Hey guys,
So i'm writing this post to try and find advice on securing funding for constructing some pre-sold single family homes.
I'm still focusing on the large condo development that I made a post about a while back, and I've made headway with it and have made contact with some local very successful businessmen. One gentleman in particular is worth mid-high 10 figures. I was pretty nervous about calling him, but did, and we had a great chat for almost 40 min. Honoured that someone like him would take that much time out of his day to talk with me.
But anyway, back to my core business of single family home building. Business has been going great this year, and with a change in my marketing tactics I've been getting phone calls left, right, and centre.
In the past 3 weeks I've signed contracts for 4 custom homes. I've now only got 2 lots left in my inventory and it's looking like those will be sold within the next couple weeks as customs as well. I'm also on the verge of signing contracts on 4 other homes for lots I can get from other builders/developers.
The problem I've run into is getting financing to actually build these homes.
This partially my fault, I figured once you had the units sold, the banks would throw money at you to build them as it's as safe as it gets in RE. They're sold, contracts are signed, plans approved, buyers are approved for financing. But no bank wants to lend money. Why? Not sure exactly, the loan to value is under 50%, but they won't even look at the details. It's just a flat no. I've heard from other builders that until you're 10+ units a year for at least 3 years, it's the same story for everyone. Once you're that big you qualify for commercial loans and it gets easier.
So a few other options I'm looking at include:
Father of a guy I built a home for works for a company that is flush with cash. They're giving it out to employees at 1% just to have it doing something. Maybe they'll lend to me if I offer 5%? Still early looking into this option.
Approaching the billionaire I mentioned above about obtaining financing, but it's small potatoes for him, don't think it'd go anywhere but looking into it. Maybe he'd want to partner on something small before doing a large condo development?
Found a guy that does private 2nd/3rd mortgages for people, maybe get him to finance but his rates start at 12%.
Have a banker that said no to me contacting some of his private money contacts to see if they're interested.
I've got a venture capital firm that loans at 6% that had initially said they'd like to work with me back when I first met with them about the condo project, now they're saying it may be tough to pull off funding for these homes. The loan amount is on the low end of what they do. But I'm hopeful on this one.
I've looked into crowdfunding, but all the sites I've come across so far are only for the U.S.
I need about 1 million, preferrably as an LOC as it's not all needed at once but I'd take a lump sum if that's the way it worked, to build the 4 homes. Need it no later than 4 weeks from now. Like I said, it's my fault for not looking into this sooner. Thought banks would be easy once you had them pre-sold. I was wrong. Lesson: Don't assume anything!
Any suggestions on other options?
Do some of the angles I'm working appear to be bad?
Thanks in advance.
So i'm writing this post to try and find advice on securing funding for constructing some pre-sold single family homes.
I'm still focusing on the large condo development that I made a post about a while back, and I've made headway with it and have made contact with some local very successful businessmen. One gentleman in particular is worth mid-high 10 figures. I was pretty nervous about calling him, but did, and we had a great chat for almost 40 min. Honoured that someone like him would take that much time out of his day to talk with me.
But anyway, back to my core business of single family home building. Business has been going great this year, and with a change in my marketing tactics I've been getting phone calls left, right, and centre.
In the past 3 weeks I've signed contracts for 4 custom homes. I've now only got 2 lots left in my inventory and it's looking like those will be sold within the next couple weeks as customs as well. I'm also on the verge of signing contracts on 4 other homes for lots I can get from other builders/developers.
The problem I've run into is getting financing to actually build these homes.
This partially my fault, I figured once you had the units sold, the banks would throw money at you to build them as it's as safe as it gets in RE. They're sold, contracts are signed, plans approved, buyers are approved for financing. But no bank wants to lend money. Why? Not sure exactly, the loan to value is under 50%, but they won't even look at the details. It's just a flat no. I've heard from other builders that until you're 10+ units a year for at least 3 years, it's the same story for everyone. Once you're that big you qualify for commercial loans and it gets easier.
So a few other options I'm looking at include:
Father of a guy I built a home for works for a company that is flush with cash. They're giving it out to employees at 1% just to have it doing something. Maybe they'll lend to me if I offer 5%? Still early looking into this option.
Approaching the billionaire I mentioned above about obtaining financing, but it's small potatoes for him, don't think it'd go anywhere but looking into it. Maybe he'd want to partner on something small before doing a large condo development?
Found a guy that does private 2nd/3rd mortgages for people, maybe get him to finance but his rates start at 12%.
Have a banker that said no to me contacting some of his private money contacts to see if they're interested.
I've got a venture capital firm that loans at 6% that had initially said they'd like to work with me back when I first met with them about the condo project, now they're saying it may be tough to pull off funding for these homes. The loan amount is on the low end of what they do. But I'm hopeful on this one.
I've looked into crowdfunding, but all the sites I've come across so far are only for the U.S.
I need about 1 million, preferrably as an LOC as it's not all needed at once but I'd take a lump sum if that's the way it worked, to build the 4 homes. Need it no later than 4 weeks from now. Like I said, it's my fault for not looking into this sooner. Thought banks would be easy once you had them pre-sold. I was wrong. Lesson: Don't assume anything!
Any suggestions on other options?
Do some of the angles I'm working appear to be bad?
Thanks in advance.
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