Real Estate Developers?

Question

Hey guys, I am a General Contractor from Upstate NY. I am looking to get out of NY and it looks like we will be landing in the Bend Oregon area. The prices for pre-existing homes are through the roof and home prices in general are very high. We are able to build 2,200 sq/ft homes, higher end for under $200k in NY and I can't see anything that would increase our costs much simply by relocating. A 2,200 sq/ft home here we are listing for $350k-$370k, based on what I am seeing on Zillow in the Bend Oregon area, it seems similar houses are selling for 200k+ for the same product. I am looking for any information and input you guys may have on the market, what would a good area be for me to buy land and throw up a little house to live in?

I am interesting in connecting with investors in the area who have knowledge in real estate development or have an interest in being involved in it. A properly built home can result in an excellent profit for the developer. The developers I am working with here, for example on the next home we build; his cost to have us build it will be $260k, he has $10k into the property now, probably $20k all in. The home will list for $365k, giving him a big profit. Our average turn around on a new build is 3-3 1/2 months and we can run 2 builds at a time.

Josh Garner · Answer

Hi Ronald,

although not a licensed contractor, as I understand it new construction in the Central Oregon area is being built for $200/sf on the lower end, up to $500+/sf on the higher end. Land costs are also quite high. In a good area of Bend, a lot just down the street from me (3900sf lot) sold last year for $250,000.

There's a severe shortage of builders/contractors/skilled laborers around here.....lots of folks are making $40/hour to hang drywall, paint, etc. Many developers would love to build more homes, but can't find the workers to complete jobs.

I recently completed an addition onto my home, and performed most of the work myself. I did contract out the foundation, framing, and plumbing. My costs for the 800sf addition were around $120k for a mid-range home.

I hope this is helpful!

Tim Johnson · Answer

I can promise you this, you might get one home run like that, but your not going to get them all that.

If you are building for those numbers, I would go knock on the door of every developer and let them know, because your going to have so much business you won't know what to do.

Habit builds for $75 sqft national wide average and they get deep discount on building materials and tons of free labor.

Our cost are running right now at about $105 sqft and I'm in Michigan, I would think we would  be ton cheaper than New York and i know we are cheaper than Oregon, maybe I'm wrong, maybe I"m right.

Brandi Croom · Answer

Hi Ronald, I live here in Central Oregon and I’m curious what made you choose Bend? The costs are quite high to develop here especially compared to the average incomes of what people can afford to buy.  Some of the prices per square foot seem more like Redmond, OR new construction than Bend.  Are you interested in rehabs or just new development?

Ronald Starusnak · Answer

Yeah subs cost more, if I got to the point where we had more than three at a time I would sub it all as well. Hourly saves me a ton of money right now

Tim Johnson · Answer

We are busy, we sub everything out.  I also include everything in that number. Well septic, dirt work soups to nuts.

Ronald Starusnak · Answer

To be at $105 cost, are you subbing a lot of the work or are your guys slow? We are 3 to 3 1/2 months on a build and that’s about $60k in labor and $100-$120k left for materials and sub work on a 2200 sqft home on a basement with quartz counters, asphalt driveway, and landscaping.

Ronald Starusnak · Answer

Those are my costs, not what we are charging. The lowest we charge to build is $120. We also aren’t considering land costs or site development ie driveway, well / septic, and electric. The NY where I am from is primarily rural. We do not sub much of our work out unless it can be done cheaper. The only thing we are subbing here right now are specialty trades: plumbing, HVAC, electric. We sometimes sub out the foundations and excavating depending on the site especially if building in basement. My average basement when subbed with excavation runs me about $20k. Oregon does not require even a slab on grade from what I understand.

Ronald Starusnak · Answer

Hi Brandi, I am completely focused on new construction. The costs to develop there I am sure are going to be different but since we actually build everything ourselves with our in-house crews I think our costs will still remain lower than the sale price. We can build for $70-$80 per sq/ft not counting a profit and based on the research I've done and people I've spoken too, it seems like houses are selling $200-$250/sqft and that anything under $500k sell very quickly. My choice of Bend is not entirely driven by the potential monetary gains however, I really like what I've seen about the area. When I say Bend, I mean within an hr of Bend as well since I do not know the areas very well yet, just looking to operate within the Bend area but even Portland.

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