SFH Spec Homes - Sell Land Separately Or Roll Into Mortgage?
We are building several spec homes on lots my partners own. Do you usually sell the lot separate from the house or roll it into one? Benefits of each way?
I spoke to attorneys on consults and cannot get a straight answer.
are you talking about how to sell the finished spec home to a buyer, or to "sell" the lot from the partner for the spec home financing?
You should be able to cash out 80% of the lot if you finance @ the bank with a construction loan.
We are building everything out of pocket.
We are not sure if we shoould sell the lot and the house separate. I do not see why it cannot be a package deal when we are ready to sell the finished houses. A house and the lot it is on.
We have seen builders doing it both ways so I was wondering what are the benefits to selling the lot to the buyer first and then selling the house in a separate transaction.
Hi,
Just a few of my experiences...If you choose to sell the lot, do not use your money to build the house for the owner of the lot unless it is done as a construction loan and, now, I do not even build a house for someone on their land without being on title on the lot, or on the construction loan. You do not want to customize a spec house to a specific someone's needs before closing on it, unless you like their choices and think it will sell well. People can back out of buying it. A possibility is to escrow funds for changes if they do not buy the house.
Good luck,
Terry