Construction Financing-"One Time Close" Or Not?
I have started a SFR project. Lot purchased, survey complete, builders picked, grading scheduled.....Now, what do you all recommend. "One time close" type financing or regular construction financing.
Some specs:
lot - $77k, I own it free and clear
cost of building SFR - $120k
Costs of a one time close by Countywide - approx 8k (thats the whole deal including interest on the draws)
More traditinal financing also costs about 8k.
Thanks in advance for the help. Brian
It would depend on your goal, to flip, or long term rental.
If your goal is to flip, you may want to make the loan assumable for an added sales ability, and make sure there is no prepayment penalty so that you can sell it faster. Or if you can find a presale buyer just set the loan up with them.
If your goal is for a longer term rental, you will want to stay away from Adjustable rates as the rates will go up in the not so distant future. If you want increased cash flow you may go for an interest only loan, or a balloon payment to lower your monthly bills.
Since both will cost the same regardless, you will need to look at the meat of the contracts and see which will better suit your goals.
Good Luck,
Kyle