Construction Loan
Discussion
I am looking to acquire a sum of capital to construct 1 or 2 cheap houses (sub 100k). What would be my best way of gaining the capital for such a project?
Currently I am 24, homeowner, employed and earn a good wage and already do not wish to be working for anyone else by the time I am 28/30 years old. I have little experience in such a project but am willing to learn and v.determined. Any pointers, advice, do's don'ts etc are all very welcome.
Currently I am 24, homeowner, employed and earn a good wage and already do not wish to be working for anyone else by the time I am 28/30 years old. I have little experience in such a project but am willing to learn and v.determined. Any pointers, advice, do's don'ts etc are all very welcome.
Borrowing will be more of "business" related than "property" property.
Any lender will want to know how much capital you can put up personally and what guarantees you can offer them to lessen their risk.
The main thing with such projects is ensuring that you have sufficient working capital to fund the ongoing building and labour costs.
You may need to have sufficient funding in place to keep you going for up to two years because, having built the properties, it may take a while for the properties to sell.
Any lender will want to know how much capital you can put up personally and what guarantees you can offer them to lessen their risk.
The main thing with such projects is ensuring that you have sufficient working capital to fund the ongoing building and labour costs.
You may need to have sufficient funding in place to keep you going for up to two years because, having built the properties, it may take a while for the properties to sell.
Eric Mc said:
Borrowing will be more of "business" related than "property" property.
Any lender will want to know how much capital you can put up personally and what guarantees you can offer them to lessen their risk.
The main thing with such projects is ensuring that you have sufficient working capital to fund the ongoing building and labour costs.
You may need to have sufficient funding in place to keep you going for up to two years because, having built the properties, it may take a while for the properties to sell.
Any lender will want to know how much capital you can put up personally and what guarantees you can offer them to lessen their risk.
The main thing with such projects is ensuring that you have sufficient working capital to fund the ongoing building and labour costs.
You may need to have sufficient funding in place to keep you going for up to two years because, having built the properties, it may take a while for the properties to sell.
Thank you.
This is why a construction loan of some degree seemed interesting to me where the loan is drip fed as the work progresses rather than borrowing a large sum at the outset and paying interest on sums of money which are not initially needed.
I am aware that you have to build in some time incase the properties do not sell however this is the risk. With a new build I hope that the project will be as desirable as possible (this is obviously a given for any development).
It's probably a bit small for most of the commercial lenders but generally you would need to have between 25 and 40% of the total project cost from your own resources
You could talk to the high street lenders as most of them would consider something like this as a business loan provided you have adequate available equity but remember that banks will lend you an umbrella when its sunny and ask for it back as soon as it starts to rain
I am making some enquiries on a slightly larger scale project at the moment and mine is a refurb/extension but I will ask the lender I am dealing with what their starting point is for loans and I will post up what they tell me
You could talk to the high street lenders as most of them would consider something like this as a business loan provided you have adequate available equity but remember that banks will lend you an umbrella when its sunny and ask for it back as soon as it starts to rain
I am making some enquiries on a slightly larger scale project at the moment and mine is a refurb/extension but I will ask the lender I am dealing with what their starting point is for loans and I will post up what they tell me
billsnemesis said:
It's probably a bit small for most of the commercial lenders but generally you would need to have between 25 and 40% of the total project cost from your own resources
You could talk to the high street lenders as most of them would consider something like this as a business loan provided you have adequate available equity but remember that banks will lend you an umbrella when its sunny and ask for it back as soon as it starts to rain
I am making some enquiries on a slightly larger scale project at the moment and mine is a refurb/extension but I will ask the lender I am dealing with what their starting point is for loans and I will post up what they tell me
You could talk to the high street lenders as most of them would consider something like this as a business loan provided you have adequate available equity but remember that banks will lend you an umbrella when its sunny and ask for it back as soon as it starts to rain
I am making some enquiries on a slightly larger scale project at the moment and mine is a refurb/extension but I will ask the lender I am dealing with what their starting point is for loans and I will post up what they tell me
billsnemesis, thank you. It would be interesting to read what they have to say on the subject.
Gassing Station | Business | Top of Page | What's New | My Stuff