update on OLD spec thread

14 Replies

As many of you know, I'm not very good with this techie stuff. I posted a thread a LONG time ago about specific custom spec homes I was building in SO. Utah. I posted the results of all the previous ones but not the most recent one. It closed this week.

   I built EXACTLY the same floor plan in the same area for the 3rd time. Made super returns on the previous 2. Not nearly as well this time and an extremely long holding period. I felt the slow down coming and sold a lot I had bought for future spec at a great profit and sold a month ago. Purchased for 47K and sold for 73K (I think) only a few months later. Some other "fool" wants to build a spec. I didn't make any more profit on the house that just closed than on the lot-with no risk.

I also just closed on my personal residence (basically the same home) that I bought 2 years ago for 269K and sold for 340K. Again, nice profit. 

I really feel that the area all these homes are in is WAY over sold and trouble is on the rise. These homes were upper mid range in pricing. Anyone seeing the same thing?

I'm continuing to build lower price homes in my SO TX subdivision, and they are doing really well with a lot of sales of homes and lots. I think I have 4 lots and 6 homes sold this year so far. I think the price range and area is the difference.

I'm also beginning to build in the Ocala area of FL with first 2 homes approved and under const. $200,000 is price range and I expect to do well with these as long as The Villages is going crazy.

Just wanted to give my views on what I've seen first hand lately. Rich

I don't see the above post on the current forum. Did i enter it incorrectly on the new format?? Thanks. Rich

Sorry. Now I see both of them....

Hey @Rich Weese  

Southern Utah is looking scary to me.  I've sat on two rehabs over the $300k price range for way to long this year.  Sold one and made a small profit.  The other is under contract for 10% less than my February Comps and I will be losing money on it. 

Under $200k is the place to be unless you can sell at a REALLY, REALLY good price!  The scary market is $300k-$400K right now in Southern Utah. 

@Rich Weese - It seems like many real estate markets as well as the stock market is over priced. I am not comfortably seeing any value anywhere in decent. I am seeing lots of hype over the news and many speculators jumping into the game. Congrats on the gains from the lot sale and the personal residence. Just like in your book, you are definitely milking the 2/5 year rule of not having to pay capital gains of the sale of your personal residence, very nice!

Hi Justin- I agree wholeheartedly. There are so many lots being developed at present, it has to bust, imo. Other areas will follow. My homes in TX pass the muster in price point at 150K plus. 

Johnson- You actually READ my Book. I'm proud of you and to remember my process is remarkable. My sale of personal residence game is over. I love The Villages and have no reason to leave. Rich

@Rich Weese   - Not only did I read your book, I read it again this year as a way to stay motivated in the real estate game! Unfortunately, I am not finding any deals that make sense and money! It is hard to sit on the sideline but it maybe my best option until I find a lucrative deal.

So you're living in The Villages and building outside of it? I would have thought you were pulling the same scheme in St. George where you purchase a couple of lots, build a house, move into it for two years, build another one two years later, move into that and sell your prior house for a tax free gain. I have to say I thought that was brilliant when I read you doing that.

How do you build a spec and sell for $150k and profit? 8' ceilings? #3 lumber? What am I missing here?

Good to hear from you Rich.  Eva and I decided, instead of buying a second home, to buy a new Fifth Wheel and explore the country.  We have also purchased an additional 8 homes this year, raising our monthly income another five grand or so.  But where we differ, I am currently living in the house I was born in, nearly 54 years ago.  Can't beat the Prop 13 property tax, paying about $1,000 a year for a house worth $600,000.00.  Glad to see you are still staying active in the market place!

Johnson H- My wife was so helpful in our estate building with regular moving that she deserves a change! 44 moves in 44 years. We don't need as much income any more either.

James Evertson- You don't have much experience on here yet, so let me re-post items that you can find and research in other posts and threads I've added to BP. 

1. Lot price. I bought a 64 lot subdivision that was in trouble in So. TX for average of 12K per lot. Prior to closing, I turned it into a gated community and lot price doubled. ($12,000 profit before start of home)

2. Low labor costs in Rio Grande Valley and a VERY fair Builder since I do a lot of work with him. Cost plus a certain %.

My average deal is a 1700 square foot home with a 2 car garage, fully fenced (wood fencing) and FULLY landscaped with all sod and a few bushes and trees. There are coffered ceilings, automatic garage door opener, granite counters, double walk in closets in Master and either decor brick or rock on the exterior in front, tile in all the areas other than bedrooms. (FOUR)

The most recent home was sold to an investor as a turnkey product with lease of $1450 per month and the property Manager is licensed in RE and LIVES in same subdivision .(he also owns 2 other rental homes in same subdivision.

To further confound you, I expect to turn even a better profit in my new venture building homes in The Villages in FL. My lot acquisition price was LESS than the TX lots... It can be done with a little effort. My profits are higher % return than available in most flips these days... Good luck. Rich

Mike M- I forgot to reply to you. CONGRATS!!! You probably already know, but wifey and I did the full time RVing for 6 years-started TWO days after we got rid of last of 6 kids!! We had a 40' with 5 slides and loved it.

Garden Grove- I remember that area well. Orange County was extremely good to me and made it possible to retire at a very young age as you know. Have a great time. Rich


We also have six kids, one of which will be with us full time due to a disability.  But the boomerang affect keeps them coming back, so we currently have two at home.  It's a shame when someone is working full time, making $15-$17 a hour and can't afford to live on their own in Orange County.  Two of my other kids live in an OC rental I own, which I discounted so they could afford to live here instead of the Inland Empire.  It works because I told them that whatever they do to the house, they will inherit it in that condition.  I am losing about $1,000 a month on the rental, but it helps the kids!  (and it keeps them from moving back home!)  As for our fifth wheel, it also has five slide outs and we LOVE it and is 38 feet, 6 inches!

Your developments seem to be doing well.  Two of our purchases this year are in the Dallas/Ft Worth area, one in Forney and one in Crowley.  We also grabbed a nice one in Surprise, Arizona.  But the real killer deals were in the Central Valley of California.  We are buying units for $40,000 that rent for $795 a month.  We bought five of them.  And they are only 23 years old, so not much deferred maintenance.

Well, time to get ready for a picnic!  Have a great Holiday!


@Rich Weese   its good to see you posting here again.  I am living in a small town with very little growth, but always try to turn a deal or 2.  I am thinking about building a house for me and my wife and selling the house we lived in the last 25 years.  Maybe I need to be looking for lots for the build after that.  Since the newest house we lived in was a 20 year old trailer house I can probably sell her on the idea of moving into a new house.  Please keep posting.  I look forward to your stories and insights on the market.

Jerry W-Thanks and good luck on the new venture of building a new home! Rich

thanks to Steve Babiak for helping to find this old thread. As most all of you know, I am not good with the technology stuff. This is not the main thread that I was posting information in about my new venture in building homes in Florida. I am in the middle of that but I believe the other thread would have better information to lead up to where I am currently at.

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