All Forum Posts by: Adrian Chu
Adrian Chu has started 76 posts and replied 1372 times.
Post: Primary residence turned into rental
- Real Estate Broker
- Seattle, WA
- Posts 1,488
- Votes 425
Phinney is by no means a gentrifying neighborhood now :)
Post: Profit margins on new construction homes
- Real Estate Broker
- Seattle, WA
- Posts 1,488
- Votes 425
Originally posted by @Brennen McConnell:
I have foreign investor capital lined up to buy vacant lots and build new roughly 1,750 sqft homes in the Greater Seattle Area, including Tacoma and Everett, and am looking for feedback as to whether or not my assumptions are correct. The investors will be funding the entire project with cash, so I don't have any financing costs to assume. I have assumed that the cost of the lot will be approximately $100,000 if not in the city proper, and that cost to build will be $170 psf, so about $300,000 assuming 1,750 sqft. I am assuming the $170 psf includes all permitting and general contractor fees. At $400,000 total cost, I assume that I can sell the house for $450,000, and that less 6% in broker fees, the net profit would be $27,000, or 6.75% of $400,000. To me, that seems a bit low. I have read elsewhere that one can expect to earn a 10-15% profit on new home construction.
I am wondering if anyone has feedback on my assumptions? I have never built a house before, though I do have experience with doing rehabs. But I am pretty much a complete newbie when it comes to new construction. However, I have the capital lined up and need to find a way to make it work.
That is very low. It is very hard to make money hiring a GC with such low margins.
It works on higher end builds, exit value $2m and above. We try to shoot for $500k-1m in profits each project in the Seattle area.
Post: For Sale by Owner - Thoughts?
- Real Estate Broker
- Seattle, WA
- Posts 1,488
- Votes 425
In this multiple offer market, it is even more important to have an agent to be able to stir up a multiple offer situation and make the buyers fight each other. Make the buyers over-pay for the home. Many homes in the Seattle area are getting 50-60 offers and buyers are getting sweet-talked into paying $300k+ above asking price and waiving all contingencies after spending a 15 minute time window at the house, because all the slots to view the home get booked up and there isn't an opportunity to even do a pre-inspection even if the buyer wanted to. Sounds like a bloodbath for the buyers, but it makes sense for the seller.
Post: Seattle Townhome Rental Market Outlook for 2021
- Real Estate Broker
- Seattle, WA
- Posts 1,488
- Votes 425
Rents have gone down temporarily. The typical demographic for a townhome is 2 of 3 individuals sharing a house together. There aren't as many of those groups nowadays. But people will start moving back soon.
Post: Any Commercial Real-estate Players out there?
- Real Estate Broker
- Seattle, WA
- Posts 1,488
- Votes 425
What kind of commercial property? Office? Retail? Industrial? Something else?
Post: Sell or hold as rental?
- Real Estate Broker
- Seattle, WA
- Posts 1,488
- Votes 425
Manufactured homes (even on their own land) can't qualify for conventional loans as an investment property. Do you have a portfolio lender who can do this?
Post: What did Susan do in 2020?
- Real Estate Broker
- Seattle, WA
- Posts 1,488
- Votes 425
Congrats! Sounds like a lot of accomplishments for 2020.
Post: 30 year old Millionaire
- Real Estate Broker
- Seattle, WA
- Posts 1,488
- Votes 425
Congrats
Post: THE ULTIMATE SEATTLE HOUSE HACK (no, it is not renting out rooms)
- Real Estate Broker
- Seattle, WA
- Posts 1,488
- Votes 425
Originally posted by @James Pou:
@Adrian Chu, so creative! What size lot or available back yard space do you look for? What's the sqft on the DADU?
Min is 3200, but the bigger the better.
Post: THE ULTIMATE SEATTLE HOUSE HACK (no, it is not renting out rooms)
- Real Estate Broker
- Seattle, WA
- Posts 1,488
- Votes 425
Originally posted by @Stephen Pirotte:
@Adrian Chu
Great post, thank you for sharing. Which neighborhoods of Seattle does this work best? How large a lot do you need?
It works anywhere within Seattle city limits. Min 3200 sf. It is most optimal to do this somewhere with high exit values, since cost to build and effort are about the same everywhere. My project was in View Ridge.