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Dec 30th, 2023
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 building/lending money on spec houses
#12293484
06/14/17 03:09 PM
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Joined: May 2007
Posts: 45,067
WAWI
OP
TFF Guru
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OP
TFF Guru
Joined: May 2007
Posts: 45,067 |
I have been approached about partnering up on a couple spec houses. I have known the builder for long time. Any of you done this type of stuff, how were deals set up. I would be first and only lien holder.
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Re: building/lending money on spec houses
[Re: WAWI]
#12293488
06/14/17 03:11 PM
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Joined: Dec 2011
Posts: 9,012
H.Town_paddler
TFF Celebrity
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TFF Celebrity
Joined: Dec 2011
Posts: 9,012 |
Snap necks and cash checks, bro!
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Re: building/lending money on spec houses
[Re: WAWI]
#12293504
06/14/17 03:17 PM
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Joined: Mar 2010
Posts: 5,458
Chris Borden
TFF Celebrity
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TFF Celebrity
Joined: Mar 2010
Posts: 5,458 |
Wth is a spec house. Guess I will go google it.
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Re: building/lending money on spec houses
[Re: Chris Borden]
#12293515
06/14/17 03:23 PM
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Joined: May 2007
Posts: 45,067
WAWI
OP
TFF Guru
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OP
TFF Guru
Joined: May 2007
Posts: 45,067 |
Wth is a spec house. Guess I will go google it. Builder builds it without a buyer, non custom.
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Re: building/lending money on spec houses
[Re: WAWI]
#12293524
06/14/17 03:25 PM
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Joined: Nov 2010
Posts: 12,094
Urban Fisher
TFF Guru
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TFF Guru
Joined: Nov 2010
Posts: 12,094 |
Well it's called a spec (short for speculation) house for a reason. Sorry I don't have anything to offer, but good luck!
Jane says I've never been in love - no
She don't know what it is
She only knows if someone wants her
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Re: building/lending money on spec houses
[Re: WAWI]
#12293530
06/14/17 03:28 PM
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Joined: Oct 2012
Posts: 9,446
SgtDag
TFF Celebrity
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TFF Celebrity
Joined: Oct 2012
Posts: 9,446 |
What's being put in? And what is your estimated return?
"If you're going through hell keep going." Winston Churchill I open mouth kiss my sisters
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Re: building/lending money on spec houses
[Re: WAWI]
#12293545
06/14/17 03:32 PM
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Joined: Aug 2003
Posts: 30,929
RedRanger
burro desagradable
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burro desagradable
Joined: Aug 2003
Posts: 30,929 |
So you are going to be a Hard Money Lender?
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Re: building/lending money on spec houses
[Re: SgtDag]
#12293548
06/14/17 03:32 PM
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Joined: May 2007
Posts: 45,067
WAWI
OP
TFF Guru
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OP
TFF Guru
Joined: May 2007
Posts: 45,067 |
What's being put in? And what is your estimated return? We are gonna sit down and put numbers to things in couple weeks, I'm more or less looking for how something like this is structured, pitfalls, etc. I know we have a few builders on here. I'd be looking for a 20 percent return on a deal of this nature to feel good about it.
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Re: building/lending money on spec houses
[Re: RedRanger]
#12293550
06/14/17 03:33 PM
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Joined: May 2007
Posts: 45,067
WAWI
OP
TFF Guru
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OP
TFF Guru
Joined: May 2007
Posts: 45,067 |
So you are going to be a Hard Money Lender? Yes
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Re: building/lending money on spec houses
[Re: WAWI]
#12293570
06/14/17 03:37 PM
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Joined: Jan 2002
Posts: 9,880
swalker9513
TFF Celebrity
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TFF Celebrity
Joined: Jan 2002
Posts: 9,880 |
I could be completely wrong in this, but it sounds like the builder is looking to tie up someone else's money for a couple of years while he is cashing checks--and very little return if any.
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Re: building/lending money on spec houses
[Re: WAWI]
#12293572
06/14/17 03:38 PM
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Joined: Jan 2009
Posts: 50,387
fouzman
Methuselah
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Methuselah
Joined: Jan 2009
Posts: 50,387 |
You don't seem like the "partnership" type to me?
Coincidence is His way of remaining anonymous.
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Re: building/lending money on spec houses
[Re: WAWI]
#12293585
06/14/17 03:41 PM
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Joined: Dec 2006
Posts: 7,579
Arkansas10 bass
TFF Celebrity
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TFF Celebrity
Joined: Dec 2006
Posts: 7,579 |
can be an excellent venture with the right builder.
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Re: building/lending money on spec houses
[Re: WAWI]
#12293587
06/14/17 03:41 PM
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Joined: Oct 2001
Posts: 15,684
Mo
TFF Guru
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TFF Guru
Joined: Oct 2001
Posts: 15,684 |
What's being put in? And what is your estimated return? We are gonna sit down and put numbers to things in couple weeks, I'm more or less looking for how something like this is structured, pitfalls, etc. I know we have a few builders on here. I'd be looking for a 20 percent return on a deal of this nature to feel good about it. My Step-son is a builder in Smith County, from listening to him discuss his business, there is no way a 40% margin there to be split with a lender. If this were true , I would be there on every house he builds. My next question would be why is he seeking funding from you ? Is he in trouble with his normal lenders ? good luck and be careful MO
 MY BACKYARD , 20,000 ACRES , NO MOWING 
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Re: building/lending money on spec houses
[Re: WAWI]
#12293589
06/14/17 03:42 PM
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Joined: Dec 2011
Posts: 9,012
H.Town_paddler
TFF Celebrity
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TFF Celebrity
Joined: Dec 2011
Posts: 9,012 |
What's being put in? And what is your estimated return? We are gonna sit down and put numbers to things in couple weeks, I'm more or less looking for how something like this is structured, pitfalls, etc. I know we have a few builders on here. I'd be looking for a 20 percent return on a deal of this nature to feel good about it. If you need 20% to feel good about it then I don't think you're going to feel good about it.
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Re: building/lending money on spec houses
[Re: WAWI]
#12293604
06/14/17 03:47 PM
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Joined: Nov 2006
Posts: 660
J Bays
Pro Angler
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Pro Angler
Joined: Nov 2006
Posts: 660 |
I've done several spec development projects (commercial) and a have a few opinions on the matter:
- Spec real estate, regardless of type, is the ultimate dice roll
- if the GC approached you because he needs a financial backer, his fees should be at risk just like your money. In other words, he shouldn't make money until you do.
- The only way I would do one-off spec residential deals are in areas of high demand that are land constrained (like knocking down old homes in desirable urban neighborhoods). I wouldn't touch anything in the burbs... too much competition and price fluctuation.
If I may ask, what is the overall value proposition that makes this deal unique from every other spec deal?
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