How difficult would it be to fund (from any source I suppose) two simultaneous construction projects? I bought a run down home in Sacramento for 209k. It sits on a .25 acre lot in a quiet, tree lined neighborhood. I originally planned to fix up the place, put it back on the market and make a quick eight or ten grand. I got to talking with an architect who has drawn plans for a two story house which would fit nicely on a lot half this size, so I could split the lot and build two new homes.
We originally discarded the idea of splitting the lot because of the time involved, but it might be possible to get a permit to build both properties simultaneously from the city if we file an application to split the lot at the same time. The cost of the construction would be 110k each, and I will owe 209k on the lot (which I plan to split). Each home would be worth about 320k (conservatively) when they were completed.
Just plugging the numbers into my home made spreadsheet, I came up with some decent numbers. I guess now I need to locate funding for this project. I have excellent credit and I own two other homes with plenty of equity, but I would need about 300k to get this project completed. Is there a source of hard money for this sort of project?
original purchase price 209000
loan costs 15000
total acquisition costs 224000
improvement expenses 250000
holding costs 25000
misc expenses 5000
subtotal basis 504000
proposed sale price 640000
agent commission percent 7%
closing costs 44800
gross expenses 290000
gross gain 431000
gross capital gain 136000
net capital gain 91200
gross percent fed/state taxes 41%
actual tax paid 37392
takehome $53,808.00