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It falls down to the value of your proposal, eg: Land: $25,000 Resale at $20,000 to $30,000 Tiny House: $25,000 Resale at -$5000* to $35,000 Normal House: $1
by _s 11y ago
It falls down to the value of your proposal, eg:
Land: $25,000
Resale at $20,000 to $30,000
Tiny House: $25,000
Resale at -$5000* to $35,000
Normal House: $100,000
Resale at: $75,000 to $125,000
* Next owners may want it removed
A $50,000 loan doesn't make sense / is too risky.
I know the above is grossly over simplified, and there's hundreds to thousands of factors going into a risk / valuation but currently banks aren't equipped to handle tiny homes, not to mention the market for them isn't as big yet to justify it.
- SwellJoe 11y ago"Land: $25,000 Resale at $20,000 to $30,000" I think you're assuming I was trying to get a loan to build the house. The loan was for the land itself, and I planned to self-fund the house construction. So, I was looking at property that cost around $75k, and was hoping to get a loan for $50k of that (with $25k down). The tiny house was not at all part of the equation on the loan (except in the sense that had I been planning to put a big house on the land and was contracting a home builder to do it, the bank might have treated it more like a regular house and been willing to loan me money). But, yes, part of the problem is that land has much less predictable resale value than houses, and that was the usual answer I got when being told, "No".
- seanmcdirmid 11y agoBuilding something on land that isn't standard reduces the value of the land because it has to be removed as annoying. Undeveloped land is risky to finance because you have no idea how the borrower will develop it. There are a lot of whacky people out there.