Construction loans?

[BK911]

I want to build a house on a lot I have. Unfortunately I can not find anybody willing to loan money to an owner builder. I can get a loan if I pay a general contractor. However, I do not want to pay a GC. Anybody have an extra $100k they don't need?

So anybody know a company that will still do construction loans to an owner builder in FL?

Or should I forget about building and buy another house? The market is pretty good for buyers.

[looneybin]

Most lenders stopped funding owner/builder long ago, they were having issues with the projects not being completed, then they had nothing to secure the loan against.
Some building dept's even don't like issuing permits to owner/builder for the same reason.

[Big Ed]

Originally Posted by BK911

Or should I forget about building and buy another house? The market is pretty good for buyers.

I would think this is your best bet. There's an oversupply of homes, prices are down, and conventional mortgage rates are cheap. I would think you could do better this way, especially if you are in a position to hold the land until the market recovers.

[BK911]

I would rather build because for the same money as a 3/2/2 I can build a 1/1/6.

[Big Ed]

Lending banks might also have an issue with the collateral value of your proposed 1/1/6! You need a lender who is a car guy.

[kach22i]

Have you included all of your costs? I think there are some newer wind resistance provisions of the code, it depends on which area you are in. You might need someone (architect/engineer) to seal the drawings, ask the city about this.

http://www.myfloridahouse.gov/FileStores/Web/Statutes/FS07/CH0553/Section_0553.79.HTM

(14) Certifications by contractors authorized under the provisions of s. 489.115(4)(b) shall be considered equivalent to sealed plans and specifications by a person licensed under chapter 471 or chapter 481 by local enforcement agencies for plans review for permitting purposes relating to compliance with the wind resistance provisions of the code or alternate methodologies approved by the commission for one and two family dwellings. Local enforcement agencies may rely upon such certification by contractors that the plans and specifications submitted conform to the requirements of the code for wind resistance. Upon good cause shown, local government code enforcement agencies may accept or reject plans sealed by persons licensed under chapter 471, chapter 481, or chapter 489. A truss-placement plan is not required to be signed and sealed by an engineer or architect unless prepared by an engineer or architect or specifically required by the Florida Building Code.

[Superman]

This must be your lucky day. You see, the banks are sitting on brand new piles of cash so I am confident they are anxious to fund new projects to revitalize the markets.

[BK911]

I am sure I have missed some costs. I got a quote from a precast wall company for $30k installed, and $25k from the truss company. I basically doubled it for foundation, site work, utilities and interiors. I could do most of the utility and interior work myself.

I designed and drew up the house. I am a FL PE so I could stamp the drawings. Plus the truss company stamps their stuff; likewise for the wall company. I couldn't be the special inspector though.

So George, as an architect what do you think about this:

http://www.weaverprecast.com/florida/

A little more $ than block but 'better'.

And super, I was thinking the same thing. Wouldn't giving loans to people with excellent credit history and income help stimulate the economy? Why make it harder for qualified people to borrow money?

[Porsche-O-Phile]

Tilt-up is good and makes sense in FL but obviously it's all about the connection details...

Best of luck getting it funded - construction is very, very tough right now.

[kach22i]

Originally Posted by BK911

So George, as an architect what do you think about this:

http://www.weaverprecast.com/florida/

I'm up here in Michigan with basements and clay soil. My story goes back about ten years ago, on one of the the Habitat for Humanity houses I designed, they elected to try something similar (to the posted product) for the basement walls. With all the free labor we had available for back-filling by hand/shovel the subcontractor decided he would beat us to it (perhaps to cover any less than perfect work) and do us "a favor" by back-filling with his bulldozer. The walls bowed in a little despite the kickers/lean-to's, but did not fail.

It would have been better to get the floor joists and floor decking/sheathing/plywood in so it acted as an reinforcing diaphragm, but no failure or leaking that I know of today.

The short of this story is, that when using something "different", make sure EVERYONE on the project is aware of it's differences. The walls we used were different than concrete block or poured concrete basement walls and were not quite up to the antics found in real life.

The little I know of Florida code, I know there are WINDBORNE debris zones in Florida as well as crazy wind loads, I just Googled it. You will need to verify (in writing if possible) that all products (like windows) are up to the task.

Remember, the "Code" is a minimum, you can always best it and often should.

[rammstein]

If you get financing, I will be shocked. Banks are beyond tight at the moment. Tight like a $3.4MM virgin...

[Zeke]

Hard to imagine that a bank would fund a project just because a contractor was doing it over an owner builder. Banks do what they do, but a lot of contractors are far worse than many OB's.

I would think that you could approach the bank with a better construction schedule, bids in place and a bit more of an equity position. Or, hire a contractor as a consultant and give him/her a small fee to pull the permits and look in once a week. I'd do that in a heartbeat for you.

All a bank is looking for is the best place to put the money. Show them the best place.

[Superman]

Originally Posted by BK911

And super, I was thinking the same thing. Wouldn't giving loans to people with excellent credit history and income help stimulate the economy? Why make it harder for qualified people to borrow money?

I'm with ya. There is apparently a LOT about economics I do not understand. Projects are needed, revenue, work, etc. These would appear to be "good" things to me, both from the perspective of consumers business people and lenders and everybody. Plus, I know a number of economics geniuses post here who take the position that what's good for people, and workers, and consumers, and the economy.....is also good for business. I know they will post here shortly to explain how we might gift hundreds of billions of dollars to banks only to see credit dry up. Not tighten, but simply DRY UP. I am eager to hear why they should receive my ongoing faith and support.

[jyl]

Many banks are in trouble, their existing loans are going bad at such a rate that they believe they need to hold on to cash to meet required capital ratios and/or survive.

Banks also see real estate values still declining and forecasted to decline further, and also see how poor the recovery rates are for foreclosed real estate, are not eager to loan on collateral that is falling in value. I don't know anything about construction loans but I'm guessing the fact that the collateral doesn't even exist yet can't help.

Basically, the govt has injected a large amount of capital into banks but at same time a large amount of capital is evaporating as asset values fall and borrowers default. Also, after a decade of enthusiastic lending, loan officers have swung back to fearful lending - the old human thing of over-compensating.

The govt's actions in 2008 were meant to keep banks/banking system from collapsing.

Any talking heads and Congressmen who is surprised/outraged that bank lending hasn't rebounded is, err, under-informed. I don't know many (any?) informed investors/economists/etc who thought those actions alone would be sufficient to cause bank lending to rebound. Investors expect consumer credit to remain very tight in 2009 - if investors thought credit was about to loosen, market would be in a huge rally now.

There was a study of financial crises and their cost to the country and economy, looked at tens of such crises in various countries over the past many decades. I can't recall the author but you might be able to find via Google. In a nutshell, the typical cost as % of GDP is considerably more than the US govt has spent so far plus what the govt plans to spend in 2009.

In other words, don't expect a quick or easy solution. Injecting a few hundred billion of capital in 2H08 is far from enough. Will need much more action (incl money), and more time as well.

That said, I recall some PPOT posts by someone who ran a community bank, saying that community banks had plenty of money to lend and were doing business as usual. This was a few months ago. So maybe better luck going to smaller banks?

[911Rob]

Find a builder that will 'assist' you to build the home.
He'll make a few bucks and you can ride on his New Home Warranty program. He can do all the inspections he wants to secure his peace of mind on quality of construction. In my area NO owner/builders are permitted without being qualified first; period. House cannot be sold without the HPO certificate.

Or, become a professional builder; it's not too hard if you're qualified?

Good luck, building houses is great fun!

[BK911]

I thought about having somebody 'help' me. Unfortunately the checks have both parties name on them. I am not sure about giving somebody else control of my money.

I only need $100k. Maybe I can auction off my virginity? I won't be able to sit for a bit, but at least I get a house out of it!

[JeremyD]

Regions did mine - but three years ago. Good luck getting it now. From experience - It's easy to spend a ton of money just on windows that meet the Florida building codes.

[911Rob]

Ha! You're funny

Find someone you can trust? It's not that big of an obstacle.
It's never about the resources, but always about the resourcefulness!
Where there's a will, there's a way, they say.
Good Luck!

[Superman]

Residential construction companies are currently somewhat motivated. In fact, everyone is motivated except the banks. You know....the guys with our money.

[legion]

One of my friend's fathers owns a construction company. Last time I talked to him (the father), in October, he was telling me that he was still going strong. He could not get financing from any of his traditional sources. Considering that he builds bank branches for a living, he eventually had to go to the banks he was building for and tell them that they had to finance the construction, or he wouldn't build them a branch.

Construction financing is tough for the big companies right now. I think it is nonexistent for individuals.