Helping Hand On How To Do This Deal
In the beginning of June, I purchased a piece of land in NJ. The county which this property is in is really hot right now. Homes built in the area are selling for $500K.
The specific are as follows:
$50K @ 4.5% = $253.34
Property size is 1.5 acres zoned residential.
Recently a friend of mine told me about someone who bought land (appr. $100k), got a construction loan (100% financed, the construction loan wrapped the original property mortgage), built a home for $200K and then sold the home for $750K. So for $300K he made $400-$450K.
I wanted to know, can this actually be done? What kind of construction loan would wrap the mortgage for the land?
How long do I need to own my land before I can get this type of loan? Any suggestion on how to do this?
I'm new to the building/developing, but I appear to be in the right place at the right time.
I'm sorry for the long post, but I'm seeing dollar signs all over the place. 
What County in NJ?
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Short Sale Practitioners can't predict, or guarantee results... but can take steps to insure the likelihood for success....[ Edited by NancyChadwick on Date 06/24/2004 ]
Normally the lender wants some equity in the deal before they put up their cash for development. If the project stalls they want to know they can bail it out using the owner's equity.
I am not sure that the project was financed as you think. I suspect that if there was such a loan there was some other way the lender was protected (other assets with a lien, guarantees, etc).
As you have no experience the track record will also be an issue unless you hire out the work (and therefore have the added costs).
John
[addsig]
Depending on the market big profits can me had.
Make you factor in all cost include insurance (in CA they have building defect insurance that''s $$$$)