All Forum Posts by: John Blackman

WEEK 11

Sheetrock makes the house look almost ready, although it's not.  There's still a lot to do.

Completed this week:

• Framing inspection passed
• Started sheetrock, first coat of tape and float is complete
• Interior doors and trim ordered
• Waiting on plumber yard lines before starting landscaping
• Draw 6 processed

WEEK 10

We're making steady progress with no blockers which is a little unusual.  Inspections went quickly on this one.  We should be able to sheetrock next week now that the insulation inspection is complete.

We used roll-in insulation for this project.  We have used spray in insulation on some projects which costs a little more but also requires special plumbing because the spray in insulation creates a tight seal around your pipes, so make sure your mechanical vendors know what insulation you are going to use before they get started.

Spray foam is more efficient but costs a little more.  You can also do half and half, and only spray foam the ceiling and roll in the walls since heat rises.

Completed work:

• Insulation complete
• Sheetrock stocked
• Sidewalk poured
• Passed mechanical

@Dustin Morgan 

 This property is already sold.  We went through three separate offers and ended up closing on a contract that we signed after 44 total days on market.  It took us about 14 days to close (cash buyer on this one), so we accepted that offer about 30 days after listing.

Mine is treated like regular income, but I take a lot of business deductions and full advantage of an SEP which I can then self direct into other builder's projects to avoid UBIT and self-dealing.  Make sure you have a good CPA who can keep you straight.

This is right next to one of our projects in Austin.

I am assuming you have to insulate them on the inside, otherwise that steel box would cook you.  They are very sturdy for sure.  In terms of permitting they are a new beast.  They don't have any framing, and I suspect you hang drywall on top of electrical and plumbing that you frame to the side of the units.

I've never built anything like that, but this is not the first time I've heard of it.  I am very interested to hear how your experience goes.  I really like the idea as you could probably build these things very fast.  It's mostly foundation and finish outs, no framing or roofing.  Although your designs are going to be um.... boxy.

Often you will hear about a marketing funnel.  Marketing puts deals into the funnel, and hopefully the small end is your ability to complete deals.  You have to keep a careful balance so that you can meet the obligations to your current deals and keep deal flow moving without over committing to the point that your performance suffers.

As such, marketing spend should ramp up to the point of your operational capacity. 

It's fine to dream big, but don't be an elephant chaser.  To get from small to big, the best way (and this is just my opinion folks, so don't flame me if your first deal was a 7 figure bonanza) is to go through ever step in between.  Do one deal, then do two, then 4, then maybe 8.  Each time you double you will face new logistic and marketing challenges.  You may find that you market in spurts as you catch up with deals that you have procured.  Although I would advise against that if you can keep your spend more steady so you don't loose mind share amongst your customers and partners.

In general I prefer to hire most jobs based on value and not take on W-2 overhead.  Unless it is a steady system like a mailing list, then just pay per item.  If you have marketing overhead and you have more work than you can operationally manage, then you're wasting your marketing spend or possibly worse bringing on more business than you can handle which will damage your existing deals.

Short version: target how much work you want to do, spend enough marketing budget to get there.  Double that target and repeat.  Keep doing this until you go insane or are independently wealthy.  You may end up a little of both.

After clearing the lot and getting ready to pour the foundation, our builder discovered a slight discrepancy in the foundation plan which required a small change from engineering.  It was the difference in using a concrete back deck or a wood one.  We went with wood because it looks nicer in my opinion, is cheaper, and has a smaller impact on our impervious coverage ratio.  Win-win all around. 

With that little item taken care of, we started forming the foundation last week and we are making good progress this morning.  Today I even have a video for you.

Pre-Start last week:

https://www.youtube.com/watch?v=LuWWGmx56ZM

This morning:

https://www.youtube.com/watch?v=9ADy0XTkb7E

This is WEEK 1 of an active project.  We're aiming to get the following items completed this week.

• Form up the foundation
• Dig exterior foundation beams
• Complete the plumbing rough
• Termite treatment

Next week we will add steel, seal the foundation in plastic and hopefully pour assuming we can find a time slot with our concrete provider.

We are working off our first draw which is only 1/5th of the land purchase price so our loan to equity ratio is a tiny 20%.

I'm sure there are a few business plan templates out there, but I'm not sure software would help you other than a word processor.  A business plan is so dynamic and unique that your plan should be the special sauce that your business brings to the market.

If you are following a common real estate strategy, then your business plan can probably be modified from an existing one to suit your market.  However, you should always aim do provide a service or special angle to the market that others are not.  Investors seek specialists who can explain their unique proposition and demonstrate its effectiveness.

I'll take a little pause here to emphasize a point about subs that is super important not only to new construction but any sort of flip or maintenance issue as well.  Getting good vendors is key to this business.  If I am getting three bids for any given job, I usually take the middle one.  You never want to have to come and fix someone else's work.  This doubles your time and will usually cost more than the most expensive bid.  Make sure that your vendor can get in and do the job right the first time, even if it costs a little more.  It is well worth the time and headache of having to clean up someone else's mess to get it right the first time.  Don't step over a dollar to save a dime.

WEEK 9

We should finish our mechanicals this week and hopefully start insulation and stock sheetrock.  Our builder met with the city and they have committed to fix the crushed storm drain seen in the pictures below on their dime.

Completed this week

• Completed 3rd party inspection
• Cabinets ordered
• Insulation started
• Sheetrock is stocked
• Shower pans complete
• Fencing complete
• Sidewalk and driveway formed
• Lot is graded

Current Budget: $160,849

Total Money Spent: $115,536.50