thanks for the reply. Location is NW WA. the area’s trends have been following seatle’s #'s, and seatle is on the upswing again.
I have not seen the GC’s tax returns, but he has been doing this for years, I do know his credit score is 800. He is licensed and bonded, and we have talked to other big GC’s around the area and they have all said he is a good, solid guy. good character.
He’s got a great area that is being developed, there are 18 lots left that just got finished in the 2nd stage of a development expantion. The area is very nice, and very in demand. He himself is building 8 houses in that area right now, with over half of them being pre-sold.
I do appreciate your concern, and believe mem I have thought long and hard about this. Still not sure if we’re going to do it. We have been looking at some other options, and I’m leaning toward them now. These other options have a lot less exposure risk, so we’ll see. I see how people can get in a hurry to invest, so I’m trying to slow down, make the right decisions, and I keep telling myself this IS NOT the only deal out there. Keeping my eyes open…
I do agree with the rent vs. debt cost because I cannot rent these to cover that cost. That makes me very nervous.
Once again, thanks for the info! I have talked to some very helpful people because of this post.
Ok, I’m young and I’m kind of new to this, but I’ll just give you some numbers and see what you experts think. I’m trying to figure out if this is possible.
I need 680K to build 2 houses in the next 6 months, each house cost’s 340K and they have been selling for 440K. I need to do a construction loan I think, but not sure if I can get lending at a reasonable rate…
I have a 135K cash, and a credit score of 725.
The plan is to build and sell in 6-8 months.
The GC that I am going to do this with has been selling the ones he’s been building in 1-2 days on the market, and some have been getting into bidding wars.
Problem, my wife and my income combines are only about 70K gross, so they won’t like that.
Question…can I get a loan at around 6% with those numbers or is my income too low?
Re: Are you sure the timings right ? - Posted by Ed Garcia
Posted by Ed Garcia on April 07, 2006 at 11:02:30:
Jon,
Are you sure the timings right? Here you are in a market that?s softening and you as the investor have never built a house. This doesn?t sound like a winning combination.
You talk about your GC?s success, I hope you have a lot of confidence in him because once you enter this relationship; you?re along for a ride. At that point, he calls the shots.
I would see financials on him, his tax returns, his licensing, run a credit check on him and of course I would want to make sure he?s bonded. You certainly don?t need mechanics liens etc from other sub-contractors or for materials that haven?t been paid for.
The other thing I don?t like about your deal is the price range you?re in. If the houses don?t sell, I doubt that the rents would debt service the loans. You haven?t disclosed where you?re at; I?m in California so I?m familiar with your numbers.
If you GS is doing so well in selling his houses in 1 to 2 days, then he is definitely the exception of what I?m seeing across the board. I realize that there are still some hot spots but I can assure you bidding wars right now are far and few between.