Buying Dirt and Building Any and All Advice

Land & New Construction
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Buying Dirt and Building Any and All Advice

Lane Ewert
Summerville, SC · Member since 2012 · 26 posts · 0 votes

Ok here is where I'm at. I've looked at a few properties to rehab and flip. So far out bid. So I've been looking at everything from rentals to even lonnie deals. However I really like the idea of buying some land and building and selling for a profit. So far on paper with me doing most of the work with a few "swinging hammers" I could get nice return. What my partial question is most of the posts that I have seen are for spec building. Does this mean they already have buyers or have a certain criteria that X buyers are generally looking for. I would also like to ask what is a good way for a self builder to build? I've looked at a lot of options and it seems like icf and sip are the most cost/time effective vs. stick building. In the last month or two I have literally seen whole sold neighborhoods go up. Where I'm looking I can find land for 24-30k and comparable around go for 200-300k at 1700-2000 sq ft. Am I dreaming that I could do this? Builders do make money right :)? Sorry for the long post ANY AND ALL ADVICE, STORIES, EXPERIENCE IS WELCOME. THANK YOU

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Jon Klaus
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
13y

Lane, there is so much to new home development, I'll just address a couple things.

How much can you build for per square foot? Including all your soft costs? You need to know. Sounds like you can sell for $115-$150 per square foot.

If you have to actually do the construction work in order to make an acceptable profit, the deal is too skinny. Not that you shouldn't do work to enhance the project and give yourself a job you enjoy. However, chances are professional trades will be faster and better than you at their craft. Don't get in the way and slow it down.

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  • William Donaldson
    Clemson, SC · Member since 2012 · 82 posts · 19 votes
    13y

    I know a lot of people that are into speculative REI - or maybe I should say where. My dad was big into speculative REI at one time and taught me a lot about the good and the bad..

    You should NOT go through with this plan if you think you can make a lot of money by putting a lot of "sweat equity" into a new build - when you aren't a GC or have any construction experience! It's very hard to make money with spec investing, especially considering how banks aren't lending for this even to the most experienced investors/builders.

    If you are a GC with plenty of experience, capital reserves, opportunities for loan/LOC, then maybe it could work for you. I don't think the way to get into REI or into short-term REI (flips/rehabs/spec) is through speculative building. Learn the ropes with flips and rehabs and work your way to speculation. It's a lot easier to sell a home that needs some work than a house that is half-built.

    1Reply
  • Jon Klaus
    Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    13y

    Lane, there is so much to new home development, I'll just address a couple things.

    How much can you build for per square foot? Including all your soft costs? You need to know. Sounds like you can sell for $115-$150 per square foot.

    If you have to actually do the construction work in order to make an acceptable profit, the deal is too skinny. Not that you shouldn't do work to enhance the project and give yourself a job you enjoy. However, chances are professional trades will be faster and better than you at their craft. Don't get in the way and slow it down.

    2Reply
  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    13y

    Lane Ewert More information is needed in order to help you. Are you talking about buying an improved lot and building on it, or a parcel of land that would need to be split and improved? What exactly is your experience?

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  • Lane Ewert
    OP
    Summerville, SC · Member since 2012 · 26 posts · 0 votes
    13y

    A little more information... The land is in a neighborhood water and sewer, elect available for tap in. The size of the lot allows for what I want to build (enough room on all sides.) I was a handy man on a farm for many years and built a few small sheds ect. I will be sub contracting out the major stuff best left to pros. IE foundation (slab we don't have basements here), plumbing, roof and electrical. My father is a structural cad electrical/structural engineer so I know I can save on the plans However where I see I could save a good bit is on the interior work. My plan would be to move into it as I am paying rent now any way and put it on the market. I have a business that works and I would have a lot of time to put towards it. I feel if I built a house from the ground up (mostly) I wold have a very firm grasp on a lot of the inner workings to then on my next house be able to sub out the work. Or if i liked it enough repeat the process in the same area. Hope this gives enough information thanks for your replys

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  • Lane Ewert
    OP
    Summerville, SC · Member since 2012 · 26 posts · 0 votes
    13y

    John,

    I'm looking at 150k to build with a variance of +10-15%. I haven't gotten the plans drawn up to nail down bids but I've over estimated (I think) on the parts that will require subs.. Plus the houses that sell in this price range don't have high end finishes. The ones that are decked out are more 500k plus. Hope this is enough info. Thank you for your replys

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  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    13y

    Lane Ewert Once you have plans, one suggestion might be for you to get bids from some GCs that would deliver a "shell" to you, getting all the work on the lot done and hooked up, slab and drive way installed, framing, plumbing and electrcal in, siding on house and roof. You then would finish interior.Spell out exactly what the GC will do. Will he do sheetrock, tape/texture, or just frame up, and you go from there? Who installs fixutres, etc.?

    Be sure they are all bidding the same work, specifiy materials where possible, so that you're comparing apples to apples. When getting the bid, get a cost breakdown for the job, so that you can see what is included and make sure it covers everything.

    Make sure you have a signed contract, spelling out EXACTLY who is responsible for what, how everyone is paid, etc. You would take out the permit, making you responsible for everything getting done to get the notice of completion.

    The most important part is knowing all that needs to be done, and not leaving out anything that eats profits ...which comes from experience.

    Good luck.

    1Reply
  • Rich Weese
    Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
    13y

    Karen gave you some great info! Areas really vary as per prices and costs. I build in SO TX and SO. Utah The values and costs are significantly different. Learn your market. I always like building median price homes so if market turns down, I can still rent home out and have a significant investment.

    Karen- Should start building Mikes/ home before end of month. When I learn how to post plan, I'll post the final plans or just e-mail them to you or Mike. Rich

    1Reply
  • Lane Ewert
    OP
    Summerville, SC · Member since 2012 · 26 posts · 0 votes
    13y

    Karen,

    Thank you for your response. I have a lot of planning to do!

    Rich-Thank you as well for your response.

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  • JOE SNEAD
    General Contractor · Tampa, FL · Member since 2011 · 32 posts · 13 votes
    13y

    Karen has hit the nail on the head for you. if youve got the ability to create plans do so. You will flush out alot of questions from contractors which will force you to do some more homework decision making about how to build. this will also give you a chance to further develop your strategy for building on the property.

    Take your plans even though they arent signed and sealed to your local municipality for advice. they can walk you through where local utilities lie and where the taps or connections need to be made. you will get a good idea of costs from your municipality which will include things like taping into water, binging in temp electric, sewer tie in, if there are any impact fees, costs of submitting plans for permits, and the cost to actually pull the permits. All of these soft costs can add up quickly.

    Finish your plans and then go figure out your costs and get hard numbers. I would then find a realtor to look at the property and the plans to give you an estimate at what the home could be sold for. Once you have all of the info you should be able to make a good decision.

    It sounds like from the general numbers you provided you can build a house and sell it for profit. in Florida most homes are block with a slab floor and excluding land and soft costs can be built for around 50/sf. I think getting a good realtor to let you know what people are really looking for up front and what your home would sell for is critical. SIp panels, and ICF construction are more costly upfront and if you go this route you should have a plan or know that a GREEN home is going to be able to sell at a higher price point.

    Keep us posted

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