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.