In real estate investing there are two common types of investments: investments in spec and in custom homes. To start, instead of meeting the general preferences of a larger community, custom homes are constructed with a specific client in mind. This client will have a drawn out and specific plan for the construction of the house. Floor plans will represent what an individual client finds appropriate, economical, and appealing. All of the supplies for building, the colors, and the arrangements will be considered and constructed based upon agreements between the both the purchaser and the contractor.
On the other hand, spec homes or speculative homes, are homes made to suit the general needs of the housing market. These homes will be constructed by Arizona Spec Home Investors who do not have a specific client in mind, but rather are looking to create a home consistent with other designs that are selling well in a given area. To do this, Arizona Spec Home Investors will have researched a favorable floorplan and will have measured out the general costs of the materials needed to build a decent looking home. Suiting the markets general needs permits the builders to receive a quicker turn on investment than dealing with the idiosyncrasies of trying to reach an individual.
By building a general fit for market needs in a profitable and attractive area, Arizona Spec Home Investors are able to get a quick return on investment. Many Arizona Spec Home Investors find that they have buyers before completing construction. Another reason for the popularity of spec homes and the ease of selling is that buyers generally know what they are getting into since they are able to look at other spec homes previously built.
Arizona Spec Home Investors who have been in business for a long period of time are sometimes able to acquire conventional lending. This is often due to a favorable credit history, a strong credit score, a leverageable asset, or a great record of completing ventures and paying off debt. The advantage of obtaining conventional lending is that it offers some of the lowest available rates. These rates diminish the total amount of interest to paid off in the long run. On the down side, is the red tape and the length of the paperwork. Conventional lending offers great rates, but potential debtors are subject to rigorous credit evaluation and stipulation requirements, these taking at times months to complete.
If potential Arizona Spec Home Investors, are unable to meet these stipulations, that is to say they do not have stellar credit scores, businesses with a favorable lending history, or properties to leverage, hard money lending may be the best option. Since hard money lending bases collateral off of property, Arizona Spec Home Investors interested in these types of loans will require property to leverage instead of creditworthiness. Whether the collateral is property that is already owned, or it is created by putting cash down the future investment, it does not matter. For more information on spec loans talk to a broker at Setabay.
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters and 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.