New construction financing - Posted by Bill
Posted by Bill on October 03, 2003 at 20:56:49:
I always hear of creative financing that is being done, so I’d love to hear some ideas on this one.
I’ve done some research in one of the shore resorts in New Jersey. An opportunity has presented itself that I at least want to explore. I would be partnering with a builder to purchase a motel, demolish the property and then have six condos built on the site.
Cost of the property is $600,000. Total construction costs (materials, plans, demolition, permits, etc.) would be another $730,000. Totaled, this would be about 60% of the expected sales price of all 6 condos. Based on today’s comps, the selling price is fairly conservative. In addition, the builder is doing construction at wholesale prices. In return, he is asking for 40% of the final return.
I would only do this if I could get in with as little as possible down. There’s good profit to be made, but I don’t want to put in (or have) the 10% or whatever it may take to invest.
At the very least I’ve already educated myself some on how this process works, but I don’t want to give up without exploring things fully.