In this episode, Dan discusses how bridge loans work, how to build on a vacant lot, how to select a builder and the types of loans that are available.
00:00 WILKINS It's today's show that's the Colorado Dream House team on your host the Apollo. I'm coming to you live from Denver Colorado I hope you're off to a good start today in enjoying the week. If you're new to the program as always this is all about real estate. We help you navigate the real estate business. No matter what part of the country you may be in. So if you've got a question about buying selling or investing in real estate you're want to tune in right here every Tuesday and Thursday to get that information. As always Again please leave your comments questions leave them here on Facebook. Call us at 7 0 4 4 6 6 3 to 5. E-mail us at team at Colorado Dreamhouse we want to help you. We want to hear from you. And again just just love you to participate if you've got a real estate related question.
00:54 Two things we like to accomplish every week we want to do a little market information and we want to answer your questions so let's go with market information. Step. On me if you heard this before.
01:06 Then I would put my house on the market if I knew where I was going. Yeah that's a problem in Denver when the inventory so so low at 30 year lows. People will sell their homes but they are unsure where they would go or what would be available if anything that they may like. So what we hear is this. Day and I will put my house on the market as soon as I find a replacement home home that I want to buy. And so we kind of start this process in reverse. It used to be we put your house up for sale. It went under contract and we went and found a new home. Now what we're doing is we're finding a new home and then putting your house up for sale. And so you may be similar in that that that means that you have the money to buy the new house.
01:59 Even though you haven't sold your house. Not necessarily. Let's just say you do need the equity and the money out of the sale of your house to purchase another house. Right. What we can do is called a bridge loan. And basically it's a short term loan of three to six months. That's in addition. To the loan that you're getting for your new home. And basically the bridge loan pulls the equity out of your home. Let's see how$100000 in equity. You need to sell the house you're going to use that$100000 as a down payment to purchase the new home. With the bridge loan is going to do is it's going to pull out that act when that hundred thousand dollars out of the house. And we're going to give it to you in the form of cash and then you're going to use that money as your down payment to go buy the new house.
02:49 Your clothes on the new house. You'll move into the new house and then you'll put your house up for sale once you're out. What's that old house goes under contract and is sold. You will pay back the bridge loan that you took out for$100000. That's it. I know a couple of lenders that specialize this will not only finance the bridge loan but to finance the new home. So if this sounds like this would be a great alternative for you. Contact us so we can put you in touch with them and give you more information. We find a lot of people going this route because they want to find a house that they're moving into first.
03:30 Before they give up the one they're in now. Right. Make sense hopes of. Questions. The color dream Dreamhouse team when building. New. Meaning a new home on a vacant lot. How do you know how much money to spend on the construction of the home. Can we spend any amount we want. Well yes of course you could spend any amount you want on the construction loan however. You run the risk of devaluing the land. What do I mean by that. If you buy a piece just the dirt and dirt is 500000. You shouldn't spend five hundred thousand on that construction for a total of a million. Because you're going have a very difficult time. Reselling that property and recapturing the amount that the dirt cost you the 500000. So what you've done is if you've only spent 500000 on the construction of the house you've now devalued the land and you're not going to get that money back when you go to resell.
04:33 We like to tell people to use the three times rule. So if the land is 500000. Multiply that times three. That would put us at 1.5 million. That means we've spent 500000 for the way in and we spent 1 million on the construction. Now that's a scenario where we haven't devalued the land and we've built the right amount of house for the cost for the purchase of the last.
05:00 Right and you can do this with anything you buy a$300000 will multiply times three. That means when the house is completed you should be all in it 900000. OK. Otherwise again you run the risk of devaluing the land and never be able to recapture that money.
05:17 Hope that makes sense. Your color of the Dream House team when buying a new subdivision can you use any building you want. Generally
05:26 not the way the subdivisions are planned to develop these days is that the master developer usually says you can use as a builder. They might give you three options or four options or eight options. In the case of what we are talking about a few weeks ago and certainly ranch you know I think there's eight different builders in there and they reach out to a variety of models but they are the exclusive builders to Sterling ranch and you cannot bring in. Your own builder. That's not the case in every subdivision. It's certainly not the case of what we call an enfilade. What isn't it. Phil WATT Well let's just see we're driving through a subdivision that's been established for a long time and been closed out by the builder many years ago and there just happens to be a vacant lot in there.
06:16 That's what we call in. Maybe it's a cul de sac of 12 homes and one of the lavs never got built in so you can go in and purchase that lot and chances are you can bring any building you want to the equation. Gary. Your column in house team. I find it very confusing to follow the lending industry that means to us. Can you help us understand what loans are available to us. Well sure. Any real tour like us or our team of Realtors that do this full time that sell as many homes as we do in a calendar year year in and year out.
06:55 Part of our job is to stay on top of all of the lending programs and they're constantly changing. And each lender probably has a different program. Or a variety of different programs. So one person's got this special 1 percent down program but the other person does it. So you need to know who to go to for what your specific need is. I say by all means give us a call. We're talking to a dozen lenders at all times. I know of probably two dozen different type of lending programs. And again one of the things that we do that I think is valuable to our clients is we find you cheap money. We find you the best way to finance what it is exactly you want to do and we'll put you in touch with that lender. Hope that helps. All right.
07:44 Last week on Thursday I told you we had about five properties coming to market in the next eight days. Just on Friday we put a new property on the market it is 9 5 5 Eudora's street and it is condo ETEO 4 but better yet it's the penthouse. On top of that building. It is the top floor penthouse with amazing views of Denver downtown and it's about 21 million square feet. Too bad. Two and a half bath. I think you're really going to like it. It's a great location. Check it out. 9:45 Eudora's street go to our website. Colorado Dreamhouse dot com. Forward slash Eudore. This week we've got four more properties coming on the market. So again if you're in one of those scenarios where that might we just can't find anything we keep looking. Make sure you contact us at the Colorado Dreamhouse TV and find out what we've got coming on the market because we're always bringing new properties to the market and this week we just have to be bringing four of them so we can check in with us.
08:49 Well that's it for this week's show. We're going to be back on Thursday. Hope you have a great week and keep the questions coming. Thanks for tuning in. We'll talk to you on Thursday.