What is an owner builder construction loan?
An owner builder construction loan is designed for borrowers who want to acquire residential real estate as well as be the general contractor on the project.
What should you know about owner builder construction loan?
Risk: Lenders view these loans as high risk as they prefer the borrower and general contractor are separate parties.
Qualifications: Borrowers for these loans will need to show a resume of experience, be a professional home builder or hold a general contractor license.
Requirements: Borrowers will need to provide detailed project plans, proformas, timelines, budgets, and models.
What can you do with these loans?
Borrowers can use this loan type to fund an owner-builder real estate investment project or to build a home for personal use.
How can investors benefit from these loans?
Exchange Traded Funds (ETF) are investment funds that make investing in real estate accessible to the average investor. Investors can purchase homebuilder focused ETFs in the residential real estate construction industry. An investor can purchase shares of an ETF focused on the residential real estate construction industry and become a partial owner of the funds’ investments.
Homebuilder ETFs
iShares US Home Construction (ITB) is an ETF that invests in home construction. The funds market capitalization sits at $1.75 billion. ITB offers a .41% dividend yield.
SPDR S&P Homebuilders ETF (XHB) is an ETF that invests in homebuilders. The funds market capitalization sits at $1.18 billion. XHB offers a .66% dividend yield.
Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL) is an ETF that invests in homebuilders. The funds market capitalization sits at $1.37 billion. NAIL offers no dividend yield.
Hoya Capital Housing (HOMZ) is an ETF that invests in homebuilders. The funds market capitalization sits at $56.59 million. PKB offers a 3.18% dividend yield.
