I have a buyer/renter for a new construction single family home here in San Antonio. The buyer is not sure if they will qualify for a loan so they have stated they would sign a 2-3 year lease to own while they rebuild their credit to buy the home in 2-3 years. I am a home builder but also rebuilding my credit so I cannot finance the deal in my name and lease to the buyer because of this. I can build the home they want for $170,000 - $175,000. They can afford a payment of $1400 per month. The market value of the home will be $225,000 when completed. Of course, over the 2-3 year lease it will appreciate in value by approx. 7-8% here in San Antonio. Anyone have any ideas or suggestions how to work a deal for this scenario and get financing. Also, taking suggestions on alternative ways to pull this off.
How do you normally get financing for your construction projects? How long have you been a builder? Unless you are brand new you must have some connection with lenders down in SA. Have you or the customer had credit reviewed recently? From what it sounds like you want an investor to take a chance on a customer with bad credit who is having a builder with bad credit build their home. Sounds like a risky proposition for anyone. Do you or the customers have money to put into the deal? Or will this be 100% cost to construct? Not to mention that the property will not cashflow because of the size of the loan in relation to what they can afford. I don’t want to rain on your parade, but just from the information provided this is not a make sense deal for a smart investor.
You have valid points. This is why I am looking on this board…for advice. I was hoping to find someone in San Antonio or this general area who would take some risk, but I am willing to offer a handsome return to an investor who wants to give it a go. I have built one home and rehabbed another recently; both were completed timely and with a fair amount of ROI. The buyers do not have money to put towards the construction now. The plan is to have a LTV at 75%-80% on this home.