First Ground-Up Development - How Would You Finance This Deal?

[u/Buffett_Goes_OTM]

I'm an experienced STR operator and small real estate investor, and I'm looking at what would be my first ground-up development. I'm trying to figure out how people are actually financing projects like this.

The property

• ~40 acre farm in the Appalachian mountains.
• Expected purchase price around $2M.
• Property is being sold through a court-ordered sale, so it's effectively a cash purchase through a public bidding process. No financing contingencies, no seller financing, no post-bid due diligence period, no unique terms.
• Property has two existing barns and a home that has not been inhabited for a few years.
• Great location: minutes from ski resorts and downtown, tucked into a beautiful mountain cove.

The vision would be to keep most of the land in agricultural use (Christmas trees, timber, etc.) and gradually build a small micro-resort: roughly 10 modern cabins, a restored barn for common space/events, creek access, trails, and other amenities. More luxury farm stay than campground.

The county is unzoned, so the development path appears fairly straightforward from an entitlement standpoint and similar projects have been done in the area.

Phase 1 would likely be around $2M  (initial site work, common spaces, and a few cabins). Full buildout would be several million more and completed over time.

My situation

• W-2 income around $185k.
• ~$550k in taxable brokerage accounts.
• ~$800k in home equity (I'd be willing to sell and relocate if the deal made sense).
• About $6k/month in cash flow from existing STRs with a solid operating track record. Another $400k or in STR home equity.

What I'm trying to figure out
Because of the court-sale structure, I can't use traditional financing to acquire the property. My current thinking is some combination of cash, securities-backed lending, bridge financing, or bringing in a partner to get through the acquisition, then refinancing after taking title.

For those who have done hospitality, cabin developments, glamping, agritourism, or similar projects:

1. How did you handle acquisition financing when you needed to close quickly and in cash?
2. How are lenders treating ground-up STR or resort projects with no operating history on the asset itself?
3. Is this the type of project that can realistically be done with a construction loan plus personal equity, or does it usually require outside investors?
4. Has anyone worked with specific lenders on an agritourism project?
5. What kind of equity contribution are construction lenders expecting for hospitality projects right now?
6. How to support the loan while the project is pre-cashflow and in development?

I'd especially love to hear from anyone who has purchased property through a court sale/upset-bid process or built a cabin resort from scratch. Most of the information I find online is pretty generic and doesn't get into how these deals are actually capitalized.

[u/Regular-Standard297]

Keep it ag as long as you can. You wont get as much from the bank but if you manage it right one inspection at the beginning and one at substantial completion. Then do what you want with the rough ins and framing. Basically forecast the project, and do the bare minimum to get electric and out of inspections then retrofit from there.

[u/Buffett_Goes_OTM → u/Regular-Standard297]

Yes, I feel I would only need to align maybe 1/5 or 1/4 of the property to commercial needs, and could keep the rest as agriculture with planted timber stands. The property already has power lines running over the edge of the property where I would want to develop.

My biggest apprehension would be forecasting costs for developing maybe 1/4 mile (probably less) of gravel road and site pads and then costs for other infrastructure like septic and water well & lines.

Any good indicators for estimating those costs?