Do they have reserves? 

Hi folks,My wife and I have a construction to permanent mortgage loan on land+home where we intended to build.Unfortunately, we found out that unexpected foundation work due to soft soil would likely make the project use triple our contingency reserve before even breaking ground.We are exploring our options on how to transfer our current financial obligations for this construction loan to some other loan offering (as moving forward with the project is now too financially risky).

Here’s the reality; the once every two or three or four years a GREAT deal falls in my lap, I (fortunately) have enough capital in reserve to purchase the property immediately for cash.

We don't hide that by continuing distributions--so we cut those off early to preserve cash reserves. 

We got Interior/Exterior Rehab Reserve of about $250K.

But per lot it will cost roughly the following:$1,500 Electrical poles, meter installation $2,000 water taps and connections$5,000 grading and land prep$8,000 septic installation (assuming a 1:1 ratio of homes to 1000 gallon septics)$5,000 down payment on each home ($700-750 / thereafter per unit)$21,500 total set up x 17 = $365,000Ongoing expenses after development would look something this for POH model: $12,750 a month in mobile home mortgages (17 x 750 for PITI on each unit) $1,900 a month in land mortgage PITI (house) $3,000 a month landscaping$2,000 a month in reserve emergency fund$2,200 management$21,850 a month total expenses $262,200‬/yearOngoing incomes after development would look something this for POH model:$27,000/month ($1500 x 18 {17 mobile homes plus house})$324,000/year324k-262,2k = 61,800 net pre-tax profit or $5,150/month.Opportunities to reduce start up expenses: Bulk deals with the government or contractors for doing all the work at once (electrical, water, land grading, septic) Trade free rent for someone to mow and landscape (turning a $3k event into a $650 event every month).

I have the reserves in place for the 5% down payment, 15K for emergencies, and have no debts! 

The carrier may issue a "reservation of rights" letter and ultimately deny indemnification; but generally they have a duty to defend.   

You still need the reserves for now, but you are in a good spot.Your real choice next is where to invest.

Figure out what each of you want and what reservations you both have and work through it.