financing unfinished homes - Posted by giovanni

Posted by Scarlett on October 27, 2003 at 12:44:55:

I have a unfinished home that I am building. I would now like to sell it as is, due to the fact that I need to move to care for a parent who has become ill.

How would I go about listing this property? How hard will it be for someone to get a loan to finish the home which is about 85% finished?
Thanks for your anticipated advice.


financing unfinished homes - Posted by giovanni

Posted by giovanni on December 04, 2002 at 02:02:43:

Can i make this into a deal ? Somehow ?
An architect/builder has 2 unfinished homes. He needs the funding to complete the 2 homes. The homes are each 50% completed. This Per the broker who has a contract to sell the homes once they are finished. Can a note be created and simultaneously sold or how else can I assist in brokering (being the middleman) this deal. Does any other info. needs to be furnished for an intelligent answer ?

Re: financing unfinished homes - Posted by Ed Garcia

Posted by Ed Garcia on December 04, 2002 at 09:36:13:


Unless you’re in a position to finish the construction out of pocket, you’ll have to obtain an additional construction to complete the project.

Here is a little post I made a while back discussing some fundamentals of a construction loan.

Construction Loan

I have done construction loans.
What you are attempting to do is not as complicated as it seems.
You will need the following.

(1) LAND: Either free and clear, or 50% paid down for a land draw.
(Note) If you wanted, you could buy a lot with NO money down, have the seller subordinate their loan to a construction loan. I know that you already have your lot Chuck; I just wanted to mention that for the benefit of others who might be reading my post.

(2) PLANS: These plans have to be approved by the city your building in.

(3) PERMITS: As you know, sometimes the City can require you to build either conforming structures or off sites, that the City wants. They will also have building standard for your area.

(4) COST: The Bank will require a COST BREAKDOWN of all of your expenses. They will want to see a cash flow chart to pay you on a VOUCHER system. As each phase is down and signed off by city inspectors, the contractor will be paid for that phase. (Note) interesting enough, the bank will take your cost break down and analyze it with their computers. If the cost is more, that will concern them, and they will cut it back. If it’s less, that will also concern them because they will think you short changed yourself in building this project. So In essence, the bank can be instrumental in verifying your cost. However, don’t ever count on anyone but yourself. Do your own, do diligence. (Note) the bank will require at least 10% liquidity on you the borrower.

(5) CONTRACTOR: If you are a Contractor, the bank will want to see your resume and you contractors license. If you are not a Contractor, then the bank will want to have a resume on your contractor as well as a copy of his license, and financial statement.

There are other considerations, but this is enough to get you thinking in the right direction. If everything is done right, you should be in the deal about 70% to 75% LTV on a NEW property. In fact I have seen better depending on area, and size of the deal.

Good luck Giovanni, I hope this helps.

Ed Garcia