Follow my Nashville new construction project

Follow my Nashville new construction project

Nashville, TN · Member since 2017 · 95 posts · 91 votes

Hey BP!

I am a Nashville native currently involved in a number of development projects locally. I am trying to be more active on the forums, so I’m going to document a development project from start to finish. I plan on updating this thread weekly and I hope this gives the other members a look into Nashville as well as a feel for what goes into a small development project. I’m currently 2 weeks into the project, so I will get the thread caught up and answer any questions along the way. Let’s get started!

We will be building two homes on a lot where one home existed previously. This is known in Nashville as an HPR (Horizontal Property Regime).

Lot Details

  • Size - 50x150 lot
  • Zoning - R6 - this allows one or two dwellings with at least a 6000 SF parcel. The houses can be side by side or if your lot is deep enough the homes can be staggered front to back.
  • Setbacks - 20’ rear, 5’ side, 37.5’ front. The homes also must be 6’ apart at a minimum. This means that we can go 17’ wide if they are detached side by side, or stagger and lose the road frontage for one home while gaining a more favorable design in my opinion.

Design Details

  • Size - ~1740 SF
  • 3 beds, 2.5 baths
  • 2 car garageport
  • Design will have some contemporary and farmhouse aspects
  • Concrete slab foundation with polished/stained concrete floors on 1st level
  • Hardwoods on 2nd floor
  • Tile in wet areas

Financials – Will post a picture of my model, but here is a quick overview. If anyone wants to see the budget to breakdown the build cost I will post it as well. Let me know

  • Purchase price - $160,000
  • Construction cost per home - $175,000 (about $100/SF is the goal)
  • Total cost (land + construction) - $510,000
  • Sell price per home - $344,000
  • Profit after soft costs, contractor fee, demo, site work, commissions, etc – 50k per house for a total of 100k profit
  • Financing with a 10% down 18 month IO construction loan

Pro forma 

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Nashville, TN · Member since 2018 · 1 post · 3 votes
8y

Looking great Roberto!

See this reply in the discussion

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  • Nashville, TN · Member since 2017 · 95 posts · 91 votes
    8y
    Originally posted by @Luka Milicevic:

    @Roberto Gutierrez

    I actually had seen this somewhere else and had no idea it was your project.

    I can only imagine the insurance headache man!!!! 

    Definitely set up security on all job sites. I haven't had any issues largely because cameras are a good way to scare people away.

    Yea it was a difficult experience for sure. Not the call i expected to get on a Tuesday night! I guess it's another notch in the belt!

  • Nashville, TN · Member since 2017 · 95 posts · 91 votes
    8y
    Originally posted by @Carrie Carlton:

    Wow! Just saw the fire post. I am so sorry!  Any updates ? Insurance? Rebuild or sell? 

     Rebuilding it!

  • Nashville, TN · Member since 2017 · 95 posts · 91 votes
    7y

    Update - 10/22/2018

    Framing complete and windows and doors are in. Roofing now complete at both units. Rough ins are starting this week as well as siding! Feels good walking through these houses again!

    Living room

    Kitchen and dining

    Master

    Master

    Master closet

    Keywords: Nashville, Development, Residential, New Construction, New Builds

  • Nashville, TN · Member since 2017 · 95 posts · 91 votes
    7y

    Update - 10-29-18

    Plumbing and HVAC rough ins underway. Siding also underway. As long as weather permits I think we will have plumbing, HVAC and siding complete in a week. Electric rough in and insulation after that and then we will call in our framing inspection and order drywall. 

    Sewer is connected and water meters will be set next. Also got a new power pole set, so we will be starting to dig trenches for underground electric service to the houses soon as well.

    We also received renderings back on these and we may be pre-listing prior to completion.

    Keywords: Nashville, Development, Residential, New Construction, New Builds

  • Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes
    7y

    @Roberto Gutierrez

    Looking good my friend.

    On the 3D rendering - the stone looking thing on the front. Did you decide against that?

    Where is the parking going to be? 

  • Nashville, TN · Member since 2017 · 95 posts · 91 votes
    7y
    Originally posted by @Luka Milicevic:

    @Roberto Gutierrez

    Looking good my friend.

    On the 3D rendering - the stone looking thing on the front. Did you decide against that?

    Where is the parking going to be? 

     Yea - we do put stone or brick on a lot of our builds, but we ultimately decided against it based on cost on this one.

    Parking - front house will have a pad right in front of it and rear will have a pad behind it. Both will have pretty nice yards. Rear will be about 30x25 yard and front house will have a 20x50 back yard as well as the entire side and front yard.

  • Mike ReynoldsPro Member
    construction · Nacogdoches, TX · Member since 2011 · 2k+ posts · 1k+ votes
    7y

    @Roberto Gutierrez Wow, Understand your dilemma Roberto. Had a house once that was over 2 mill that burned the week before the client moved in. Had to start over. A word of caution.....It aint over yet and wont be for about 5 years. It shouldn't cost you but that insurance company will want blood from someone and they are relentless. Just be patient and....... breathe. It will all pass soon. 

    Other than that, awesome job and the renderings look solid. 

  • Flipper/Rehabber · Nashville, TN · Member since 2018 · 35 posts · 16 votes
    7y

    @Roberto Gutierrez Wow man, just came across this thread today, and didn't anticipate the roller coaster of a build this has became.  You handled this situation so well and I hope it can warn other investors that these things do happen and as long as you have your ducks lined up you will turn out okay.  I hope they find that scumbag.  I'm looking into starting a rental portfolio in Nashville as I have some contacts there.  Looking forward to seeing the rest of this thread!

  • Nashville, TN · Member since 2017 · 95 posts · 91 votes
    7y
    Originally posted by @Brad Hornecker:

    @Roberto Gutierrez Wow man, just came across this thread today, and didn't anticipate the roller coaster of a build this has became.  You handled this situation so well and I hope it can warn other investors that these things do happen and as long as you have your ducks lined up you will turn out okay.  I hope they find that scumbag.  I'm looking into starting a rental portfolio in Nashville as I have some contacts there.  Looking forward to seeing the rest of this thread!

    Haha yes it was a unique experience to say the least. I appreciate the kind words and you're so right about having everything lined up. So important to have insurance and extra money for contingencies like this because it could wipe you out if not. Can't wait to start on the decorative side of things soon and then get these sold!

  • Nashville, TN · Member since 2016 · 10 posts · 24 votes
    7y

    Glad to see this project back on track! 

  • Nashville, TN · Member since 2017 · 95 posts · 91 votes
    7y

    Update 11-11-18

    Rough ins complete and inspections passed. Insulation scheduled early in the week, then framing inspection, and then drywall! 

    Unit A

    Kitchen

    Living room

    Master

    Unit B

    Keywords: Nashville, Development, Residential, New Construction, New Builds

  • Nashville, TN · Member since 2017 · 95 posts · 91 votes
    7y

    Update 12-2-18

    Drywall complete and concrete floors have been grinded. Moving on to hardwoods, tile, trim, and interior doors. Exterior paint scheduled this week if weather permits.

    Keywords: Nashville, Development, Residential, New Construction, New Builds

  • Nashville TN · Member since 2018 · 4 posts · 2 votes
    7y

    Wow, I stumbled on this today. I was digging all the info and pics, then my heart sank when I saw the fire post :/

    Glad to see you overcame, and the progress is looking great!

  • Nashville, TN · Member since 2017 · 95 posts · 91 votes
    7y
    Originally posted by @Josh Cooper:

    Wow, I stumbled on this today. I was digging all the info and pics, then my heart sank when I saw the fire post :/

    Glad to see you overcame, and the progress is looking great!

    Thanks! I think it made myself and my partners more cognizant of the fact that uncertainties exist even when you think you've got it all covered! We are setting more aside for contingencies on our projects now and pointing to this as an example of why it's needed when talking to other partners/investors. If you're local let me know if you want to grab coffee and/or walk some of the properties.

  • Nashville TN · Member since 2018 · 4 posts · 2 votes
    7y

    I am local, and I'd love that opportunity. I'll shoot you a message.

  • Peter TverdovBusiness Member
    Developer · New Brunswick, NJ · Member since 2015 · 1k+ posts · 2k+ votes
    7y

    Awesome thread. I am looking to build a home if I can find the land so this is a great teaching tool. The story of the fire is heart breaking, people like you work so hard to make a neighborhood better and an arsonist comes. @Roberto Gutierrez Any advice you can share (without revealing too much) as to how security is increased on a project like this?

  • Nashville, TN · Member since 2017 · 95 posts · 91 votes
    7y
    Originally posted by @Peter Tverdov:

    Awesome thread. I am looking to build a home if I can find the land so this is a great teaching tool. The story of the fire is heart breaking, people like you work so hard to make a neighborhood better and an arsonist comes. @Roberto Gutierrez Any advice you can share (without revealing too much) as to how security is increased on a project like this?

     Thanks Peter! Happy to share security measures. These have helped us out a ton.

    1. Become friends with the neighbors and ask them to keep an eye out for you. We've even started giving people $40-50 gift cards to incentivize them. We have had neighbors call us and tell us about suspicious people hanging around our properties because of this.
    2. Trail cameras - set a couple of these up so you can monitor. AT&T has a data plan we pay for that allows us to watch in real time. 
    3. Flood lights - we have a few of the dusk to dawn flood lights that stay on while dark out
    4. Lock all doors and windows as soon as they are in and be sure to give the subcontractors a hard time if they don't lock up when leaving. They will get the picture after a few conversations.
  • Nashville, TN · Member since 2017 · 95 posts · 91 votes
    7y

    Update 1-30-19

    Long overdue for an update! Time got away from me. We are making good progress. Working on our electrical trenches this week and hope to have power on in the houses within the next few weeks. Once electrical trenches are covered we will move on to final grading, landscaping, gutters, concrete, and fencing. Pretty cold here currently, so we are waiting on final paint touch ups on exterior. HVAC is done and electrical trim out is wrapping up. All we lack is plumbing trim out, mirrors/shower doors, door hardware, and a final polish of the concrete floors. Hoping to have it wrapped up in 6-8 weeks.

    Keywords: Nashville, Development, Residential, New Construction, New Builds

  • Nashville, TN · Member since 2018 · 9 posts · 3 votes
    7y

    @Roberto Gutierrez thanks for posting this! Gives me a lot of inspiration as a new wholesaler in the area. I do have a question about purchase price you purchase the home for 160k. I've read the rule of thumb (which I know is meant to be broken) is around 70% ARV-Repairs. In this case this 70% rule doesn't seem like it's applicable. What do you and your partners typically look for as it pertains to purchase price when wanting to do a project like this? In other words how do you determine your purchase price? Thanks again for sharing

  • Nashville, TN · Member since 2017 · 95 posts · 91 votes
    7y
    Originally posted by @Kenya Lacey:

    @Roberto Gutierrez thanks for posting this! Gives me a lot of inspiration as a new wholesaler in the area. I do have a question about purchase price you purchase the home for 160k. I've read the rule of thumb (which I know is meant to be broken) is around 70% ARV-Repairs. In this case this 70% rule doesn't seem like it's applicable. What do you and your partners typically look for as it pertains to purchase price when wanting to do a project like this? In other words how do you determine your purchase price? Thanks again for sharing

    That's a good question that I haven't really thought about before. All in with land and construction we are 80% LTV. I'd say when you're dealing with most renovations that there is a lot more uncertainty involved in terms of construction costs. Ground up construction definitely has it's own set of risks so don't get me wrong. In this case we already had a completed survey and had identified there were not any easements, water features, overlays, etc that would stop us from building what we wanted. So a lot of the uncertainty was removed and the main variable that remained was our construction cost. We have a really good handle on that, so it's easier to forecast the outcome. If we can put in 60-70k on a project like this and make 20-25k a house then that's a good return for a house priced under 350k in our opinion.

  • Nashville, TN · Member since 2018 · 9 posts · 3 votes
    7y

    @Roberto Gutierrez that makes sense. I appreciate you taking the time to explain your thought process. Hypothetically in a situation like similar to this when you were unable to do all of the due dilligence prior to purchase you may have wanted to be around 60-70% LTV to able to account for uncertainties? Or is that still to high of a percentage? I'm not too sure for a project of this size how much of a % buffer would developers like to have in play when due diligence hasn't been as thorough as yours.

    In most wholesale situations the actions tend to act fast and like to close the transaction in 30 Days or less. With all the due diligence that you and your team performed did it take a while to complete that part of the process? If so how long on estimate (if everything is running smoothly). 

  • Nashville, TN · Member since 2017 · 95 posts · 91 votes
    7y
    Originally posted by @Kenya Lacey:

    @Roberto Gutierrez that makes sense. I appreciate you taking the time to explain your thought process. Hypothetically in a situation like similar to this when you were unable to do all of the due dilligence prior to purchase you may have wanted to be around 60-70% LTV to able to account for uncertainties? Or is that still to high of a percentage? I'm not too sure for a project of this size how much of a % buffer would developers like to have in play when due diligence hasn't been as thorough as yours.

    In most wholesale situations the actions tend to act fast and like to close the transaction in 30 Days or less. With all the due diligence that you and your team performed did it take a while to complete that part of the process? If so how long on estimate (if everything is running smoothly). 

     A good rule of thumb for the core of Nashville where houses are selling for 190-210/SF is to get your land at around 20% of your anticipated sales price. That 20% means that the land is ready to go at 20% though. If there is land development that needs to occur to make the land buildable then I would ask to discount the price based on the land development cost. The due diligence can be fairly quick with most lots by visiting the codes dept and talking to zoning, public works, stormwater, metro water, etc. We go in with a pre-set list of questions that we may tweak based on the land and if we get favorable answers then we order a land survey. Our surveyor takes a look at his maps within a couple days of our request and gives us his opinion too. That obviously doesn't eliminate all risk but it hasn't steered us wrong yet and it only takes a few days to do. I wouldn't buy land if that wasn't done even if it was pretty heavily discounted. As long as we can get our due diligence complete and have the surveyor lay eyes on the lot then we are typically ok with closing even if we are still waiting a few days to get a survey back. 20% is really just a rule of thumb though. If i had a nice flat lot presented to me in an area of town like The Nations for ex. I'm probably ok paying a little more and operating on smaller margins because of how hot the area is. If I look at land out in Bordeaux i would probably want to be around 15% since it's much less developed. It really comes down to knowing the different pockets very well.

    Another thing i'll say is that this approach really only applies to land that is already zoned for the use that you intend to use it for. it's a whole different game if you are buying tracts of land with the intent to rezone and create more density or different uses. Those really have to assessed on a case by case basis based on costs to rezone with the city, time spent to rezone, cost to develop land (Easily $300k per acre or more in some cases). There's a lot more risk involved so those types of parcels need to be sold at more of a discount since they aren't entitled for the intended use yet.

  • Nashville, TN · Member since 2018 · 9 posts · 3 votes
    7y

    @Roberto Gutierrez thank you very much. The last thing I would want to do is waste the seller or investor time with a deal that is not really a deal. So getting insights from a developer is very helpful. Staying posted to see the finish product.

  • Nashville, TN · Member since 2017 · 95 posts · 91 votes
    7y

    Update 04012019

    I've been bad about updating this but i'm going to see it through to the finish. The houses are about 1 week from completion. Taking care of miscellaneous punch list items. From rebuild to now we are at 6 months almost exactly. We applied for our COs and expect to have them in 10-15 business days from the city. We are planning to list around 360k per house and will likely stage them, get a full set of photos, and a drone video that i'll be happy to share. Once we sell i will release final numbers.

    Keywords: Nashville, Development, Residential, New Construction, New Builds

  • Lititz, PA · Member since 2013 · 595 posts · 272 votes
    7y

    Nice transom window above kitchen cabinets.  

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