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Construction Loan to Build on Property You Don't Own?

4,343 Views | 6 Replies | Last: 4 yr ago by Martin Cash
lawless89
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8:54p, 9/19/21
Like the title says…

Long story short, my parents are going to build a barndominium on our rural land where we also live. They don't have the cash to build outright until they sell their current home. If they don't own the property, would they get approved to build? Other options?
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jja79
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9:34p, 9/19/21
After they build who will own the property?
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lawless89
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In reply to jja79 • 10:06p, 9/19/21
jja79 said:
After they build who will own the property?


We will. Basically we are letting them build on our property because it's going to save them money. Grandparent benefits as well!

They are meeting with an estate attorney as well just to get everything on paper for when they pass.
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jja79
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7:25a, 9/20/21
The owner of the property will be able to secure construction financing. If they have sufficient equity in their existing home a HELOC might work.
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lawless89
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In reply to jja79 • 7:43a, 9/20/21
So not an option for my parents to get the loan to build on my property?

We would rather not get tied up in the financing part of it if we don't have to.
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jja79
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9:22a, 9/20/21
The real property and improvements secure the construction loan so the owner of the real property must be on the loan.
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SteveBott
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1:34p, 9/20/21
Carve out just enough property by survey, if in Texas, gift it or sale foe nominal amount to parents, then they do the loan.

Ask your attorney about if this can be done. Probably more complicated then this post but doable.
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Martin Cash
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In reply to SteveBott • 4:12p, 9/20/21
SteveBott said:
Carve out just enough property by survey, if in Texas, gift it or sale foe nominal amount to parents, then they do the loan.

Ask your attorney about if this can be done. Probably more complicated then this post but doable.
Most counties have a minimum tract size for a residence, usually one acre.
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