All Forum Posts by: Johnny L.

Hey J! 

Thanks for your response!

This is the answer that solves it for me I believe! I couldn't find where I fit in as an investor and developer....because I don't! Nothing is stopping these builders from building their own houses and selling them because of the market right now. They don't need my money or need me tot ake the financial risk. Their custom clients take the risk or they know it will sell and will take the risk themselves!

Was it ever possible to hire a GC and make a profit on a spec house when the market was different? 

Whats your opinion on manufactured homes as specs?

Definitely looking into getting my license even though it may take a couple of years!

 Hey Russell!

Thats exactly my question! Where does a developer come in? Why would a contractor need anything from me?  Im just an investor and realtor. They can just build and sell on their own. From what Ive read on here its possible to build individual spec houses but I cant seem to find where I fit in.

 Hey Eric!

Yeah, it definitely does help! It could be that right now construction costs are so high that my margin is diminishing and lower construction costs could bring my margin back up. I just see so many homebuilders buying land and doing everything themselves and I don't blame them! Thats why I find it difficult to see where I fit in. I would never work with a developer! 

Does a developer come in when the contractor has all of their own money tied up and cant build and need someone else's money?

Thank you!

Hey Shawn!

So are you saying theres no room for a developer in this model? Thats what I seem to be realizing.

When you mention the more opportunities I bring are you saying I try and bring land where I can guarantee him three homes to be built or are you saying I try to build one at full cost potentially lose money and then hope he lowers his price the second or third time?

Thanks for the reply!

Hey Marc! 

I definitely don't see anything wrong with manufactured homes as I've sold several as a realtor! I have to see if the covenants allow these because if they do it may be an option I can look further into! 

Is this what you currently build and sell? 

 I have to find some way to build that relationship with them. I guess I'm still having trouble seeing what value I bring other than the financial risk I will be taking. Perhaps volume is the answer, unfortunately this will take more time to save up some cash. 

Thank you!

I see what youre saying! So what would be your solution? To guarantee them more work?

Thanks for the reply! 

Yeah, as you're saying it may just be the cost to build. However, if the market doesn't require a contractor to take less profit why wouldn't they just raise their prices to keep up? Therefore eliminating my profits again. Where do I come in as a developer? 

I've asked for builder-grade finishes on the builds but will have to explore those options more as you mentioned! I thought my plans were simple enough when discussing it with my architect but perhaps I can make changes.

Thanks for the reply!

Definitely see what you're saying! Lumber prices are having an impact for sure. Do you believe once lumber prices come down this may be more viable? I think I may do what you're suggesting and just build one to start building the relationship. However, with the bids I've been getting back I wouldn't even be able to turn a profit or my margin may be very slim. 

I'm currently trying to build my first infill spec home. I have most of my soft costs figured out and have a piece of land I'm ready to go under contract on and have vetted. I now need an estimate on the cost of what it would take to build the home I have plans for. This is where I'm having a problem.

I've contacted about 9 general contractors and home builders and they either don't respond or the bid they give me back seems to be priced as if I'm a client building a custom home (I guess I technically am). I make it clear that I'm an investor/developer looking to sell the home once it's built. The plans I have are simple. Cost-effective. I do tell them that I will be building several of these a year if this first home works out but still nothing.

I can see why they're charging me as if I'm a client building a custom home to live in because why should they lower their price just for me? They're getting plenty of business from custom clients so why take my work for less? I guess I'm struggling to find where I fit in here in terms of making a profit. Yes, ill be taking all of the financial risks but so are their custom clients.

How can I better approach these contractors to make it possible to use their services and still make a profit? Or am I just approaching the wrong ones?

Thank you all!