property has been active MLS for 20 days (used to be 15).

Your offers sound pretty strong, so it could be coming down to that and/or the highest offer. Regarding REO properties, I've often heard on BP that you shouldn't get attached to any single one. Bid on hundreds, land one, repeat.

Well done!

Why would they feel rushed to reply to your offer? Remember, you are dealing with an entity, not an individual. Most sales reps that handle the REO's for Freddie and Fannie have as many as 100 properties they are managing. These days they seem to go for no less than 95% of listing price if the offers come in right after they go on the MLS. A lower offer might be accepted if it is all cash.

If the property is desirable, they know they'll get what they want or close to it. It is correct that there is no place to include a deadline on the submittals, and if you pressure the listing agent and some snags come up (repairs, etc) then they may be less willing to go to bat to help you.

Buying an REO is a different animal, and deals can be had, but you need to submit your highest and best off the bat, and if its a good deal, ASAP!

That doesn't sound right. If a new property has to be created for the same buyer, the agent doesn't relist it on MLS. That is not a requirement in my experience, and it sounds as though the Realtor was either inexperienced with the process or just not telling you the truth. Either way, sounds fishy.

I would request an informal review of your project with the county (or city) planning department. That way you are on the schedule and will have the ability to speak to one or more people who can review your project and provide feedback. I wouldn't take the advice of the counter guy in planning, as they are not usually as well versed as the more experienced planners.

One thing to think about during the process is whether or not the existing infrastructure (streets) can handle additional traffic & use. Even if it is only one more property, that's something planning will take into account as well as any crabby neighbors that may want to thwart your efforts.

@Bill Gulley had an excellent point:

if someone does show up to object, be prepared to overcome the objection.

Guaranteed someone will have an issue, given human nature and all. I just posted something related to this, so am interested in any future progress you'll be making.

I'd like to build a guest house on the back of our personal property and rent it out either as a long-term rental unit or vacation rental. It will be under 1000 s.f. not counting the garage.

The goal is to rent it out now, and eventually move into that unit and rent out the main house when the kids are out of the house.

My question is, what's the best way to finance this? I already have a small HELOC on the property that we've used for main house improvements, and getting a larger one wouldn't cover all of the construction costs for this project. Doing a cash-out refinance of our primary would force us to give up our 3.5% fixed rate. Not completely out of the question, but the numbers would have to work.

The other idea I had was to purchase a chunk of adjacent land (we've already done this once on another side of our property from the same owner) and then subdivide our property so we can develop it as two separate parcels with a shared well. I've done prelim research with planning on this, but don't want to go every which way on this project and spend a lot of time researching every single option under the sun. In other words, I want to be efficient with the time spent on this endeavor from start to finish.

Without running formal numbers, I'm going to say it looks like this:

Land purchase: $40k

Permits, plans, etc: $8k

Construction costs: $190k

Potential rental income: $900-1000/month or average $675/month vacation rental (est)

Are there any ways to finance this that I'm not aware of? Would be interested in any ideas, experience or feedback from the forum community.