Quote:
Originally Posted by calgarywinning
I think in many times where a structure is being demolished, it depends on the value of the lot as it stands without structure. Many times a lot with an older building will be valued just the same as without structure.
However, you will need a line of credit which requires a higher down payment. Then when a new structure is being built you will need a builders mortgage. Finally, when the construction is complete you will receive a regular mortgage. Mortgage is latin for death loan.
Caveats are there are a lot of expense that you need to take into account. You need to deal with the insurance company and have builders insurance which is 4 to 6x more expensive that homeowner insurance. Carrying costs, city tax cost.
Also, the cost and expense of having to live elsewhere while the project is underway.
So I agree, it's an arduous task and being hit in the the face constantly by the 2 x 4 of expense is stone cold.
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You can certainly speak with the mortgagee and be upfront about what you're doing, but you're probably going to pay as much as bridge financing in interest.
Course of construction insurance isn't really all that bad as I experienced it. But with the draw schedule not always lining up with your invoicing, that's why I say you should have a float of around $100k, especially if you happen to be operating as your own general contractor, which some people do.
I don't know Deegee.. seeing as how you almost never see individuals, but rather developers (small or large) buy empty lots for development with a mortgage, I'm going to have to say that we might be talking about different things.