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[quote=Anonymous][quote=Anonymous]We looked seriously at this and ended up going the tear down route. Your numbers are actually in the range where it can make sense.

For lenders, you want a construction-to-permanent loan. A few that come up a lot around here are U.S. Bank, PNC Bank, and Wells Fargo. Also check local credit unions. The key is finding one that will give you full credit for your lot value as equity and offer a one-time close.

With a $700K lot, you are in a strong position. Many lenders will treat that as your down payment, which can significantly reduce how much cash you need to bring in.

On keeping the 2% mortgage, almost certainly no. The construction loan will pay off your existing loan, and lenders will not leave a low-rate mortgage in place on a property being torn down.

One thing to keep in mind is that the numbers tighten up fast. Demo, permits, rent during construction, and higher interest rates add up. It can still work, especially if you plan to stay long term, but it is not as wide a margin as it first looks.[/quote]

+1. The margins for OPs specific situation are pretty small unless similar new build comps are closer to $2.4-2.5M. The $700K lot value in particular gives me pause as a bit low (crazy, I know, but that should be closer to $1M for a close-in desirable lot). Same for new builds nearby going “close” to $2M - they should be mid 2s or higher for areas with the least amount of depreciation risk. This sounds like a property zoned to Justice or similar to me - I wouldn’t do a teardown for that but to each their own. [/quote]

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