Author Topic: Owner-builder financing..?!  (Read 388 times)

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Offline gbleuc

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Owner-builder financing..?!
« on: April 12, 2019, 04:34:15 PM »
Hi all,

I've been reading through the posts so far that have been related to owner-builder financing, and still have questions. From what I can tell, the responses have been very specific to each region, bank, and individual situation. I'm hoping to narrow down my strategy a bit based on the general commonalities of financing this type of project.

Here are a few things I've seen listed so far:

- Paying cash for land, adding improvements later on such as utilities and/or a small structure, and then using that to obtain financing
- Paying cash for the land and then obtaining a personal loan for a construction
- Finding a general contractor who is okay with being the designated GC on the lending agreement but that allows you to do some (a lot?!) of the work yourself. Not really sure how that would work but saw it mentioned somewhere.
- Continuing to petition banks for approval
- "...get the land and pay for a few years and put a camper on it so you can enjoy.  Pay it down a little and then go in for a construction loan." (Directly from a quote from highlandva:) Not really feasible for me because of the regulations in the area where I'm building, but thought I'd list it here in case it helps someone else.
- "would (it) be possible to work with a contractor who will take on the shell, and allow you to help and finish the inside." (from mgramann)
- Land loan, then paying cash for a small cabin + utilities hookups. (>>Would this potentially increase equity enough to obtain financing, providing the land cost is reasonable? My long-term strategy is to buy a double lot, build modestly on both, and then sell one to offset the cost of the other.)

Does anyone have strategies/resources to add with regards to financing? No need to suggest paying cash for everything as that's not an option, and I'm aware of the idea of phased building.

Also, the area I'm looking in doesn't allow campers/RVs/any kind of "temporary" shelter even while building.

I'm in the planning phases of an owner-builder project in WA and have recently been hit with the reality of how incredibly difficult it is to get a loan for an owner-builder project! These were local banks, too. I was wondering if folks could provide some additional input/strategies based on your experience with this. I spoke with two lenders in the area, and the second one said they didn't know of anyone nearby who did them. When I asked them if I could have a contractor signed on and then have me still do part of the work, they said that would violate the lending agreement. I got an earful about how awful owner-builder projects are; Then I called around to some general contractors to get bids in case I am forced to hire someone due to bank requirements for financing, and got an earful about how dumb I was for building myself (despite that I'd said I wanted to do it, and had some building experience) and how I should just save time and hire them.  :-\ Lol. Definitely made me glad to be on here that's for sure, although maybe a foreshadowing of what I may have to deal with in the future. Hopefully not. I'd love to find a contractor who's like-minded.

So, if folks have ideas here about how to get financing for owner-building (land + construction), places most likely to do this, strategies, etc, please let me know? I would really appreciate it! Hopefully this will help other people with these questions too.

Thank you so much in advance!!!

Offline Dave Sparks

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Re: Owner-builder financing..?!
« Reply #1 on: April 15, 2019, 02:15:49 PM »
Have a contractor build you a shell !  This may not work everywhere but it worked in the nanny state of California. We had one of the best contractors in the county and he let me work with the crew. I also lived in my trailer but i think if you timed it weatherwise there might be other ways to stay. Just get it lockable fast.

We had a lockable shell finished in 5 months and my wife and I took another 18 months to finish. We had a certificate of occupancy in the first year. All we needed was a working kitchen, a bathroom, drywall, and finished electrical. The floors needed to be safe but we had OSB for 14 months.

Good Luck ! There has to be a way so ask the contractors.

"we go where the power lines don't"

Offline gbleuc

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Re: Owner-builder financing..?!
« Reply #2 on: April 15, 2019, 03:25:22 PM »
Yes!! That's exactly what I was thinking. Good to hear confirmation of that as a possibility & that that's what you guys were able to do. I'll be making more calls this week to contractors directly to get some feedback. We'll see how it goes! Thank you for the post & the info, and the well wishes too.

I'm also thinking that depending on where I build, I may be able to do a trailer temporarily if it's hidden/out of the way enough. (The city technically doesn't allow it.) We'll see how it goes!!

Offline MountainDon

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Re: Owner-builder financing..?!
« Reply #3 on: April 15, 2019, 03:46:09 PM »
We have a neighbor who did it like Dave did. Floors were OSB for about 8 years; painted.

Just because something has been done and has not failed, doesn’t mean it is good design.

Offline gbleuc

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Re: Owner-builder financing..?!
« Reply #4 on: April 15, 2019, 03:56:10 PM »
Thanks Don. Good to know - it seems like it's a viable route


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