Superintendent acting as GC

[Shea T.]

I am located in the San Antonio area

I am a seasoned residential superintendent capable of building homes from dirt to close and working with homeowners along the way. I have established great relationships with crews in each part of the homebuilding process. How to construct a new home correctly does not worry me, but how the funding works does if I were to try to build with intentions to hold and rent it out.

More specifically, homes are being sold by GCs for less than their typical values of $180-220k. Taking into account the GC's markup, we can safely assume homes are being built, conservatively between $100-$120K, maybe even less. The margins I see are very enticing and I want to take advantage of them by acting as the GC. I can possibly take out even more markups by dealing with the crews directly.

How would funding for something like this work assuming I want to hold on to the property and rent it out? I am in the process of setting up my own LLC. I am thinking along the lines of taking out a construction loan for 20% down and converting into a mortgage when project is complete. Assuming numbers hit right, could I possibly pull a "BRRRR"-like move by taking out the equity and applying it to the next deal?

Appreciate any input and/or referrals.

[Greg Dickerson]

Originally posted by @Shea T.:

I am located in the San Antonio area

I am a seasoned residential superintendent capable of building homes from dirt to close and working with homeowners along the way. I have established great relationships with crews in each part of the homebuilding process. How to construct a new home correctly does not worry me, but how the funding works does if I were to try to build with intentions to hold and rent it out.

More specifically, homes are being sold by GCs for less than their typical values of $180-220k. Taking into account the GC's markup, we can safely assume homes are being built, conservatively between $100-$120K, maybe even less. The margins I see are very enticing and I want to take advantage of them by acting as the GC. I can possibly take out even more markups by dealing with the crews directly.

How would funding for something like this work assuming I want to hold on to the property and rent it out? I am in the process of setting up my own LLC. I am thinking along the lines of taking out a construction loan for 20% down and converting into a mortgage when project is complete. Assuming numbers hit right, could I possibly pull a "BRRRR"-like move by taking out the equity and applying it to the next deal?

Appreciate any input and/or referrals.

Your gross margin is way off. General contractors will typically only have 10 to 20% gross profit margin on a house. As for the financing a bank will give you an acquisition construction loan for a 6 to 12 month. That can convert to a portfolio loan if you want to hold the property and rent it long term. If you want to pull cash out through a refinance you will have to go to a different lender or use a line of credit but you will only be able to pull out 70 to 80% of the finished appraised value of the property.