If a group of investors approached you to build homes

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Need way more details, but most contractors get paid a percentage of the construction price usually in the 10-20% range.

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What other details? I'm asking because I'm curios. Where do the investors make their money? Strictly off of the sale price? What's the average ROI for them?

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Who is putting up the money, or signing the note?

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Investors is my guess.

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Whose house is it if it doesn't sell

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Tricky, but my guess is investors, I'll tackle that next.

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Who gets less is it sells for less than expected?

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Investors per % of initial investment, although I imagine this is investment group with llc so company backed by investors, as builder would have contract for hire.

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Whose loss if it sells for less than the cost to build?

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Highly unlikely, but investors.

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Who buys the lot?

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If I were developer I would subordinate the lot, any activity is good activity in new construction, and a spec going up in a n'hood shows confidence, people are risking $ that this hood is worth building in without an established buyer. Plus, if SHTF, you can pay off construction loan with subs, deed in lieu, and sell it and make bank, or rent it, per HOA bylaws

In my experience, North Alabama. Spec money is hard to get right now, so investors have more leverage. Generally speaking, the investor is taking the financial risk, the builder is taking the warranty/public risk.

You take sales price of the home, subtract all costs associated with the deal (including interest payments, loan acquisition costs, realtor fees, lot cost, etc.) Whatever is left (typically 15%-30% of the purchase price), is usually split 50/50.

As long as the contractor is a good builder and many warranty issues don't arise, it's generally a great deal because the contractor isn't taking on the financial obligation.

The biggest question is time on the market. The carrying costs can rack up over time, so if you have to sit on a house for a while, that 15%-30% shrinks a lot.

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The only people that generally make money on these deals are realtors in my experience.

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They're definitely not the "only" ones making money.....otherwise no one would do them. I've definitely seen it happen before, but I wouldn't consider it the norm by any stretch. They make money, until there's a better way, it's just a cost of doing business. The investor and the contractor should make significantly more money than the Realtor (each) in the deal, or there's something wrong.