All Forum Posts by: Andrew Taylor

@Geoffrey Jones The reason you agree with my numbers is because I was using your numbers for my analysis :). Maybe I should've been more clear: I'm skeptical that you can build a house that will sell for $700/sf for only $140/sf. Typical builder profit margins aren't nearly that high.

Figure six months minimum build time, likely longer. Depends on your builder / project manager, how detailed the plans and actual construction are, level of fit and finish (going to be high considering the area), etc.

@Geoffrey Jones I didn't look through anything at your links, but just speaking as a long-time Houston builder, I think your numbers are way off. The market in Houston is tight. Assuming you're building something in the 3,500sf range in that area, that's $140/SF at cost, exclusive of land ($400/SF with land). Your target sale price is $715/SF.

I haven't seen everything, but I've seen a lot of things. One thing I haven't seen is 40% profits in this market.

Best of luck to you. I hope you knock it out of the park.

Quick land lease question: If I have a parcel and, say, 20 buildings on it that I want to rent out (to 20 different people), can I put each of the 20 units on a separate land lease? In other words, can I divide up the parcel into 20 equal portions and sign a land lease for each portion individually? Or would I have to actually have the parcel replatted into 20 individual parcels?

I've got zero commercial real estate experience, but I have an idea and I don't even know what I don't know :). Thanks in advance for your input.

@Ben Sherman Ask for however long you think you can get away with. The longer the better. And don't mention anything to the seller about needing time to find a buyer; that's your business, not his.

All you need is a signed purchase & sale agreement (PSA) between you and the seller. In the "buyer" area, you put "Your Name &/or Assigns," although I think in Texas PSA's are assignable by default. That's it. Make sure you negotiate a long enough contingency period that you have time to find a buyer. I'm not sure what you need between you and your buyer, and I'm not sure what you need to mark on the contract when you sell it (if anything), but you don't have to notify the original seller of anything.

@Leah R Grier Please DM me your contact info, and I'll add you to the group notifications. Thanks!

@Michael Earl Please send me a DM with your contact info and I'll add you to the group. Thanks!

Now that all the attorneys have spoken, allow me to speak from the contractor side. Will this flip require any materials? Sheetrock, insulation, paint? Interior trim, doors, cabinets, plumbing fixtures? Light fixtures? Appliances?

These are all things that have to be ordered in advance and, generally speaking, paid for in advance. That's why your guy wants a percentage in advance. Now, is it 30%? Who knows. Ask him to account for that money.

Just like investors believe they should never be "ahead" of the contractor in payments, contractors believe they should never be "ahead" of the client in work completed.

If I was your contractor, I'd list the items that need to be purchased up front and I'd ask for that money in advance (or have you order them yourself). Then I'd structure draws so they're due when work STARTS (i.e. when sheetrock starts, payment for sheetrock phase is due). That avoids the "you were short two pieces of drywall so I'm denying this draw" conflict that always seems to come up.

Finally, I'd want the final draw (retainage) to be 5%. That's five grand on your job, which is more than enough to pay for typical punch list items (paint touch up, adjusting hardware, etc.). Too many clients want to use the huge final draw as a lever to get additional work done. Be reasonable with it. Withholding ten percent of the contract for one percent of the work isn't reasonable.

There's no such thing as a well-priced architect. Good news is, you don't need one. Any designer can draw them. Code is simple. The framer can probably build them without drawings. Reach out if you need help.

I'm also not an attorney but we had meetings with one a while back about this subject (among others). To the best of my recollection, the Series LLC will do what you want, but it hasn't been tested in court - so there's no precedent for actually keeping them separated in a lawsuit. That's how it should work in theory, but until somebody sues a Series LLC, who knows?

If you'd like a recommendation re: the attorney we spoke to, reach out and I'll pass her info along. (Frankly I think your breakdown of what you need is maybe a little overkill, and I'm not sure you even have to keep separate bank accounts when using the Series LLC, but I'd for sure ask an attorney.)