Hello Everyone,
I’m a licensed new home builder in NJ looking to purchase a vacant lot and build my 1st single family home on it. My plan was to find a bank to finance 80% of the total cost (land+construction) with my 20-25% down. I’m confident I can complete the home efficiently and economically. I also have experience with the engineering/planning side of things.
The problem is I don’t have much more than the 20-25% DP and I don’t have a building track record yet. I can’t find a lender who will lend to me as an owner-builder because it’s too risky. And I can’t find a lender who will differentiate my LLC from myself and qualify me, not my LLC, for a construction-to-permanent mortgage while my LLC is acting as my builder making construction draws to pay subcontractors. This is my biggest hurdle as of yet. I have a great credit score, very low debt-to-income ratio, and stable income (self employed doing something else).
It’s hard to be a builder with a track record if banks aren’t willing to fund your projects to begin with. I’m wondering if anyone out there has ever faced a similar issue and what their work around was.
Replies
I am actually in the exact same boat. I have talked to a regional bank who has indicated that they might provide the loan. Not too encouraging but I will need to at least try with them. I know it’s been a few months since you posted this so I’m curious if you have found an answer? Have you had any discussions with hard money lenders? I have been told they might lend in this situation but obviously that comes with a higher cost. I have also talked to a few people who have hired an experienced GC, who then contracts with them to construct the home. That way the bank is lending to you based on the experienced GC, but you are doing the work and gaining the experience since the GC is hiring you to build the home. I’m not sure how realistic it is to find a GC who would do that, or if that’s even legal, but I do know if people who have done it.