All Forum Posts by: Rich Weese

hi Ron,

I do build for cash. On some occasions in the past I have used private financing at a 9% interest rate and two points. It really didn't add up to that much since I was turning the properties in less than six months. I've sold a couple properties so I have the cash to use on the construction without any financing. It does save a few bucks. In my subdivision in Texas I have been building for under $60 per square foot. That does include fully fenced yards and complete landscaping with sod front and back. Most of the homes I built in Texas were presold and the time from start to finish was 120 days. I only have the one home that has been built and sold here in Florida and it will be close to seven months from start to finish. There were a lot of mistakes and that one took much longer than the second one will take. We should be closer to 90 days on the construction and it is just up for sale now.

Rich

it is about time to give a short update on the property here close to the villages in Florida. I did end up buying nine lots originally and split them into 13.

First, my disclaimer. I did not build for the price that I had originally thought I could build for for several different reasons. The villages already own their property and it is ready to build on. All the utilities or ran in the ground is relatively level and they start their actual construction.

The lots I bought came heavily treed and had to be mostly cleared. With this being my first entrance into property in this area I learned a lot about the subcontractors that I want to continue with and the ones that needed to be replaced. I knew in advance that I would have the costs to remove trees, dig a well, and install a septic system. I also did not take into account the size of my lot that I was building on compared to the average size lot in the villages. The first lot I built on was nearly 19,000 ft.². I should never have installed an irrigation and landscaping over the entire lot. Big mistake. I will also have motion sensors and cameras from here on out. Someone came in and stole all the copper wiring which required us to pay extensive additional expenses for new wire, new sheet rock repair, and new paint to restore it to new condition.

it also took longer than I expected to get permits, design drawings, and final inspection and meter installation. I expect to do much better on the second home and completed in a much more timely fashion.

The first home is sold and expected to close in one week. The multiple listing service will show the sale at $208,000. The listing agent already had a buyer lined up that was willing to pay the $208,000 but we had it listed at 220,000. He agreed to take 1% commission so our net was $206,000 less closing costs. I will have the final numbers within another week or so.

Our second home is already sheet rock and moving along much quicker. It is a little smaller since I wanted to test the market with two different sides homes. We have just recently cleared to more lots and have prepared the pad for spec number three. We have also been told that one of the larger builders in Florida, Adam homes, is also following me into that same area to begin building homes after the first of the year. That can be both bad news and good news. They will do a great deal of advertising which will bring additional lookers into our area. It will be up to me to build a competitive home at a competitive price. I am attempting to purchase more lots at the present time.

I believe my net will be approximately 30% cash on cash in a six-month period of time for an annual net return of 60%. I expect to do much better than that on the second home due to lessons learned and improvements made. I also anticipate it to be a total time period of approximately 4 months. If I can turn these in four months, my annual return will improve considerably.

More info soon.

Rich

thanks to Steve Babiak for helping to find this old thread. As most all of you know, I am not good with the technology stuff. This is not the main thread that I was posting information in about my new venture in building homes in Florida. I am in the middle of that but I believe the other thread would have better information to lead up to where I am currently at.

Ron,

I pretty much have the final numbers now but don't close for another 10 days. I don't like condos so I don't build them. I build for cash and either don't have enough funds or don't want to use enough funds to build multi family. Those seem much more difficult to me from the initial stages of finding the property, getting it reason owned, completely new floor plans, etc.

I have a licensed general contractor that is very well-known in the area and has a very good reputation. That does not cause any difficulty at all.

Rich

Kyle,

I like apartment buildings. I own 154 unit building outside Dallas Texas. I also spent the last weekend in the Dallas area making walk-throughs of three different buildings I was interested in. All were over 150 units and I liked two of the three. I made an offer on one of them and thought I had offered a high price only to find out I had come in second place by $50,000 on a $6 million property. It is hard for me to keep up with the increases in prices in Texas. I have been convinced to put my building up for sale and exchange into additional apartment buildings.

The problem I have is justifying the price per door I'm having to pay. It has gone up significantly and makes the possible acquisitions look high but I guess if I get a high price for mine on the sale, it doesn't matter.

Ron,

I actually have a very small group I work with. In Florida and in Texas I only have a general contractor. They do all the work with the architect and the subcontractors. I've been building homes long enough that I have a pretty good idea of what I want to build and what it is going to cost. That obviously varies depending on where you are building the homes. I mostly build in inexpensive areas where I have an exit strategy if the home does not sell. I would simply keep the home finance it and use it as a rental until the market strengthens once again.

My returns have been significantly larger than most people earn on flips currently. I'm going to post the results of the first home I've completed and sold here in Florida shortly. It will give you an idea of what my profit is and we made significant mistakes on this first house. We have cleaned that up and are currently sheet rocking our second home and leveling the lots and preparing the pads for the next two.

The biggest risk in any real estate investment in my opinion, is to make sure your estimate months are correct on both the cost to build and the price you can sell it for.

I hope this helps.

Good luck.

Rich

hello Ron and Barbara,

I don't post as much on bigger pockets as I used to but I know there are other threads that answer the same question that I have posted before. Basically, I stopped buying properties to flip a couple years ago. The effort became much more difficult for what I perceive to be the small return on my money. I found other ventures  that have worked out better for my situation, specifically building new homes. I have been building in southern Utah and in the Rio Grande Valley of Texas for a few years.

Less than a year ago I moved to the villages in Florida where I perceived there to be another great opportunity to build homes just outside of this master-planned community. If you are not aware of the villages please understand that there are over 100,000 people living in this community. I decided to buy some lots and build some homes just outside of the villages and have just recently completed the first home while the second one is now being sheet rocked.

If someone can find my previous thread where I mentioned that this is what I was going to do next, I can fill in the blanks with some specific numbers. The first home is under contract and due to close within 10 days. It will be a significant profit and we actually did quite a few things wrong. I will go into more detail in the thread I started months back about this was going to be my next program.

I found that the return for the time commitment on buying flips was not worth it. I used to buy as many as five homes at a single sale in South Texas and all were extremely profitable. Having just visited there this past Saturday I definitely don't feel it is anywhere near as good of return. As other posters will state, you can still find a profitable property but it takes a lot more work and effort.

Good luck.

Rich

Thank you Mark. Most of the property listings I'm finding do not share their listing and maker the Buyer pay his agent.

Rich

Thanks again Carlos. I just wanted to make sure that there wasn't a half million dollars built into the price that I was having to pay for the property.

Rich

Thanks to everyone. I want to make sure I understand what Carlos had to say. My example is an apartment building that would be valued at approximately $8-$10 million. I would not be the seller of this property but may very well be the buyer. If I understand what you are saying, this $8-$10 million apartment building most likely has a commission of 2%. Would this be split by two different brokers, the seller's broker and the buyer's broker? Or would this be the likely commission if the same real estate office was handling the listing and the sale?

My interest is in finding out what I as the buyer am paying for commission that is built into the selling price. It is considerably different at 2% then it would be at a 6% real estate commission on $8-$10 million.

Again, thanks for the help.

Than you Daniel. Jon was correct. This would be an apartment complex (S).