dieselenthusiast wrote:
I wanted to give an update. It’s been nearly 1.3 years since I originally posted. Since posting, we have reduced our college loans from $30,000 combined down to $18,000 combined. We owed $12,000 on our travel trailer and have recently paid it off. And at the time, we still owed about $9,000 in credit cards and have paid them off. So other than student loans and the property that we bought, we have no other debts.
We haven’t used credit since we last bought our 2008 travel trailer. For the first time in nearly 4 years, we are now trying to acquire credit in search for a construction loan. The bank recently pulled our credit score. Our credit score is better now than it was back in 2008, which was a good sign. There are two observations that I would like to point out. (1) We cut up every credit card in 2010 and have not used credit since, which apparently didn’t hurt our credit score; however, (2) we did pay off a significant amount of debt during that time frame including our truck loan, jeep loan, and RV loan, therefore that credit history may have stimulated and “maintained” our credit. But here’s the funny thing, we meet and exceed the credit score qualifications for a construction loan, although, the bank is requiring a larger sum of money down. So this goes back to Dave Ramsey’s theory that credit (by itself) doesn’t mean much to the bank. Banks want to see $$$$. “CASH IS KING.” I told the bank that I don’t have much money in the bank because I’m trying to become debt free. I said, "why have $20,000 in the bank when I have $20,000 in debt?" And they agreed, lol. I’m still in negotiations with the bank, but so far I have declined their request to put and X amount of money into a 2 year fixed CD and their request to put down an X amount of money for the construction loan. If I have to, I’ll wait another year to build.
Actually, working with developers, since the banking crisis of 2008 banks are really shy about construction loans. I was working a deal on putting up a $12M hotel in North Dakota, but the banks wouldn't budge on construction loans. There was a time when the developer only needed to put up 2%, now they need 20-30%.
You can make a lot of money in development -- if you have money to begin with.