All Forum Posts by: Scott E.

Having a backup plan is important. So underwriting it as a long term rental, mid term rental, and short term rental is what I would do.

But it might not be a bad plan building a spec for resale out there right now either. In my area, permits are way down. And we still have a housing shortage. So while demand is also down right now, a lot of people are forecasting the cost of a new construction home to be higher in ~12 months because there just wont be much inventory.

You should look at similar stats in your area if you haven't already.

I've done this a couple of times. Short answer to your question is yes, $1100 for a draftsman or an architect to draw this up is normal and fair. Especially if that price includes the structural engineer getting involved for removing that portion of the exterior wall.

You're not paying them to just put a box on a piece of paper. You're paying them because they have the education and years of experience to put a box on a piece of paper.

I love the energy! Never too late.

What's tough about your situation is that generally I'd advise to invest close to home on your first couple of deals. Like, really close to home (within a 5-10 minute drive).

But $120k won't get you very far in most parts of Southern California.

With that being said, the first thing you need to think about is your financial goals.

Are you looking to build up that pile of cash? If yes, flipping is a good plan if you are open to getting into some construction.

Are you looking to just generate some cash flow to supplement your other income and maybe trade up properties every couple of years? If yes, starting with a fourplex is a good plan. But cash flow wont be great with where rates are at.

A lot to think about. But you've come to the right place to learn more.

Others have given great feedback and seem to be pointing you in the right direction.

But on a much simpler note - Just because you purchased for $390k and sold for $1.375M doesn't mean a $1M gain. I'm sure you've spent some money on the home along the way, right? I'd talk to a CPA about adding any and all improvements to your cost basis.

There is a lot of built to rent activity out here in Phoenix and I have studied a few of the developments closely. The only way the numbers work around here is with true economies of scale. The most successful builders are building hundreds of homes at a time.

If you are in a position financially to take on projects at this scale and your husband has the capacity to take on a big development based on his building experience, it is a great strategy. Average rent rates and occupancy rates are higher on single family build to rent compared to traditional multifamily.

Sounds like a post somebody would have written about the internet back in 1995.

Interesting to hear about the listing descriptions. That's a great use for AI. I imagine it can also be used to help come up with some solid marketing plans for properties as well. There will probably always need to be some human intervention (as you said, for small tweaks). But generally will save a lot of people a lot of time.

I agree Erin. I've heard that comparison before (about how AI is as groundbreaking as when the internet was first introduced) and I'm starting to believe it.

In the beginning it was tough to fathom how AI could possibly disrupt industries other than perhaps copywriters and coders. But it just a few short months it's already starting to show so much more potential.

You're going to have a hard time convincing a divorcing couple to allow you to take over their mortgage payment sub-to.

Really think they both want to stay on this loan for the foreseeable future?

While I've been having fun following the AI craze over the past several months, I've have had a hard time seeing where AI might disrupt the real estate industry... but it just clicked.

Here's my prediction - Over the next ~5-10 years, AI will be putting most architects, designers, and engineers out of business.

These AI tools are already getting to the point where you can input a certain set of parameters, and they will spit out 3D models of exactly what you're looking for.

Let's say for example you told an AI model the following:

 -You just bought an 8,000 square foot residential lot

 -You would like to build a 2,800 square foot single level home on the lot

 -The home should have 4 bedrooms, 3.5 bathrooms, and a 2 car garage

 -Ceiling heights should be a minimum of 10'

 -The home should take inspiration from Frank Lloyd Wright architecture and have contemporary finishes

 -Building should comply with XXXXX city code requirements for lot coverage, building height, setbacks, etc

In a matter of seconds, this AI model is going to be able to spit out dozen of options for you to consider that precisely meet the criteria that you have input. This is work that would have taken an architect, engineers, and a designer weeks or even months to complete.

As a developer I'm having bittersweet feelings about all of this. I love the creative process and I have so much respect for architects and designers. But I'm also looking forward to the cost savings. I'm spending between $35,000 - $50,000 per project just on architectural, engineering, and design fees alone. Not to mention as I said above, most of these creatives are crazy busy and take months to come up with a useable plan.

Zaha Hadid Architects have already started to adopt AI into their business. They recently used AI to generate 100,000 designs for a building interior in 27 hours. Excessive example, but you get the point. link.

I know there is always going to need to be some human involvement when coming up with usable buildings. But I'm stoked to see how AI changes the game in both residential and commercial real estate development. What do you guys think? Am I missing something?