All Forum Posts by: Jeffrey Stasz

Jesse it really depends on the rehab. 

And nothing against the folks at BP but the rehab calculator on BP is sub-par. There is a lot more that goes into a job and I think that tool breezes over most of it. 

I am a full time developer and builder.  I use a program called Pre-Built MLX. PreBuilt costs about 60/month and is well worth it. I also have the folks at my materials supplier do an independent takeoff. 

I think a question that you're asking but not really asking is this - How do I know all of the different stuff that is going to go into my project? How do I figure out what that's going to cost? and how do I figure out how long that is going to take. 

The short answer is experience. But you can definitely accelerate your learning curve with technology and hard work. Here is a process that worked for me. I hope it works for you. And remember, this is my full time job and I grew up in the business and it still takes me FOREVER to build out estimates. So don't get frustrated with yourself if you get a little burned out early in the process. This is hard work and it's not sexy but it will help you get to real and pretty accurate numbers. And it will help you communicate with contractors along the way. Good luck. 

Step 1: Get plans and make sure they are in your market in your kind of product (high end, low end, mid market) I use an app called MagicPlan. After you figure out how to use it, It will allow you to generate the floor plan of a typical two story house  in about 15 minutes. After that you can load the PDF into a program called PreBuilt MLX. They will help you set up your template file and you will refine it as you go. When you first start in PreBuilt and if you don't have an architecture or construction background it is going to be very hard and very frustrating. Things are going to seem extra backward. BUT. Prebuilt is designed to follow a typical GC's work flow, and there is a TON of value in really really understanding that workflow. I also recommend purchasing a book called Carpentry and Building Construction from McGraw Hill. It's the reference book most most state licensing exams use and is just a great resource. 

For early estimates start in chapter 1 and go chapter by chapter using the book and prebuilt until you have "built the house" virtually. Then take your materials list and price it using home depot or lowes or whatever is near you. That is going to give you the materials costs. 

Step 2. Go to building cost.net and get their book on labor rates and labor productivity factors. Go back to your PreBuilt list and do the same thing but this time for labor. 

Step 3. Rinse and repeat a gagillion times. 

Step 4. Get a project, run it, and compare estimated to cost. 

Step 5. Refine refine refine 

As an FYI, it is going to take about 15 - 20 hours to do your first estimates this way. But on the upside it will transform how you see this business. And if you really get into it, it will transform how the trades see you. 

Imagine, you're meeting with a sheetrock contractor on site and he says it's gonna cost x for the job, and you whistle and exhale and sigh and then say...well that seems like you'll be charging me y per installed board and I know the /board installation rate is closer to z and I have estimated abc number of boards... well it adds a level of professionalism and confidence that can sometimes make the difference between success and failure. 

@Jay Hinrichs I did see that. I bet that is the cheapest driveway you've ever built. That must of been a tricky lot to coordinate deliveries too. 

I'm building new fences for everyone at my Dingle St. project. It makes site work so much easier and helps everyone feel comfortable which makes the job run much smoother. 

@Liz Cole consider becoming an associate member at your local NAHB chapter and try to find the builders who are actively doing spec and custom. 

BP is heavily biased toward the investor population. But in many markets the most successful developers/flippers are also the better builders. We have a lot more capital access then people generally would think and we already have all the equipment and people to execute. The reason you don't see a lot of builders on BP asking about how to raise money is because most of us have access to traditional commercial lending at 4.5% plus a point or two. So if we want to do a deal we maybe call a couple buddies to get the equity together and then get rolling with our local bank. 

With the exception of @Jay Hinrichs, here in Charleston my most frequent competitors for a deal are usually the same guys and gals I'm competing with for clients and jobs. 

The other advantage to getting in with some good builders is they have the ability to make deal success something of a self fulfilling scenario. 

Consider this: two teams I'm super impressed with have decided to focus all their investment efforts on a small section of a particular neighborhood. We have a couple of banks  bought in and ready to make several asset based loans to several of us for projects in that target area. 

So in the span of 18 months you'll have three or four great builders deploying several million dollars of bank capital in a two or three block area. That means you'll have a street with four or five projects all being built out by super talented custom builders. That also means that 12 months from now a street that was pretty junky is suddenly going to be super nice. We've functionally built our own neighborhood. And buyers ALWAYS want to buy in the nicest area they can afford. I suspect the coordinated build out could add as much as 10% to what were already pretty good deals. 

I realize BP is an investor community, but I'm always a little surprised at how dismissive this community can be of builders and contractors. The brutal truth in most markets is investors need good builders WAY more then good builders need investors. So as you go about building your team really think about what you're brining to the table. Because there is a really good chance that you'll be adding a lot less value then you think. That's fine! We all start somewhere. But just be really thoughtful about what you're actually asking for. 

Good luck and enjoy the ride. 

@Account Closed besides my flip answer...the drip works well. I mostly (only) work in downtown Charleston. And there is so much work that needs doing that I don't have too much of a need to be super pushy about trying to find the right thing. That can sometimes change if I'm trying to link a bunch of lots together and then it comes down to money or giving someone an opportunity to get into the deal. 

Besides money, being a known quantity helps a lot.  I am also a GC I'm purposely generous with my time. If the eldery gentleman up the block needs his sink to stop leaking I just pop in and do it. If his daughter has a work emergency and needs me to check in on something or someone I do that too. When the teenager's car is broken (again) and he and his buddies are fixing it on the street I come out with my big jack stands, the crawler and some waters. 

Not only is it the right thing to do but it puts me in a position to hear about opportunities long before they ever hit the market. Houses and land are unlike other assets because they so often have a huge emotional component attached to them. 

People need to feel good about what is often a tough decision to sell. Think about it, it's usually triggered by a death, or financial hardship and so under those conditions the decision about who to sell to is often about more then who has the most money. 

If you can help folks feel better about the sale that really helps. If they you're going to do right by their childhood home or empty lot where they used to drink beer and throw horse shoes you're a lot more likely to get the deal then someone who just came off the street with a checkbook. 

I have a friend that does this in Cambridge MA. It's one of hardest and hottest markets in the country. And he recently got one of the last ramshackle places left on one of the nicest blocks in the city. How? He sent the family a Christmas Card every year...for FOUR YEARS. 

The short takeaway is you need to build relationships in and with your community before you can start to meaningfully add or transform your community. And at the end of the day, developers are in the business of building community. 

It sounds like an okay deal to me. He probably 1099s a lot of his guys and if you pay him in cash he can pay out his guys and probably not have to pay his workers comp. Workers comp is usually billed at a certain rate per hundred of payroll. So if you pay cash and he pays cash the money might not be reported by him or his people. That does not matter to you at all. 

If the owner does not want to sell I go find another piece of land and wait. 

@Liz Cole the long distance major rehab is how I started. My first project was in Hudson NY while I was living in Brooklyn. It was about a 2.5 hour drive. 

It's not fun to hear but please heed the advice of @Jay Hinrichs and others when they say this is a much much riskier and harder proposition then you might think. 

I did my first project full time and it still almost killed me. If you are going to proceed you should plan on being full time on site no less then three days a work week. I started a gut renovation in Feb, and slept in a sleeping bag on the jobsite and showered at the gym. 

To get the project completed you'll need estimates from people who will want to "just stop by". The really good and talented folks are busy and are not going to be interested in setting up an appointment three weeks out. Construction and corporate America are different worlds. Don't expect a team of construction pros to suddenly re-arrange how they run their business because it does not suit your schedule. Also, on your first one you can't expect a GC to just run the job for you. She is going to have a million questions that you'll have to answer. Those questions will arise randomly throughout the day and will often need to be answered before work can continue. Ask yourself: am I willing/able to do a 6 hour roundtrip on a random Tuesday to answer a question about window rough opening sizes. No, you can't resolve it over the phone. No, they can't send you a picture. You will need to be boots on the ground. 

With your first flip make sure there are gobs and gobs of money to be made. My first job took twice as long to complete as expected, cost twice as much to build as expected and sold for less then expected. I still made over a 100k but that's because I picked a project that was home run no matter how much I tried to mess it up. 

All that said. Stay positive and optimistic. It's a great business and it can be a really fulfilling way to make a living. After my first project I moved to Charleston SC and went all in on the building and investing business. My construction company is closing in our first million dollar year and my investment fund is oversubscribed. Success can be had, just don't let some huckster tell you it's going to be easy and smooth. It's hard work. Satisfying. Creative. Lucrative. But still HARD. EFFING. WORK. 

Good luck and please feel free to DM me if you have any questions or want to run something by me on the phone. @Jay Hinrichs has been super generous with his time for me (thanks Jay) and I'd be happy to pay that forward. 

@Jay Hinrichs this looks great! Very impressed you're able to build at 130ish a square foot. 

Hoping my Dingle project comes off as nice. 

All. This event is cancelled. Sorry!!! 

If any one wants a tour of downtown construction sites just let me know. 

I'll be there. Thanks Danny