I am becoming more confident with the economy in Michigan, and I would like to build a few spec homes in the 250K range. I have only been in business for a few years and i am afraid that the bank will require me to sign over my first born.
Any ideas on how to finance a spec with out puting my entire financial life on the line?
Replies
There are plenty of "hard money" lenders out there who are willing to take the risk of financing spec homes. Unlike the banks, they won't necessarily ask for your first born, but they will ask for a number of points upfront, and interest rates significantly higher than the banks.
However, if you can't go the conventional financing route, the extra $$ for the points and higher interest rate may be the difference between bing able to do the project and not being able to do it.
Bob
Mick, there are a lot of construction loan specialists in Michigan. Where in Michigan are you?
blue
Warning! Be cautious when taking any advice from me. Although I have a lifetime of framing experience, some of it is viewed as boogerin and not consistent with views of those who prefer to overbuild everything...including their own egos
Additionally, don't take any political advice from me. I'm just a parrot for the Republican talking points. I get all my news from Rush Limbaugh and Fox and Friends (they are funny...try them out)!
Blue,
I'm in about the same boat as Mick. Where are these lenders. I'm in macomb county. Is there a list somewhere? I had quite a time financing my last flip house, paid through the nose with the interest, and thats with great credit (personal & business).Mark
Msa1, a flip house is entirely different than a new construction spec house.
It sounds like you are in need of a good real estate investor mortgage broker. I have used a guy (Dana) that operates out of Lake Orion, a real square shooter that can get the job done. He's President of the Oakland County Real Esate Investors Association. I also have used a guy in Farmington....he can also get the job done.
Spec building and flipping properties are two different beasts requiring two different types of financing.
Where in macomb are you operating. We've been operating in Macomb all summer.
blue
Warning! Be cautious when taking any advice from me. Although I have a lifetime of framing experience, some of it is viewed as boogerin and not consistent with views of those who prefer to overbuild everything...including their own egos
Additionally, don't take any political advice from me. I'm just a parrot for the Republican talking points. I get all my news from Rush Limbaugh and Fox and Friends (they are funny...try them out)!
mick ... you & msa should team up with blue.. he's got a lot of contacts.... if you can get on with his personality, he full of good ideas and lot's of experienceMike Smith Rhode Island : Design / Build / Repair / Restore
What the hell does that mean Mike....deal with my personality? I've got a great personality...just ask Gabe!
blueWarning! Be cautious when taking any advice from me. Although I have a lifetime of framing experience, some of it is viewed as boogerin and not consistent with views of those who prefer to overbuild everything...including their own egos
Additionally, don't take any political advice from me. I'm just a parrot for the Republican talking points. I get all my news from Rush Limbaugh and Fox and Friends (they are funny...try them out)!
blue.... i no dat... but mitch & MSA ?.... mebbe they're not a good match .
not as good as you and me , anywaysMike Smith Rhode Island : Design / Build / Repair / Restore
Mike, I'm sure we'd be fine. I'd keep my good saw (the boogeredone) stashed and when you came around, I'd rehide it and pull out the one with the safety gear still intact... you'd never know I was using the other. I'd gladly let your guys put up nets behind me on those scaffolds...but they'd have to hurry...because I'd probably be done with the work before they had all the safety stuff setup.
And..I'm actually very flexible...I'd vote for Kerry if we were doing business up there in the New England area...I know where my toast gets buttered!
I would draw the line at using a speed square though...you couldn't keep me in them...they'd be flying into the bushes at boogerin speed!
blueWarning! Be cautious when taking any advice from me. Although I have a lifetime of framing experience, some of it is viewed as boogerin and not consistent with views of those who prefer to overbuild everything...including their own egos
Additionally, don't take any political advice from me. I'm just a parrot for the Republican talking points. I get all my news from Rush Limbaugh and Fox and Friends (they are funny...try them out)!
Blue
I realize that "flips" are totally different. Those are getting a little hard to find. I'm interested in building new though I havent done it yet. Right now i'm working on a renovation in Huntington Woods. We finished up our current property in Mt. Clemens back in the summer and dont have a project house right now. BTW I live in Warren.
I grew up in Eastpointe...but they used to call it East Detroit back then. I knew quite a few people in Warren because many went to EDHS. I still have friends in Warren.
blueWarning! Be cautious when taking any framing advice from me. Although I have a lifetime of framing experience, all of it is considered bottom of the barrel by Gabe. I am not to be counted amongst the worst of the worst. If you want real framing information...don't listen to me..just ask Gabe!
I lived in East Detroit for about 6 years, thats where I graduated from. Used to live on Virginia right by the police station. I used to drive truck also(hauled auto parts to ford factories).
Edited 11/9/2004 10:15 pm ET by MSA1
Hay blue, Sounds like we are cut from the same political cloth. I am in Chesterfield Twp. (North of Detroit)
hoow about you?
I'm curently living near Grand Blanc but working in the Romeo area. When I was 19 I used to deliver a lot of steel in Chesterfield Township. I was the "East Side" driver for a company called Smedes Steel (now defunct, he was the bil of Budhyser who owns SmedeSon Steel). I also used to do all their service welding and cutting of steel beams.
Are you working in the Chesterfield area? I've never worked that area...the prices are too "east side"...if you know what I mean!
blueWarning! Be cautious when taking any framing advice from me. Although I have a lifetime of framing experience, all of it is considered bottom of the barrel by Gabe. I am not to be counted amongst the worst of the worst. If you want real framing information...don't listen to me..just ask Gabe!
I am not sure how the prices are in romeo but every ware i look 50k to 70 k is what lots are going for. i did a small custom in richmond 2 years ago qand the land was 48k with a sale price of 311k i would love to find a hot market that is cheeper
Mick, the lots are now 65 - 75K for buildable small acreage. Don't go anywhere near Grand blanc in the 250k market.....there's a ton of inventory sitting and competition is fierce....markups are slim.
Richmond has a sub inside the city limits that is doing so poorly that the builder is thinking of selling the lots....that'll create a hodgepodge sub filled with homeowner builders.
Why don't you want to stay in that low 300k range?
blueWarning! Be cautious when taking any framing advice from me. Although I have a lifetime of framing experience, all of it is considered bottom of the barrel by Gabe. I am not to be counted amongst the worst of the worst. If you want real framing information...don't listen to me..just ask Gabe!
i got all of you.. my mom was Miss Lake Orion..
graduated from St. Fred's in Rochester...
is that the same one Madonna went to ?Mike Smith Rhode Island : Design / Build / Repair / Restore
Wooohooo....Miss Lake Orion! Yeah...we all know her...but who's that Madoona person that your talking about?
blueWarning! Be cautious when taking any framing advice from me. Although I have a lifetime of framing experience, all of it is considered bottom of the barrel by Gabe. I am not to be counted amongst the worst of the worst. If you want real framing information...don't listen to me..just ask Gabe!
Mike,
Madonna went to Rochester Adams and with that said I have nothing constructive to add to this post, but thought it was cool to see so many people from SE MI on this board. I live in Rochester, that's the only reason I would know about Madonna.
This is a great board, thanks for sharing all your years of experiences. I thoroughly enjoy reading Blue's posts... lots of knowledge there.
Chad
so, CAG.. I can't ask my mom any of these questions..
my Dad's sister and her husband still live in Rochester..but they don't have e-mail
was St. Fred's the Catholic HS back then ?
Mom lived in Indian Village (?) i think that's a section of Detroit ???
it's hard to believe when my Grandfather & Grandmother homesteaded from Illinois...
(1914 - 1915).. nothing was there.. nothingMike Smith Rhode Island : Design / Build / Repair / Restore
Hey Mike,
I have sent email to your profile email address... since it's a bit off-topic.
-chad
I don't know much about Rochester schools, but I do know that Indian Village is one of the original upscale subdivisions near downtown Detroit.
When I coached high school soccer, our boys beat Rochester 2-1 and that was a very significant turning point in our schools history. Every once in a while I run across some the press releases and that particular story makes me tingle.
Sports is good food for the soul...too!
blueWarning! Be cautious when taking any framing advice from me. Although I have a lifetime of framing experience, all of it is considered bottom of the barrel by Gabe. I am not to be counted amongst the worst of the worst. If you want real framing information...don't listen to me..just ask Gabe!
I always wanted a clone....
just thought I would know when it happened
lol... sorry about that, didn't know there was another cag. Never had that happen before with my initials...I didn't think it would allow you to use someone elses SN.
-Chad
I don't believe you can use the same sign on name but you can have multiples of the same nickname....
no biggy. it'll keep people guessing.
plus I always have that Jayhawk at the end of my posts.
Okay, I have corrected the problem. I have a feeling that no one would have gotten us confused since I would be the one asking all the questions.
Guess I should have done a search on the name first, again my apologies.
-Chad
Chad,
no big deal at all, if you want to go back to CAG it's not going to bother me.
might confuse me, but not bother me ;)
>> I didn't think it would allow you to use someone elses SN.
Yep. Login IDs are unique. Screen names, called nicknames here, are not.
I see you're fairly new to the board - Glad ta have ya around.
There's a thread called the Spec House from Hell that's required reading for any newbies wanting to build a spec. (-:
I'd suggest financing it yourself with your own money as much as possible. That interest really eats you up when the house doesn't sell.
Why is it that most nudists are people you don't want to see naked?
Any ideas on how to finance a spec with out puting my entire financial life on the line?
Generaly, you will be personally liable for any loan you sign for. That includes all your assets. That's just the way it works.
You get out of life what you put into it......minus taxes.
Marv
Marv...not necessarily true.
Most loans are secured by the real estate. The mortgagor can foreclose and take ownership of the property, but most loans are "non recourse" maning the property is the sole recourse for satisfying the debt.
blueWarning! Be cautious when taking any advice from me. Although I have a lifetime of framing experience, some of it is viewed as boogerin and not consistent with views of those who prefer to overbuild everything...including their own egos
Additionally, don't take any political advice from me. I'm just a parrot for the Republican talking points. I get all my news from Rush Limbaugh and Fox and Friends (they are funny...try them out)!
Most loans are secured by the real estate.
99% of real estate is secured by the property financed. But you also need to make a personal guarantee. If you stopped paying on your home mortgage would the bank sue you for the balance after selling the house? Of course.You get out of life what you put into it......minus taxes.
Marv
Marv...you're right!
As I was driving to work today, I remembered that most COMMERCIAL loans are non-recourse and most residential loans have recourse. The commercial loans are baxed on their capitalization rates...not on the individual's credit.
The reality of that situation is that the banking industry would gladly accept a quit claim instead of foreclosing because of the high costs associated with foreclosure. In most instances, if there is a shortage, they'll just write it down. There's usually no sense in trying to squeeze blood out of a rock. If the mortgagee can't pay a loan, they probably are uncollectable for the shortage.
You are right however...the individual normally is responsible...
blue
Warning! Be cautious when taking any framing advice from me. Although I have a lifetime of framing experience, all of it is considered bottom of the barrel by Gabe. I am not to be counted amongst the worst of the worst. If you want real framing information...don't listen to me..just ask Gabe!
Depends on your financial statement .
Tim Mooney