hard money

can my equity be used for the up front money?

I own a home in Ocean City Nj, I owe 540,000.00 on it and it appraised at 633,000.00 in sept 2005, I want to tear it down and build new and sell the property for 1,000,000.00 plus, they are tearing them down in this neighborhood and selling for 1,ooo,ooo to 1,390,000.00, is it possible to get a 750,000.00 loan on a deal like this I have included some photos of deals on 55 x100 lots in this neighborhood, my lot is 98 x98 on a corner with a house across the street up for 1,000,000.00

MLS (sjsr) #293866 - $1,099,000.00
Ocean City/Merion Park , NJ
residential - 4 beds / 2 baths
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MLS (sjsr) #293869 - $1,339,000.00
Ocean City/Merion Park , NJ
residential - 5 beds / 3 baths
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It sounds like you’re looking for a contruction loan. I’d start with your local banks. You wouldn’t want to carry a hard money loan for a project like that.

Why do you feel you need hard money on this deal, is it due to a low fico? And how much are the construction costs for the new house? There are loans available based off the completed value of the new property.

low fico and the value

Thanks for all the response to my new construction deal. I have
decided to go another route with private funds, since hard money
will prove to be to costly for the project

I went on prosper.com and found that there are many investors
lending money unsecured, so I figured a way to to rehab my property
and offer investors a 25% to 40% return on their cash with a small
1250.00 to 2500.00 investment depending on the amount of investors I
can attrack to the project.

I am going to put a package together and I will post it soon

The rehabed house on the opposit corner from me sold for 775,000.00 6 months
ago with nasty views and I believe since my home is a rancher it
maybe more appealing to baby boomers with bad knees who don’t want
the steps

I am going to rehab it into a cottage style shore home with wrap
around porchs and aview of the marsh lands

Good Luck!

Keep us updated on your progress!


I went and did some research and found a comp that sold in july on a corner lot like mine

it sold for 1,367,000.00

65% would bring 888,500.00 enough to build and make a profit so i’m going to try that route

If you already owe 540K on the property what are your expected building costs on the new project? Unless most of the value of the property was in the land then your deal does not really make sense. The 540K does not go away just because you tear the house down. Also you were looking to borrow 750K and you want to do it by attracting multiple borrowers each contributing between $1250 and $2500 a piece??? Even at $2500 per person you are looking at 300 people lending you money just to get to the 750K. In addition to the fact that I am going to guess that the amortization period on the prosper loans is not 360 months. So the amount of money you will be laying out to your “lenders” is going to be astronomical on a monthly basis. So you will be making your current house payment, your 300 lender payments, as well as paying rent somewhere else while you are building this home. I am sorry but I think you need to really sit back and think about what you are doing before you let the bulldozers start rolling in.

I did some comps and talked to some hard money guys today at 1,367,000 65% would be 888,550.00 thats enough to go hard money if I want to

The deal still does not make sense. Of the 888K you are borrowing 540K of it is going to go to pay off your previous note. This leaves you 340k to build a house that will appraise for 487k more than it costs to build? That just does not seem reasonable. Even with the appreciation that will happen during construction that seems to be a large stretch. I really think you need to look at other options for your property. Why not sell your current home, and use the equity to purchase a lot and build from the ground up. at least this way you will have a much more clearer picture of what your numbers will look like. Because right now it looks like one of two things will happen. Either you will run out of money during construction and be left with something that you can’t sell, or will have to sell at a loss. Or your home will not be near the value at completion that you think it will and your profit will not be near what you think it is going to be especially with the hard money holding costs, realtor fees, taxes, etc…

I am not trying to rain on your parade i am just trying to point out things you may not be seeing because you have dollar signs in your eyes.

WHAT! Are you kidding me. How are you planning to pull this one off? Unless Im missing something but those #'s you threw out there dont add up at all. Sorry but Im going to have to agree with chris YOU STILL OWE 540k even if you got 900k you will have to sell for MORE than 1.5mill and thats cuting it close. DUDE DONT DO IT!!!


thats 134.00 a square foot for a 2600 sqr foot home

the one on a corner smaller then mine sold in sept for 1,367,000.00

the others on corners being built are apraising for 1.3 and more,they are for private owners

at 134.00 a sq ft theres enough for me to make money just on my labor and the build, even if I had to sell it at a 30% discount thats 957,000.00

should cover any costs, I doubt I would have to discount 30% but thats a pretty safe discount to use I think

I would be building the home so I would not have the builders costs and mark ups to deal with

If I was going to hire a builder and then try to make a profit on top of him and have costs then I wouldn’t even think about it but since i’m a contractor and a licensed electrician, I know 134 is not something that can’t be done

I have contacts all over the place for discounts on materials and i’m using plans from a pre-exisitng home so I don’t have to pay thru the nose for plans and I know they will go thru zoning with no trouble

I will tear the home down myself, its a single story, no problem, I have done tons of demo

I think if you can put together a plan that the end you can sell it for 30% of what the others are selling for then you have a safer plan then most

If at the end of the day all I get are my wages out of it then it ok, I do this everyday for wages, why not for myself, same job for awhile and hopefully a start of a new direction for my business

Well that explains it. If you are going to do the work yourself you’ll save alot of $$$$. Just wanted to make sure you covered all those expenses. Cause I know tearing down a putting up could be very expensive. Well… Ok… Good Luck. :beer