All Forum Posts by: Edward Briley

 Low end of having a home built is $100 SF.  Secret is that if you build it yourself, even using various contractors, it is not that expensive, and you will do a lot of the work yourself.  Don't get me wrong, building it yourself means a whole lot more responsibility than having a contractor to do the job. Just like was advised above you have to manage the build correctly.  If you are the builder yourself, you are the one that has to eat the cost in things not completed correctly etc..., not to mention materials on the site when they are needed etc...  Many things can and will go wrong I know. 

Saving money to build your own home is not the answer for most, even flippers.  I am not even sure about doing it myself, my only advantage is having a support group of contractors that have built, and do build entire houses.  I will also tell you that I will be surprised if I make money on the first build, we will see. 

Built 11 homes from $150,000 to over a million. 

 Actually my contractors are the ones that want me to do it.  Do I have any experience in building new homes?  No I cannot say that I do, but I have a very good friend that does, and he is also leading me in that direction.  Also, two of my contractors build custom homes. (Roofer and foundation contractors).  Also, the local building inspectors suggest that I may want to do that, rather than flipping.  All of my contractors are class B or better, plus it is not that far of a leap for me to get a Class A license.   I am not a flipper that does shoddy work, and I don't cut corners.   My average flip is now costing $30,000 or more, plus the cost of the home and by crunching the numbers, I can see how I could build a home for that kind or money, that would sell a whole lot faster than a flip.   

I have flipped a few homes now, more than I will admit, and I have come to the conclusion, that using my contractors that it may be less expensive to build new, rather than flip in some cases.

There are many lots, not only here, but across the nation, mainly in low income neighborhoods, but many in decent neighborhoods that are 25 foot wide. I am thinking about contacting an architect to design some homes for me that I can take advantage of these properties. These homes would be from studio's with one bath to 3 or maybe even 4 bedroom homes with 1 1/2 to two baths.

My figuring on construction cost I am seeing about $30,000 to $60,000 on building these homes, plus the cost of the dirt. I should be able to sell them from $60,000 to $120,000 easily. What kind of advice can someone offer?  Would you take the leap?

I bought an REO, that I was hoping would be completed within 2 weeks after I closed on it. Now, I have found out that the main girder in the home has rotted and needs replacement. - This is not a big deal, just a delay.

In the city I am flipping the home in, has refused to remove garbage from in front of the home, that was 90% greenery.  Apparently  this city has a city ordinance that they are not allowed to remove garbage unless they deem the home occupied.  I am flipping this home, and I remove the contractor garbage at my expense.   I had the water, the electric, and the gas turned on in the home, and yes even pay the taxes on the home.  

I received a warning that they were going to fine me $300, if I did not remove it within 5 days.  I pay for garbage removal in my water bill, in which I asked about garbage when the water was cut on, and I was told that garbage removal was every Wednesday and recycling every other week.  Also, bulk garbage removal was every week. 

I called public works about the problem.  Are you ready for this?  They sent the trash police, complete with a badge and wearing a gun!!!  He told me I needed to remove the garbage now.  I just asked for his supervisors name, and he gave me the number.  I called and asked why they did this?  They told me that the Code Enforcement Officer was not allowed to carry a gun, the thing about this, the neighbors even committed on it.  After my wife contacted the City Manager they did remove the greenery.  After this was done, they sent a truck to take away my garbage cans. I told the driver, if he set foot of the property I would have him arrested for trespassing.  He called his supervisor, and I called the public works director, and he told me that time, he had taken care of the problem. They did pick up the garbage the next week. 

Now lets continue.  I closed on this home 2 weeks ago, yesterday. 

Today I received a tax bill for deferred taxes on the property for 2012, 2013 that I have to pay before October 20.  They have even raised the assessment by $5000.  My taxes what they are claiming I owe is $1060.40 for year 2012/2013.  I do have and have paid for title insurance, and I am sure that is covered by the policy.  I even made it clear in the contract that the taxes are to be paid up to the date until closing date, or that I would be credited with taxes that were not paid until that date.  Matter of fact, I think this is covered by state law. 

I am not a slumlord.  I have replaced the roof with 3D shingles, the windows, wrapped the entire home to make it maintenance free and working on the interior now.  This home was built in 1981. 

The home is brick and is beautiful on the outside, and will be beautiful on the inside when it is completed.  The area the home is in, has one of the highest crime areas in the region. 

The homeowners on the street are glad and proud to see this home being flipped the way I am doing it.   In any other area the home would be worth at least $150,000.  I have a "For Sale by Owner" sign in the front yard, and I will be selling the home for $85,000. I do my best to flip homes in bad areas trying to clean them up.  The city I have bought this home in, are doing the best they can so I will not succeed.   

When the home is sold, in which I have many interested parties, I will post the name of the city, and ask all investors to tread very carefully before they invest their money into this city.  I have flipped many homes and never have had so many problems with a city. Most cities are thankful, but not this one.  I doubt very seriously that I will ever buy a property in this city ever again.  In my opinion, that this city wants to keep the crime rate high, and keep out investors trying to improve it. 

After I post the city's name, I will send a copy of this post to the Mayor's office in this city the local TV stations, and the City Manager. Many investors in my local area will know the city, because they will know the city's reputation simply because of the crime rate. 

@Vicki Gleitz I use the neighbors, people on the street to assist me in doing things, like tear out, removing trash, landscaping mowing the lawn and such.  Just an idea.  Cheap labor, just make sure they stay safe.  

@William Ellis What I do is look at the houses around a property.  I also look to see what the houses are accessed for, and check to see if anything is scheduled for the community in the next few years.   I know someone that purchased homes on a road that no one else would touch.  I think seven or eight.  He repaired them up to above standards and rented them.  The city accessed the homes higher, because they maintained nice curb appeal.  The next year the city came in and bought the properties for accessed value to widen the road.  Actually he helped push the road project along, because more were starting to do the same, and the city realized that if buyers kept doing this, that the cost of the real estate would increase above the value they wanted to pay.  He did know the project was on the board, however.

Now, I have to look also, and see what the home sold for originally.  That tells a story alone.  If the neighborhood turned somewhere along the line, hopefully investors will buy in it along with you.  Many people when they get older like to buy properties they grew up in, and that includes slum areas. Chances are that if it was a nice area before, it will be again, but I cannot predict the future no more than you.  Believe this or not, some homes are worth buying if they are sitting on a lot that is good, just because of the home itself.  What if you could buy a 3BR/1bath brick home built in 1981 for $22,000.  Would you buy it?  I have and will again. Now at the same time would you buy a completely dilapidated home within a mile from downtown, that was a frame home that was built in 1934 for the same $22,000?  I have done that also.  

Now when I buy in real estate, I look inward, I normally know when I first see the property.   I look at what it will cost to flip the home, rather I rent it or not.  I offer an amount of money for the property that I know I can get within a year with what profit I should make after it is flipped.  I may rent it to begin with and later sell it.  What I am trying now is putting a "For Sale by Owner" sign in the front yard and put it on Craigslist with a price on it that I know will appraise for when I am done.  If it doesn't sell in the flip time period, I will just rent it out.   For a rental, I look at 3 to 4 years for my investment to return.  If not, I continue to look. However, if a bank will give me a  mortgage on the property after I flip it and rent it, for what I paid for the property, I will take it, and buy another property with the money. I let the rent from the property to pay off the credit card bills and mortgage.  And repeat.  Most properties, at this time period can produce a decent profit, if you have put into them what you should, providing the property is sitting on a decent lot.  (Decent lot referring to not on swap land, sinkhole ridden or some other major problem).  Also, just because you have doubled your money, does not mean you didn't earn it either, because you will.  It is harder to sell a sub $150,000 property now, than it has ever been, in my opinion. 

Now with all of the above being said, it is very possible that a sub $30,000 property can take two to three times of what you paid for it, to make it a castle.  Make sure you keep risk insurance on them also.  It is not cheap, but better than losing them during renovation.  It is very possible to make a 100% profit on some properties, but they are few and far between. $10,000 to $50,000 profit is not out of the realm, if you did your job correctly, and you can find the right buyer. (10 Sucks but if I can dump it for that profit quickly, I will do it).  Remember that time is money. I am working hard on trying to get flips down to just a couple of weeks, rather than a couple of months.  To do that though, means me burning a lot of midnight oil.  For this reason after 3PM today you will not see me on this forum much for the next 2 weeks. 

@Richard D. @Wayne Brooks  I have decided to go back all of the way since inception.  

@Leigh C @Steve Babiak Should I be blunt?   Being blunt can be a good thing, I can respect that, I have been around long enough.  I can be hard headed, and by being nice and covering it with flowers may not get a point across.  After all, why am I here?

Now, I realize that if auctions were easy I would see my buying competition at them all of the time.  Now my attorney did tell me that the same crew are at every auction, that I stated in my original post.   I think I have seen them there.  The guy in the black trench coat, the girl with very short, shorts and no bra, and the surfer dude. (JK)  The advantage I have over them is that they are after more attractive properties than I would be interested in, most of the time.   I am above the slumlords, and below the $100,000+ bidders. 

Now it was stated that at auction I would be lucky to buy 1 in 100 properties. I think that figure is a little high, however, at the same time I am a little more optimistic than that. Now before I would even bid on the first property my attorney is going to let me know what I should chase and not. In the past I have bought properties, that after getting them, wished that I hadn't of course and that was buying them REO. I am sure we have all been stuck in one way or another, but following the closings, and what I have seen is that I wish I would have least bid on a few. Maybe the area I am in is a little easier than yours.

To view all of the properties that are up for auction in a weeks time will take me no more than an afternoon once a week to veiw. I have been doing this. I have also been looking for signs if I would risk doing a title search on an auction that may be canceled, such is someone working on the property etc... or the properties appearence. Maybe by even talking to the present owner. I am not someone that is just running to auction either trying to find a good deal, if I were, I would not have contacted my attorney first. Now if I score 1 in 100 buys at auction, that is not a bad score either. Spending $7500 for a savings of $10,000 is still a deal. Not only that, but hopefully, and I do mean hopefully, that I will pick up a property or two I would want that I could not have gotten through REO, or private seller. I have no worries on rather I am able to get title insurance either. I know that a title insurance company may not issue title insurance on a property for at least a couple of years after it was purchased, if ever to the present owner, due to swift QCD's in a short length of time, or contracts that have been reassigned, or maybe more reasons than I know of or could state.

I lost out on an excellent deal, not too long ago, because I did not talk to my attorney before I walked away from it.  So, saying this, I would not advise anyone to pursue a deal like that, unless they had talked to their attorney first.  And I didn't say any attorney.  This is the reason I pay an attorney.  What he charges is more than fair in my opinion. I will also tell you that any title search that he does will be done back to inception. He will even advise me rather or not to do the search, based on his contacts with other attorneys.  He will make sure that my butt is covered before he will allow me to even bid on a property and more than likely what I should offer for it, at least to begin with.   Some of the best deals out there are not for the faint of heart.  I know this, also.

You also say that I should go to a few auctions to begin with, and I have, and planning to go to even more before I make my first bid. 

I also want to make it clear I am not someone that has hundreds of thousands of dollars to play with either.  The properties I purchase are modest to say the least, but I do get very good returns on them.  For now, that is good enough for me.  Maybe it is time to take the next step? 

Oh, before I leave this time, just to let you know that I live in an area that is the safest in the United States from natural disasters. However, most major insurance companies no longer issue homeowners insurance policies here.  Maybe this should tell people something?

Hello Everyone, 

I am someone that have acquired properties buying REO properties, or private sale. Today, I was talking to my attorney and asked about buying properties at auctions. The first thing, which I knew, that buying at auctions could be very risky. He also told me that basically the same people show up at every auction. The good news is that you could still get a good or better deal on a property provided you did your homework. (This includes a title search). Matter of fact, he told me that I may be able to acquire properties faster, and for less money than waiting for an REO. However, on the other side, the bank may not accept the offer at an auction, and you may find it in REO for less money than what you bid on the property. This was a very lengthy discussion why, but it made sense. Now you must remember that if you buy a property at auction, you may have to file the papers for eviction etc... Not to mention to living up to leases the prior owner may have made with a tenant. It is not unusual here for a real estate company to pay a tenant to leave the property.

Now after further picking his brain for awhile, I asked if it was possible to do pre-auction title searches on properties, and how much would it cost?  Well, I know online you can do them for around $140, but of course I could not see in paying that much.  Now the deal that I made with him, was very inexpensive in my opinion. I don't wish to disclose the prices, but he gave me 2 options.   

The first was doing the title search back on the property to the start of the neighborhood, for one price that is higher, or doing the present owner only, which is more reasonable. Either way I choose, he will deduct that from the cost he charges for closing on that property. 

Now, my question is, am I safe enough by going back to just the present owner, or should I pay the 50% higher price to go back to the neighborhoods inception?  

Now I will tell you this, that I may have them do up to 5 title searches for me a week, and I will only expect to get one of the properties at auction of the 5 title searches I have paid for. 

What would you do?

@Account Closed You need to read the first two lines that I posted. Is does not relate to anything else I expressed in the posting. My examples I made really does not have to say anything about real estate investment in Dallas or Houston. I just know that I have some very good friends that lost their butts in the real estate crash a few years ago. Matter of fact, one of them went totally bankrupt and still has not recovered from it. Myself, I am little upside down in my mortgage - maybe?  What I am (was) saying that no matter what kind of appreciation forecast gives you at the present time can not be depended on.  If forecast appreciation was reliable, banks would be sitting on most properties.  They did this after the crash, and lost money because of the cost of the upkeep on those properties, and at the same time the properties were dilapidating.  Both of these things even played a bigger role in property depreciation, rather than appreciating, than if they would have cleared their books ASAP.  In my opinion this is why the housing market is starting to improve.  Banks are now, within the last year or two, really have been working aggressively to get rid of properties that have been foreclosed ASAP, because hind site is 20/20.  In my opinion from what I see that it will be at least another year before the foreclosure rate will drop dramatically  and only at that time will appreciation forecast will be an advisable thing to do.  Most mortgages made in the last 30 years, were for 30 years. You have many out there still that are holding on and hoping that one day their home will be worth what they paid for it.  Many of these will give up shortly, you will see, and for this reason the foreclosure rate will remain higher than it should be.  The worst is over, but still many more to go.  

Who is supporting the real estate market mainly? Real Investors, that's who.  Not only that, Real Investors are also sustaining the market. Real Investors may be buying low, but they are also selling properties at reasonable (full market value) prices.  A real investor will buy a property and rehab it. Many so-called investors are no more than slumlords. And they do and will kill property appreciation just because of their own greed.  I am sure many of you know that house on your own street.