Arizona Spec Home Financing is back in a big way, but not everyone who applies for a loan will qualify. Make your application stand out from the pack by addressing a few often-overlooked issues.
1. Have a builder with experience and a good reputation on your team. People move into spec homes from all walks of life. Some are coming from the fix-and-flip biz while others are relying on their natural skill or come from some kind of construction or repair-related background. This kind of experience does matter and will help you have a more successful outcome, but it’s not enough to get a loan. If you, personally, do not hold a contractor’s license and do not have previous projects which demonstrate your success, you aren’t going to get Arizona Spec Home Financing. Find someone to partner with on your first few projects who already has a good reputation in the industry and you’ll get more approvals.
2. Bring an appraiser on board early. It may sound strange to have a house that hasn’t even been built yet appraised, but you can get an estimated value based on your plans and similar homes in the area. An awesome appraiser can also give you tips and ideas before you build, so that you can pivot your plans to collect more cash if anything has been overlooked. Most lenders will want to see the appraisal too.
3. Be prepared to put some skin in the game. The amount of your down payment will vary based upon the lender, but most builders have to put 20-25% down.
Show Lenders You’re the Real Deal with a Detailed Plan
You’ll need to be well beyond the idea stage when you approach lenders for Arizona Spec Home Financing. It may sound like you’re putting the cart before the horse—how can you plan if you don’t know how much you can get? That’s not true when it comes to applying for loans. Your investors will want to know how you plan to spend the money, what your timeline is, and what will be going into the finished project. Be prepared with floorplans, a full materials list, and other items which showcase your budget and the scope of your plans.
If you can plan it, you can successfully fund it.
There are many forms of Arizona Spec Home Financing, though chances are you’ll be looking for Arizona Hard Money Loans for this. In these cases, you’ll need to purchase the land to build on and can then use that as your collateral for the building portion. Lenders may also allow you to use other assets as collateral. For example, if you’ve got investment properties already, you may be able to use one or more of them. Knowing which asset you’ll be leveraging can also help you identify how much money you’ll have to spend before planning. Try to keep your costs to no more than 70% of the asset you’re leveraging. Yes, you may be able to get as much as 85%, but not all lenders will go this high, so it’s important to start off with conservative estimates and go from there. The same mentality will help you immensely throughout the whole approval process.
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
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.