All Forum Posts by: Sue Hough

@Clifton Gerring I love your enthusiasm! Your plan is solid and very workable.  Do not get discouraged about your lack of funds at the moment.  If you are willing and able to put in time, there are always investors looking for a great mind like yourself to work with.  You may start off just “learning”, which translates to not making money on your first or second project, but that’s okay because you are getting a free education.  

There are many worthy Real Estate MeetUp’s in Nashville.  Find a few and become acquainted with some seasoned folks.  Put your intention out there and someone will take you to the next step.  

Good luck!

@Stefan Folkert as a builder, I am bias towards stick built for many reasons, but I do understand the value of a modular home.  My comment relates to lending rather than the integrity of the modular, which rests mainly on the manufacturer as they can be of good quality.  In the Chicago market, lenders have different guidelines as to their modular criteria vs. stick build.  Something you may want to discuss with a good home lender prior to building.  This may allow you to make a small modification initially and save your buyers, and yourself,  in the end.

Good luck!

@Todd Baldwin your creative-ness and ability to see money in places where most would look the other way is astonishing!  Way to go on an amazing deal, I look forward to seeing your many upcoming projects.

@James Day welcome to your new journey!  Rather than give advise as to the feasibility of your project, here are the initial steps you can investigate to determine the likelihood;

1.Go to the local overseeing zoning body.  Most likely the City or County.  They will have Zoning Maps you can view to locate which zoning designation your building is in.  See how close you are to other zoning areas, as if you are the other side of the street a zoning appeal may not be difficult.  Ask the person in charge of zoning (not just anyone working there) to describe in practical terms the implications of your current zoning class and what it would take to change it, they are there to help you. I have found most of the time I will get the answers I need.

2.  Assuming you are able to achieve your zoning goal; consult a reputable contractor to determine the construction expenses.  Do not forget to include the separation of gas, electric and water meters and services, architectural fees and permit fees.

3.  If this is still looking good; do your due dilligence!!  Find out what local rents are going for, who are your tenants, vacancy rates, anticipated maintenance and so forth.

4.  Now you are able to make a solid and well informed decision as to the viability of your project.

As a point of reference, this may look like a lot to tackle, but I can usually complete all of the steps in less than 7 days.  In real estate there are a million ways to make a good project work, don’t give up. Good luck and I hope you have fun!!

@Lucia RushtonI strongly believe you are onto something wonderful! I am working on a small-home vacation destination in South Carolina and the numbers are remarkable.  And, I believe, the stability of these type of homes and the rental model you are working with will only solidify due to COVID and an impending economic short-fall for the following reasons;

1. Many American’s are learning to down-size and COVID is accelerating this mindset.

2.  If you needed financing, or if you are interested in selling the homes, banks are more likely to lend on a small scale project due to the low risk of default on such a small investment.  Interestingly enough, the profit for the builder/developer is very high, usually 25%-50% profit, as they can sell from $70,000 - $125,000 depending on location and amenities.

3. It is the largest growing vacation market in America.  Although, at present, the vacation rental market has been hit hard, it is only temporary.  Small-homes offer affordable opportunities to vacation in a very trendy model. In your location, the vacation rental opportunity for a small-home is between $50-$125 per night.

4.  Many single empty nesters are craving this style of living and purchasing multiple homes throughout the country.  This allows them many options without breaking the bank.

5.  Last, but not least, it is my personal favorite building model!  I love the unique “cottage” feel, low use of building materials so I can feel comfortable saving the planet just a little bit, and the price is my target.

Good luck and if you would like to shoot the breeze and bounce ideas, please feel free to message me.  

@Jake Somers congratulations on your decision to jump into the real estate investment industry!  It is a wonderfully fulfilling adventure as long as you are comfortable with many ups and downs and are a creative problem solver.   Although I do not usually air on the side of caution, I am going to in your current situation.

Please do not invest everything you have in one property, as that in itself is a horrible financial strategy and apt to be disastrous. There is NO financial strategist who would advise you to put all of your eggs in one basket!  Please never forget every real estate opportunity is a financial investment and needs to be addressed as so. You will also need money, approximately 20% of the total project cost for unexpected expenses.

I have been a residential builder for 20+ years and can tell you with absolute certainty you can not properly access any and all construction and/or code needs by looking at pictures in the MLS. As @Peter Harper and @Michael Lee both stated; the amount of changes in listing history indicates big problems. Usually when a deal falls through twice and has been on the market a while the sole reason is serious structural or building related issues, thus causing the buyer unable to obtain the bank's approval.

Finally, I would like to advise you to remove your emotions as much as possible and allow the numbers to dictate if a property is worthy of your time and money.  I learned the hard way (which translates to; loosing money) to leave emotions out of the picture. 

We will be going into a buyers market very soon, if not already in your area. Unfortunately the Covid crisis will soon cause an increase in foreclosures thus creating a buyers market.  After you have seen the property first hand please seriously consider the financial merits of this opportunity and base your decision solely on that. If this property does not work for you, allow a better opportunity to come your way. 

Good luck,

Sue Hough

@Bridger L Logan, your are on to something wonderful and I commend you for your due diligence!  You have run your numbers, are comfortable with construction expenses, have researched the local tenant markets and so forth.  In this industry, you have done everything to prepare yourself.  It is not an industry where you can learn everything you need from a book or weekend course, this is a “hands-on-have-the-time-of-your-life” sort of learning process which takes many years.  

Even after 20 years I learn something new every day and that is one of the main reasons I love it.  As long as you are open to the fact you will be given many learning experiences and have the opportunity to become an extraordinarily creative person, you will be fantastic.  I have found the people who are not comfortable within the investment arena are those who are very cautious and not comfortable with their abilities to solve problems.  Unless I am reading you wrong, you are not that person.  

You have what it takes to be very successful, I wish you the best of luck and have fun!!

Sue Hough

Congratulations Brian, beautiful project!! I wish you great success in the future.

Sue Hough

Tim,

First, welcome to real estate investing and I wish you great success!  

Second, do not give anyone your hard earned money without a contract.  Contact your attorney and have him/her prepare something which clearly defines your expectations, where the money is going, how it is protected, your position in the entity holding the properties, any recourse should things go wrong, etc.  Conducting business should be done professionally and in writing every time there is a financial transaction.  The contract does not need to be complicated or expensive.

Good luck,

Sue Hough

@Will Barnard, my apologies!  I now see the dilemma.  I was under the impression the two brothers were working on everything else equally.  @Aidee Cervantes was not clear as to the roles of each person excluding the construction.  So it all depends on what each party is doing ie; who found the deal, the financing and so forth.

Thanks,