All Forum Posts by: Account Closed

That's really stunning. Who is your architect?

Referrals are the best way to find any kind of professional in my opinion. Do you know anyone else doing development work you could ask? If you've ever worked with a Civil Engineer or Architect before they may be able to give you a referral as well. Realtors might be another avenue.

The details you mentioned are things surveyors deal with regularly and they should know what you'll ultimately need if you tell them your plans.

• Utility Locations
• Depth of Sewer
• Meter Locations
• Stormwater Drainage & Flow
• Top of Gutter & Flow Line Elevations
• P/L to P/L across the street
• Street Radius
• Paper Street dimensions
• ROW dimensions 
• Sidewalks, curb cuts, aprons along property and neighboring properties
• Existing structures and improvements. 
• Existing trees
• Distance from transit stops

1. A lot split will most likely mean you'll have to refinance your existing residence

2. Not sure why you would need an appraisal unless you were looking to sell it. You can find sales comps by looking at SOLD rental comparables in your area. Rental comps are a little harder to get solid numbers for but you can look at sites like craigslist, padmapper and zillow to see what units are being offered for around you.

3.  A prospectus and proforma are always good to have to pitch to both investors and banks alike. With the amount of equity you're saying you have in your home I'm betting you could do a 4 unit deal without outside investment.

4. You should put together proformas for each scenario and look at your ROI, Cash on Cash, and IRR to make your decision.

Sounds like a solid starting point. Here's some questions I'd like answered if I were you:

1. What's the maximum amount of units you could build on 0.68 acres? Check with the municipality.

2. Are there any incentives available to build bonus units by providing a percentage of them for affordable housing? Check with the municipality.

3. How are the rental comps in the area for Studios, 1BR, 2BR, 3BR and their $/sf.

4. What are the sales comps and $/sf. for those comps

5. How small of parcels could you split that 0.68 acres into? You'll need to check with your municipality

Some additional food for thought:

Lot splits in my area take a lot of time, patience and money

You can finance the construction of an owner-occupied 2-4 units with an FHA loan for as little as 3.5% down but the requirements are kind of onerous.

If you built a triplex next door you wouldn't necessarily need to split the lot if you were looking at a build and hold scenario and you could get owner-occupied construction financing.

Doing 5 or more units on the same parcel puts you into commercial loan territory

You could however potentially split the lot and then build a four-plex next door and stay within residential loan guidelines.

Construction loans in my area typically lend 60-65% loan to cost

You may have enough equity in the house to be able to get that 65% financing without any cash out of pocket.

If you were able to split into 10th of an acre lots you could phase the build out of 6 single family homes: BBRR
Buy, Build, Refinance, Repeat

Good luck!

@Dave Van HornI believe most wireless carriers are charging for these calls, T-Mobile at least is. See below.

The cost isn't really a concern. Paying $0.60 for an hour long conference call of yours seems well worth it. I made a typo in my message, it's the lack of visuals and the ability to type out a question that I'm not much of a fan of with these live calls, unless that ability exists and I just don't know how to do it over the PC? Don't get me wrong, the calls are very informative and I'm very thankful for you, your team and your book. Looking to buy two notes for my kids' college funds soon.

https://www.tmonews.com/2016/10/t-mobile-0-01-per-...

Thanks for taking the time to answer.

Hi @Dave Van Horn. I'm curious as to why you use this service for the conference calls? It seems to me it charges most folks $0.01/minute to listen in and there's visuals or ability to ask questions. Am I missing something? 

Show 295

https://www.biggerpockets.com/renewsblog/biggerpockets-podcast-295-using-web-to-land-8-12-deals-month-with-melissa-johnson

A few points on HELOCs vs. Construction Loans:

HELOC's are great for their low interest rate. If your current HELOC lender has an introductory rate you might even be able to raise the limit of your HELOC to enter into that promotional rate and lower it even more. If not it might be worth looking into going to another bank or CU that does have a promotional first year rate to open a new HELOC with.

Some other advantages or disadvantages of the HELOC could be that you wouldn't have a draw schedule or fund control requirement that you'd likely have with a construction loan, which can be laborious. On the other hand having a draw schedule and fund control with inspections before disbursements could be good if you're new to this as it could keep your contractors in line and it will force you to collect all the necessary paperwork in terms of Certificates of Insurance and W9's. It's a pain but it is another set of eyes on the building progress.

The construction loan is also likely to have an interest reserve so you're not making monthly payments on the money you're borrowing as well. Both the construction loan and the HELOC will only start accruing interest on the money used only when it's used. The HELOC I had had the option of paying 1% of the balance monthly or an interest only rate of $100. Be sure to look into those options.

Good luck!

The latest BP podcast guest outlined a great way to select contractors and provide them with a scope of work and terms for running late and a draw schedule. 

ARE YOU LICENSED AND INSURED?

Should be your first two questions.