Spec houses or flipping?

Question

(Living in northern Ohio)

Has anyone had experience with flipping house or building spec houses? If so, pros and cons to both and which do you prefer?

Thank you very much!
Steve

J Scott · Answer

Not necessarily.  I'm guessing there are experienced builders who build 100+ house subdivisions who average less profit per house than I average on a flip (though they make up for it in volume).

And I'm sure there are builders who are making hundreds of thousands on custom high-end builds, more than 99% of the rehabbers out there.

It really depends on your area, your niche, and your skill...

Jimmy Hong · Answer

J  Scott, would you also say that profit margins are much greater at spec level than flips?

J Scott · Answer

I've been flipping for a while and am just starting in the new construction arena.  They are very different beasts, but the requirement to understand basic building components and processes is the same.

If you don't have any experience, the advantages to doing flips first is that you can generally find "easy" projects that have much less risk than new construction.  Also, the learning curve for flips is much, much less than new construction (and you generally don't have to deal with the municipality as much).

The advantage to new construction is that you generally don't face many surprises in the actual building part of the project.  With flips, you never know what you'll find when you start digging in, but with new construction, if there are surprises during construction, you probably did something wrong at some point in the process.