Loans for spec houses are a tiny percentage of loan market, so they can be confusing for would-be borrowers. Here's how they work and how to increase your chances of getting approved for one.
A spec loan is loan for the construction of a "speculative" home. In other words, it's a home for which the builder has no buyer. If you're thinking of building a spec home and you don't have millions of dollars at your disposal, you'll want to apply for Arizona Spec Home Financing. Let's look at what you'll need to get started and how you can boost your approval chances:
● Go for an improved lot. Spec loans are risky but you can reduce your risk by opting for an improved lot. Improved land — as opposed to raw land — already has roads, sewer lines, electric wiring, and usually a proximity to recognized urban spaces. This makes the construction significantly faster and easier, which in turn makes the loan less risky.
● Think about speed. If this is one of your first spec homes, choose a plan that you can knock out quickly. A shorter construction schedule will keep budgets lower and offer less chance for major hiccups. To a spec home lender, this makes the loan less risky.
● Secure the loan with the lot. If you're worried about getting approved, one option is to offer the lender equity in the lot as a down payment.
● Spec loans are nicknamed "story loans." There's no buyer, so the builder and lender have to use their imagination to envision the final product and its viability in the market. To frame the loan as an opportunity and not a risk, you can tell a "story" — where you got the idea, what you want to do with it, and where you see it ending up down the road.
Documents You Need for Arizona Spec Home Financing
What do you need to have on hand to qualify for Arizona Spec Home Financing? It's a lot less than you might think. Much of it is documents you'll already have for your project. Namely, detailed budgets, precise plans for the property, and all the requisite permits for building in the area.
Start Your Spec Home Adventure Today
Once you've got your plan together, getting funding is the key to finally breaking ground. Here at Level4Funding, we offer Arizona Spec Home Financing for up to 24 months, customizable draw programs, loan-to-value ratios of up to 90 percent, and rates starting at just 9.5 percent. Speak with us today to see how we can partner on your spec home.
Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.
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