St. George Land update
August 24th, 2006 by KenricI think I should start calling this my “Land just east of Hurricane” because that’s where it really is. I have just begun talking to a developer about building some spec homes on my lots out there.
I don’t have any details yet on how this deal would work, but according to him there are 4 homes being built in the subdivision now. He is going to build a home out there soon and figured that if he built 2-3 at a time he could save in build costs. However, he doesn’t want to buy the lots from me and build, he wants to do some sort of I supply the land and he builds on it and we split the profit.
The problem is he has to get a construction loan to build the home and there would be no collateral on this loan because I own the land. I may have to get the construction loan for the house which is something I don’t want to do.
Posted in Real Estate | 3 Comments »
Stumble it!
It sounds like you’ll be assuming all the risk here.
By Clifford on Aug 24, 2006
Agreed. If I have to get the construction loan myself then I’m basically just hiring a builder to build the house. In that case, I should get 100% of the profit when I sell.
Now if he provided the funds and I provide the land, I would be fine with splitting the profits.
Ideally, what I would like is for him to build a house on both of my lots and I just give him one lot in exchange for him building a home on the another.
By monarchcrest on Aug 24, 2006
Hmm.. Why not form an LLC with you and him as equal owners. Transfer title to the land to the LLC. The LLC gets the construction loan, which should satisfy the bank’s collateral requirement. When the house is sold, the LLC will get paid and since you are equal owners, you’ll split the profits.
By Shaun on Aug 25, 2006