Newbie to New Construction
Real Estate Agent · Rancho Cucamonga, CA · Member since 2018 · 82 posts · 36 votes
Newbie to New Construction
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Member since 2024 · 6 posts · 4 votes
2yAlex - Construction can be a complicated animal. If currently don't have any experience with building, a renovation type project is likely going to give you a wealth of knowledge with less risk then new construction. Renos still have a lot of risk, but there are a few less moving parts to nail down. A renovation also allows you to build a great team, something you'd want work out before starting on a new build. You could certainly dive into a new build cold turkey, but you are then relying on your team very heavily to make it a success with little ability to self assess progress etc.
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- 12 Penns Trail Suite 138 Newtown, PA 18940 · Member since 2023 · 1k+ posts · 319 votes2y
main piece of it will be the builder with the rolodex of trades . The purchasing of land and getting the financing for the build is the easy part
- Member since 2024 · 6 posts · 4 votes2yAlex - Construction can be a complicated animal. If currently don't have any experience with building, a renovation type project is likely going to give you a wealth of knowledge with less risk then new construction. Renos still have a lot of risk, but there are a few less moving parts to nail down. A renovation also allows you to build a great team, something you'd want work out before starting on a new build. You could certainly dive into a new build cold turkey, but you are then relying on your team very heavily to make it a success with little ability to self assess progress etc.
- Member since 2024 · 41 posts · 28 votes2y
Hi Alex,
So I did a new construction in the city of Los Angeles where I did a complete raze (teardown) of an existing structure and built a brand new one. Doing this increased the value of my holding 2.5x, possibly 3x, I will know for sure when I sell in the coming year or two.
With that said, DON'T DO IT.
Financing, and for the most part the construction, will be the easy part It is permitting that is the killer. It took me nearly 7 years, and those were some very difficult years. There were more times than I can count when there was a crisis where I was pretty much at risk of losing most if not all of my investment. And while I made it out okay, I know lots of people who didn't. I've seen someone do a large senior 55+ housing development take 8 years before shovels were in the ground. There's a multi family project in Korea town that's been in permitting hell for at least 5 years and it's still a barren lot. And the soft costs can easily pass 100K before your project even starts. I was lucky and I survived and flourished but there were lots of times during where I thought I was screwed.
While the reward was pretty great, the risk was huge, and I would definitely not do it again unless for some reason I really, really needed the money. And it better be a damn good reason.
- Real Estate Agent · Rancho Cucamonga, CA · Member since 2018 · 82 posts · 36 votes2y
Thanks for all your answers! Gives the perspective on why it takes some balls to get into the new construction game. I will continue walking in baby steps, thanks!
- 2yRick GarridoPro MemberInvestor · Long Beach, Ca. · Member since 2022 · 18 posts · 10 votes
Jumping into new construction without having a decent feel for it is a big take. I also recommend jumping into a renovation over new construction so you can get a feel for the work.
Alternatively, you can also jump into a property where you can add more units and that can help you ease into it as well since you'll still be collecting money while you pull permits.
Good luck.
- 2yRobert EllisBusiness MemberDeveloper · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
Quote from @Alex Larcheveque:
Hi everyone, my name is Alex. I've been a part-time realtor but mostly investor for around ~4 years. For my next major investment, I've been thinking to get into new construction. It seems like it has the most upside, but I'm sure there are horror stories around pulling permits and dealing with the city.
I wanted to reach out to ask how does one start in new construction? Do people dive into it cold turkey? Do most newbies normally hire out a GC to build their first house? Or do most investors getting into new construction start with some type of fix-and-flip background? Would love to know how to break into this market at some point. Thanks!
build a multifamily to rent. lower risk, easier to execute, easier to underwrite. anytime you sell there is a 10% equity loss and capital gains. new construction in columbus appreciates at 8.65% per year. almost no reason not to consider it. land is a buyer market, you can get to better locations than you can buy existing, etc etc etc
Section 8 Launch52 Reviews - 2yKristi KandelPro MemberDeveloper · Fort Myers Beach, FL · Member since 2018 · 383 posts · 195 votes
Quote from @Alex Larcheveque:
Hi everyone, my name is Alex. I've been a part-time realtor but mostly investor for around ~4 years. For my next major investment, I've been thinking to get into new construction. It seems like it has the most upside, but I'm sure there are horror stories around pulling permits and dealing with the city.
I wanted to reach out to ask how does one start in new construction? Do people dive into it cold turkey? Do most newbies normally hire out a GC to build their first house? Or do most investors getting into new construction start with some type of fix-and-flip background? Would love to know how to break into this market at some point. Thanks!
@Alex Larcheveque I've been a RE developer for 17 years and a lot of my career was in CA and a ton of work in LA City/LA County. Building the right team of strategic partners is key to effectively completing development/new construction projects. It's simple but it's not easy.
If you shoot me a DM I'll send you information about a Free webinar we are hosting Wednesday since it's about team building and strategic partners.
CA has the most red tape along with some parts of the PNW, NE US and a few other areas in the country. However, I've built my career in those markets so I know it's entirely feasible.
Separately, find people in your community who are already doing it. Volunteer/Intern with them to learn how they do things. If you are adding value to other groups you'll have doors open that allow you to learn the ropes on other people's deals vs on your own and potentially losing a lot of money and getting way too many grey hairs and wrinkles ;)
The 5 Key Partnerships You Need in Real Estate 🏘️🌟 Mark your calendars for Wednesday May 15th, at 1 PM EST!
Things we'll cover:1. Expertise - It’s not what you know; it’s who you know!
2. Opportunities - The right partners open the right doors.
3. Money Matters - Two wallets are better than one, right?
4. Risk - Friends don’t let friends invest blindly.
5. Networks - Because your network influences your net worth.
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