All Forum Posts by: Donald Capwell

Donald Capwell Me and Mike Wood have different standards, his strategy for new builds is buy and hold, to my understanding, he can live without profit per project as long as it can qualify for financing and get his money back, but in exchange, he gets monthly cash flow, which is a great strategy, simply rinse and repeat, then you'll have a bunch in 5-10 years to replace monthly income. he does have limits 85% on new construction and 70% on rehabs. Mostly we do not have anything in CA below 70% on rehab, even if you are lucky enough, you get 70% if the rehab is substantial. Nor you can find any land that is worth less than 25%, mostly are priced at 30-35%, while in other areas, some have 0 value on land, and some even have negative value. Land is tricky also. Hence my strategy to have 80% across the board. that should give me about 10% profit, plus profit on construction.

Great stuff... Thanks. Knowing that there are so many strategies to this makes it challenging, but fun. Knowing what to look for from multiple angles (big picture, as @Bill Gulley stated) helps present a creative, if not blended solution that makes a property turn I to a deal! ;)

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Originally posted by @Bill Gulley:

Funny, I just sold rural land with a tear down, closed last month.

In residential properties, land should not exceed 20% of the market value, excess land begins to decline in value.

Pretty simple usually, the cost to buy, demo and remove debris cannot exceed the market value of the land.

Always look at the bigger picture! :)

Thanks, Bill...

1. How was your recent rural land zoned? Was it aggricultural, or residential? Have you had to get involved with re-zoning? (I realize every area is different, but what were some lessons learned?)

2. I wasn't aware of this number, but will use it in my calculations going forwar. Thank you

3. So this works conjunction with #2... the more valuable the home that will be built, the higher allowable value for the land (scrape and removal being a set cost, assuming lead/asbestos/other environmentals are accounted for). For someone that finds something like this off the radar and wants to flip it to a buyer to profit from, you'd have to know what the buyer would build.

So, I know my next steps are to speak with some local buyers, even if my offer is rejected. It will help me evaluate these in the future. This type of deal has been off my radar until now, so I live and learn.

Truly, everyone, thank you for all of the great info!

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@Manolo D., I appreciate the insight! 20% is a good number, but to @Mike Wood's point, 20% on a larger property is greater than 20% of a smaller one, when effort is factored in. As so many suggested, there are a lot of moving parts to scraping, which is why I value all of the input!

Thank you!

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@Mike Wood, thank you for your input and numbers. Very helpful to know what you do. I don't immediately aspire to build homes, but perhaps down the road a bit... For now, knowing what to look for helps me analyze a potential deal for someone that can actually profit from it, so this has been a great...

Thanks!

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Originally posted by @Judy Raymond:

Be careful. You are buying a property with a building that you are going to have torn down than turn around and flip it to a builder for them to build or split the lot and build? If you tear the building down you are creating some issues that you may not have thought through. One is your lot right now has water, sewer, power etc. If you scrape you have now created new issues that you have to overcome with the building department and Public Works and the Utility provider. You are also potentially making it more difficult for someone to get financing on a vacant lot..

I recommend the first thing you do is get a contract contingent on getting approval from the Building Department to be able to do what you think you want to do then go from there. The Building Dept, Planning Dept and Zoning Depts favorite 5 words are, "No you can't do that". Good luck

Thank you, Judy... I very much appreciate this insight. I didn't consider scraping the property for the builder, but your comment helps to consider the "why" not to do it in the future!

Also, great suggestion in the contingency. I spoke with Zoning yesterday, and his land is zoned A-1, but the project manager in the department said its "unlikely" that they'd I'll allow for re-zoning to residential to allow for the splitting of the lot. This said, there is new construction going up "a city block" (in the country) from this land, and it is a community builder with lists this size and smaller. I'm not a fan of contingencies, but definitely see value in getti g hem when I'm walking down unfamiliar territory like this. Thanks for the heads up!

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Hi, @Nicole Wood! First, no need to reinvent the wheel... Google "absentee owner letter template" to get wording for what others have done, and do that. The key to direct mail is consistency. Another route is to save the stamp if you can find the person's phonE number and CALL THEM. Uncomfortable at first, but you'll learn a lot that way, and you can likewise find scripts online to help.

Also, BATH, NY! I moved to VA 3 1/2 years ago from Corning... I didn't plug in to a REI group up there, so I can't offer any guidance, but there have to be others ROI g what you want to do. Fund them and offer to help them. That would be my approach in a small town...

Good luck!

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Howdy, @Josh Sandefer, and welcome to the site! I am up I. Fredericksburg, so onve you I ow which strategy you will take in REI, let me know... Enjoy the ride!

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hi, @Shawn Gageby, and welcome aboard! I'm Dow in Fredericksburg... Do you do work this far south?

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nice! Thanks for sharing, @Jared Watson

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All Forum Posts by: Donald Capwell

Donald Capwell has started 3 posts and replied 146 times.

Post: When does it make sense to level a house and build new?

Post: When does it make sense to level a house and build new?

Post: When does it make sense to level a house and build new?

Post: When does it make sense to level a house and build new?

Post: When does it make sense to level a house and build new?

Post: When does it make sense to level a house and build new?

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