Teardown
I have a rental property in an up and coming area. I want to tear down the house and build a new home to sell when I finish. The existing rental has a mortgage . The new house will have a substantially higher value. I will be paying cash for all construction costs. Any caveats in tearing down the existing house that has a mortgage?
check the documents. Its entirely possible you mortgage has a provision prohibiiting you from demolisihing the house (or otherwise reducing the value of the collateral).
This may or may not be a problem. As the lender, they may even loan you the money to build the new house.
Im sure the proivision is there. My concern is the period between tearing down and finishing the new home. But my thinking is as long as I keep paying the payment how would they know. And, what they don't know won't hurt them.
Besides when I'm finish the property will be alot more valueable.
It doesn't hurt to ask. Make your case for the higher value. Lets say they are not convinced, this means you should at least consider the option that you might be wrong. Lets say they are, then lending the demolition and the new construction money is extreemly likely.
Worse case: they say no and you are still determined to go ahead. Wait thirty days and go ahead. But pull out all stops once you start, Get the new house built fast. Refinance based on the higher value and pay them off.