Hello!
We are building a house that will be done this May for $1.85 Million and we have put $175K down as a deposit to build the house. The house next door which is a bit smaller and is built by the same builder and is only a few months older, has recently sold for $2.2Mil. So we should have at least $250K in equity already.
What can we do to take advantage of the equity so we don’t have to put anymore down when we buy the house when it is done?
Any advice would be greatly appreciated.
Thanks!
How much work has been done on the house? What did the “as built” appraisal come in at? Did you own the land prior to the start of construction? Is the construction loan in your name? The answers to these questions will give you your answers.
Hello!
Thanks for the reply.
1.The house is almost done. Drywall is already up and it exterior will be painted soon. We are preparing to do the landscaping and the kitchen.
2.We don’t have an “as built” appraisal.
3.We didnt own the land prior. The sale price includes the land.
4.The construction loan is not in our name. It is in the builder’s name.
We are new to real estate (esp custom built), so I apologize if our question is silly or simple. =)
So do you think there is any way to take advantage of the equity for when its time to buy/close? Even take a loan on it or something to use towards it?
Thanks!
Purchase the property from the builder for 2.2 Mil. Have the builder take a seller 2nd of 350K. Buy back the note from the builder at closing for $0.01 on the dollar (or $3,500).
Patrick,
On paper that sounds like a fantastic idea. However, what conventional lender is going to allow a seller carried second of that size? Very intriguing though.
Hello!
Thanks for the replies! Much appreciated!!
That sounds pretty interesting assuming that the builder would do that. If we could, what would we do with the note to help in this situation? Wouldnt we still have to come up with the rest of the down payment that is due at closing for the $1.85M?
We basically need to see if we can possibly use the equity to pay for the remaining of the down payment due at closing.
Is this something a hard money invester/lender could help with?
Thanks!
Here is the structure:
Sale Price: 2.2 Mil
Downpayment: 175K
Lender Financing: 1650 Mil
Seller Financing: 375K
You already paid the 175K correct?
If so, then the only money you need to bring to closing is closing costs and funds to purchase the note back from the builder.
Not a confroming deal. Rates on the 1.65 Mil will be over 10%
Way to go Patrick!
Thanks for the reply!
Yes, we put down $175K on a pre-approved loan of $1.85M, and we owe about $200K for the down payment still.
So is this really possible?
why not just do an 90% LTV loan or a 80-10-10? You already have 10% in the deal so it should be no problem.
I don’t know of any lenders off hand that will do 90% LTV on a loan of that size.
If you know of one… please share. 
I am looking at Greenpoint right now. I am also gonna check Indymac .
I know indymac will not…maybe greenpoint…but I doubt it.
Patrick,
What State is your home being built in?
Do I understand the numbers correctly?
You have to put down as a deposit the $175K you already put down and another $200K = $375K down ?
Your purchase price is $1,850,000 + $375K down = $2,225,000
Or is it purchase price is $1,850,000 - $375K down = $1.475M
If the second scenario is accurate you can perhaps work something out to have an 80% LTV home mortgage giving you a return of $285K from your deposit of $375K. Based on a home value of $2.2M This will take some complex home valuation (difference between purchase price and appraisal value) and many banks won’t do it. Worst case you can close the first mortgage and then refile to get the equity out to help decrease your costs. See if the seller will pay the closing costs on your purchase mortgage.
Hello everyone!
Thank you all so much for the advice and replies!
We greatly appreciate them all!
ArnieG:
It is the second scenario $1,850,000 - $375K down = $1.475M