How a Builder Funded a Spec Single-Family From Dirt to Sale With 12% Down
Sources: Small-Balance Commercial Refinance, PeerSense, Asset-Based Lending Hub
How did PeerSense solve this scenario?
~$96K profit on first spec build. An experienced custom-home builder who'd been building someone else's homes for 12 years. PeerSense placed the deal into ground-up construction with conservative leverage, asset-based underwriting, and fast execution. Composite case study based on the deals we close every month.
, PeerSense Composite Case Study · 2026-05-01
At a glance
| Land cost | $95K (75% financed) |
| Construction budget | $385K (100% financed) |
| Total project cost | $480K |
| ARV | $625K |
| Total loan | $456K (~95% project cost) |
| Borrower out of pocket | ~$58K |
| Term | 18 months interest-only |
| Sale outcome | $618K in month 14 |
| Net profit | ~$96K |
The borrower
An experienced custom-home builder who'd been building someone else's homes for 12 years. He had a small crew, deep relationships with subcontractors, and an established reputation in his market, but every house he'd ever built belonged to the customer who hired him. He wanted to take on his first spec build: a project he funds and owns until sale, rather than building someone else's house for a contracted fee.
He'd identified a buildable lot in an in-demand school district where new construction was selling at a premium. The lot was $95K. The build would run roughly $385K. The completed home should appraise around $625K. The math worked. He just didn't have $120K of his own cash to put into the project upfront.
Why traditional financing said no
Banks fund construction for owner-occupants, the family that's going to live in the house. Spec construction (where the builder owns the home until sale) is a different animal entirely. The few banks that fund spec construction want 25-30% down on the total project cost. On a $480K project, that's $120K, money he didn't have sitting idle.
How PeerSense solved it
We placed the deal into a ground-up construction program designed for investor-builders. The lender funded:
- 75% of land cost ($71K of the $95K)
- 100% of construction costs ($385K, drawn in scheduled installments)
- Total loan ~95% of total project cost
- 18-month interest-only term to cover land acquisition, vertical construction, and sale
The draw schedule was tied to inspection milestones, foundation, framing, mechanicals, drywall, finishes, completion. He drew funds as each phase was inspected, which kept his interest cost down and aligned the lender's risk with actual progress.
The outcome
- Vertical construction completed in month 11
- Listed in month 12, under contract in month 13, closed in month 14
- Sale price: $618K
- Net profit after all costs: ~$96K
- Started spec build #2 with proceeds plus a second loan
Frequently asked questions
What's a spec construction loan?+
A construction loan where the builder owns the home throughout construction and intends to sell it on the open market once complete, as opposed to a custom build where the future homeowner is the borrower.
How much down payment do I need for a spec construction loan?+
Investor-builder programs typically allow you to finance **75% of land + 100% of vertical construction costs**, capping total leverage at roughly 85-90% of project costs. Out-of-pocket is typically 10-15% of the total project cost.
How are construction funds released?+
Through scheduled draws tied to inspection milestones. Typical draws: foundation, framing, mechanicals, drywall, finishes, completion. The lender inspects progress before each draw.
What's the typical term?+
12-24 months interest-only, depending on project size and complexity. Single-family spec builds typically run 12-18 months.
Do I need to be a licensed builder?+
Most programs require either (a) the borrower to be a licensed contractor, or (b) the borrower to engage a verified, licensed GC. Lenders evaluate the GC's resume, references, and prior projects.
Can I build for sale or for rent?+
Both. If you intend to hold as a rental, the construction loan converts (or refinances) into a long-term DSCR rental loan once the property is leased. If you intend to sell, the construction loan is paid off at closing on the sale.
Can I do multiple spec builds at once?+
Yes, many investor-builders run 3-5 spec builds simultaneously. Each project gets its own loan; lenders evaluate aggregate exposure on a borrower-by-borrower basis. ---
Have a similar scenario?
Composite case studies based on the deals we close every month. PeerSense routes to the right program + lender.
Composite case study. Names, locations, identifying details, and dollar amounts modified to protect borrower privacy. Actual rates and terms vary by borrower, property, and market conditions. PeerSense is a capital advisory firm and does not directly originate loans.