Tin Star Homes

Posted: Mon Feb 08, 2010 10:48 pm

Trik...the answer to your question is "yes". If you put up <$1K don't waste your money chasing them. You will lose out on the good available homes while you fight. Send them a demand letter. Report them to the BBB. Move on.

All homebuyers should understand we are still in difficult times. Builders will continue to close their doors.

A couple of quick rules:

1. DO NOT DEPOSIT YOUR EARNEST MONEY WITH THE BUILDER...ALL EARNEST MONEY SHOULD BE WITH THE TITLE COMPANY...it doesn't mean you will ever get it back but at least the builder won't get it unless they prove you violated the contract.

2. NEGOTIATE ANY "UPGRADE DEPOSITS" GIVEN TO THE BUILDER.

3. YOUR PURCHASE AGREEMENT SHOULD HAVE A DATE AT WHICH TIME THE BUILDER HAS TO START YOUR HOME OR YOU ARE RELEASED FROM THE CONTRACT. This date can be 30, 60, 90 days after contract acceptance or 30 days after your clear loan approval or whatever you decide. There are builders out there that are writing contracts with no place to get the construction loan. They want to build your home but residential construction loans are few and far between.

It is not my intention to scare you or to insinuate builders are bad businessmen....it's the economy.

Dyn-o-mite! Joined: 07 Nov 2008 Posts: 338 Location: Texas

So has Tin Star officially imploded or are they still actively building in any of their neighborhoods?

Posted: Wed Feb 10, 2010 6:39 pm

DFWNuHomeSales wrote:

They're selling their lots in La Frontera to another builder.

Do you know who they sold to and how many lots? Was it Gehan?

Dud? Joined: 18 Feb 2010 Posts: 2

Tin Star Homes is actively building in all of its communities, and like virtually all of the homebuilders are having a very difficult time getting interim construction loans placed in a timely fashion.

The vast majority of banks in DFW have either suspended construction lending, or have made the qualifications so difficult that most small to mid-size builders are having to seek their construction financing elsewhere.

Yes, Tin Star is selling the balance of their lots in Arlington due to these constraints, but in no way does that constitute anything more than a prudent business decision.

Tin Star builds a great product, and will continue to do so.

Dyn-o-mite! Joined: 07 Nov 2008 Posts: 338 Location: Texas

What alternative financing is affordable enough to use for Interim construction?
It is one thing when equity is expensive, but I don't know how a builder can survive for long paying much over prime (or a 5% to 6% floor) for interim money.

Posted: Sat Feb 20, 2010 9:19 pm

Perhaps it has something to do with construction loan supply and demand 101. I've heaard from several home buyers that say they don't understand why their builder hasn't started their home.

Could it be they can't find construction money?

I know of a construction lender that has a waiting list for constriction loans......and his money has a 22% APR attached. You better build them and sell them fast at 22%.

Dyn-o-mite! Joined: 07 Nov 2008 Posts: 338 Location: Texas

Even in Texas we still have too much homebuilder capacity.
The banks and the homebuyng public, right or wrong, are the ones who will have to determine who doesn't deserve to survive.
It is a tough, painful process, and their will be some innocent victims.

To the homebuying public, if a builder is having trouble starting your house because of a lack of interim financing I would advise you to find another builder that is better capitalized.

Dyn-o-mite! Joined: 05 Jan 2009 Posts: 363

We in Texas suffer from problems in other areas. I talked to a banker that financed the construction of tens of thousands of homes in Texas over the past 15 years. He said that up until two years ago, he could count on his hands and mabe his toes how many he lost money on and all were small builders that he took a chance with since he had made a lot of money with the small builders that became big.

He said that with a little more oversight, were it up to him, he would lend today. However, he showed me the memo that stated, "No interim lending to builders; no floor plan lending to any car dealer new or used; no lending to any start-up business; and no lending to anyone wanting to drill for oil or gas."

If we or other businesses can't borrow to provide our product, the country suffers. I can understand it in cities that are losing 20% of their value each year; but I would lend in Texas. It's guilt by association.

Dyn-o-mite! Joined: 07 Nov 2008 Posts: 338 Location: Texas

I agree that there ought to be more money available than there is at the moment.
However, I also think that the 100% financing for interim construction (sold and specs) for builders with minimal equity contributed to the overbuilt situation that was created in Texas.

When I look at the 17 formerly top 50 builders in DFW who shut down, in hindsight they were overleveraged and apparently not as well managed as their peers. How else do you lose so much money in a market that didn't go down in price?

Easy money led to overpaying for lots, too much overhead and to many specs. I am not sure that requiring 3 debt to 1 equity rations on debt is that unreasonable.

I know this will appear harsh and I personally know and feel bad for many of the victims, but we are in a classic survival of the fittest struggle. There is not enough food for everyone to eat.

Dyn-o-mite! Joined: 09 Jan 2009 Posts: 275

Nelson wrote:

I agree that there ought to be more money available than there is at the moment.
However, I also think that the 100% financing for interim construction (sold and specs) for builders with minimal equity contributed to the overbuilt situation that was created in Texas.

When I look at the 17 formerly top 50 builders in DFW who shut down, in hindsight they were overleveraged and apparently not as well managed as their peers. How else do you lose so much money in a market that didn't go down in price?

Easy money led to overpaying for lots, too much overhead and to many specs. I am not sure that requiring 3 debt to 1 equity rations on debt is that unreasonable.

I know this will appear harsh and I personally know and feel bad for many of the victims, but we are in a classic survival of the fittest struggle. There is not enough food for everyone to eat.

These are great observations. On top of the high level of competition and lack of barriers to entry into homebuilding, keep in mind that many public builders knowingly were building for market share and will take a loss b/c they supposedly were making money elsewhere - here in Houston its Lennar and KB who are still doing it for a loss but don't care b/c they get tax refunds from the IRS and desperately need the cash to survive...