I've hesitated to post a success story and gone back and forth, but here I am typing.
I am 24 years old from Alaska and this year decided to get serious about real estate investing. I began the year by finally selling my live-in flip that I had lived in for two years. $35,000 tax free from that.
My next plan was to build a duplex to house hack. I did this and then realized how much equity I had in it from building it right. I sold it and made $64,000 including agent fees and and closing costs.
This spurred me on to get my residential endorsement and building licenses. I built another one, the exact same model and made the same amount of money, $65,000ish.
As people know on here once the snowball gets rolling its hard to stop, so I have started building my third and fourth duplex and have plans to purchase a lot sufficient enough in size for a triplex. I plan to have the third one sold by October (I can build from the ground up in 9 weeks.)
The plan is to reinvest all this cash into a large apartment building. I actually hope to build one.
Congrats @Wade Stahle
You said you built them right which equated to more equity than expected. Can you elaborate? Do you have pictures or plans? I am very interested in the development side of real estate. I have an architecture background (soon to be licensed California architect), I am interested in what is phrased as Architect as a Developer. I wanted to understand your process further. Were these built in Alaska? How long from survey to certificate of occupancy did it take?
I'd be happy to send send you my plans. PM me.
For my first go around I got bids from almost every single contractor in the City. This enabled me to "build it right" because I quickly learned what were fair prices for things. Every duplex is the same so they are essentially spec homes. I know exactly what my costs will be and can buy land accordingly.
They were built in Alaska, yes. My last duplex was 9 weeks and 2 days from the excavator hitting the dirt to cert. of occupancy in my hands. Very quick, but I literally leave no days open. There is always a contractor in there.
This is excellent! I'm 24 as well and am trying to buy my first property (4plex, me in 1 unit and renting out the other 3) here in Anchorage. Your story motivates me big time to take massive action.
Are you building out in Palmer?
Keep up the good work man - it would be cool to connect some time.
Approximately how much did your duplex's cost to build?
Thanks Hans, yes I build in the Palmer area. City limits mainly. I was motivated by others massive action and finally went all in. Its scary the first time but then like falling out of bed after that.
Hey Iain, my costs here in Alaska to build are about $195,000 all in. Now thats everything, land, realtors, closing etc.
If it were just sub-contractor and material costs, then thats about $145,000
$85/sf is pretty inexpensive for the structure. Great job keeping costs low. Thanks for sharing your numbers.
This is a fantastic alternative versus the more traditional routes of RE investing! Did you have an architect come up with the design plans for you, or did you do this part yourself? Also, how did you fund your first few builds?
This is definitely something I'll add to my playbook.
I funded the first one via a construction loan. 25% down of estimated build costs. After that ive had enough cash to just build on my own with some owner financed land.
I got the plans off ebay for $60 bucks ;)
@Wade Stahle plans off Ebay! Haha, what an awesome move!
Great story wade, happy to hear about your success! I myself had been thinking about building smaller homes to rent out as one unit. My plan was people would be willing to pay more in rent if they had a home to their selves, with new construction there would be little to no maintenance, and most of upkeep ( lawn mowing and snow removal) could be left to tenant where they are in a single-family property. I'm curious if you had kept your properties and rented them would the #'s work were you would have positive cash flow every month or would the start up expenses over weigh the income generated? either way hope all continues to go well for you and keep going ,your doing great work!
I actually did of one rented for a bit becuase i was living in one side for 3-4 months. My mortgage all in was $1090 and other side rented out for $1150 and they paid all utitlies. This doesn't factor in capex and property mgmt but still shows you a snapshot
wow thanks for reply,must have been nice apartments, what bed bath sq/ft were they? and that was on a 30 year mortgage for 195,000 or so? makes me want to look into new construction rentals some more
New construction rentals is a niche i wanted to be in. I had built in equity already. Yes, 30 year mortgage.
They are 2/1 units and are 850 square feet each
ahh nice, i want to build around 800-1000 sq/ft single family homes, if your building for 85 sq/ft they could get done pretty cheap, and I've heard of older single families in my area renting for 1250+ id imagine a new construction home built nice could go for couple hundred more, thanks again for the #'s I've got some calculating to do now.
Bought the plans of eBay.... totally brilliant!
I also have been doing a few new construction to rentals. It's a great niche because you won't have much in the way of CapEx for at least 10 years if you build right, and tenants LOVE the new finishes and modern styles. When the market takes a dump, you'll be the one sitting on top with all your rentals occupied! Well done!
9 weeks start to finish is impressive as well! Great job project managing. Keep up the good work!
Congratulations! You are doing such an amazing job. This is a brilliant strategy!
I have always wanted to buy land and build my own units as well, but thought I needed all sorts of licenses and years of experience before my lofty dreams could come true. Your story inspires me and motivates me to follow your path. Thank you SO much for sharing! Hope you don't mind me contacting you to ask you some questions as they come.
All the best!
Awesome plan that is doable when plenty of land is available. If I may suggest something, don't limit yourself to duplexes and apartments. Consider building small strip malls and other commercial buildings as well which can be highly profitable for your buy and hold portfolio. Get some partners (perhaps an agent) and scale it. My family built out our entire portfolio in the Central Valley of California back in the day with this strategy.
Keeps us posted and Good luck!
Ebay plans! LoL. great move!
Wow, I talked to a contractor in my area and he was saying that it's closer to $60 or $80k for just contractor and material cost. I can't believe it's that much more in Alaska or that fees can amount to so much on top of just the cost for building the thing. So much to learn lol
That is the plan! I would rather build my own rentals tham buy them. For one you know exactly how they were built and will avoid maintenance up front and secondly you aren't paying top dollar if you can build them right!
I would love to see your plans for how you turned such a great profit on your duplex. Great work!
Congrats on the success you are having! It's great to hear when people are making things happen in the RE world. Love the eBay plan piece, never even considered it.
If you get into tract housing for rental (or even resale), look hard into tax abatement opportunities. The property taxes can make or break it from the rental side and absolutely make the property more marketable if flipping to homeowners. A lot of developing cities encourage large-scale development by giving 3, 5, 10 (or more) year breaks on the taxes. If your does not currently, ask what it would take!
We love value-add projects and have recently transitioned into new construction development (again) for the rental markets and entry-level housing. Everyone here wants to build 250K+ while we are marketing to that entry level, first-time buyer. Mainly have 3 bed/2 bath plans, have not been brave enough to venture a 2/1 plan yet. It's an interesting mark that I might explore further. Thanks again for sharing!
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