Owner builder investing

[David Maldonado]

Has anyone had experience being an owner builder and built from the ground up on vacant land while using cash or private funds to fund the entire project, and then get a mortgage (getting all money invested back) and repeat? I'm pretty much describing the BRRRR method using new construction.

I figured, why compete with everyone else on a house that's more than likely going to need a renovation and pay above asking price? have built ADUs, all in, for $85-$95 per square foot per unit. I have done extensive research on the permitting process and all soft costs associated with predevelopment costs.

I'm looking at $40k-$60k on predevelolment costs

$100-$150 per sq ft for construction build. There is land with all utilities included in my area under 300k and 1200 sq 4 bed 2 bath single family comps in the area go for around $700k.

i want to build a 1200 sq ft single family home, 1200 sq ft ADU, and a 500 Sq ft JADU.

one of my propertys has both a jadu and adu and it appraised a little over a million (would be worth around $550k without the units).

With the numbers I've ran, its a no-brainer to go owner build, but I haven't taken on something this big. Just would like to hear anyone's experience and thoughts on this.

Thanks!

[Janelle K. Eagle]

Hi David -

Have you looked into Abodu? It's a company that builds full pre-fab ADUs that are pretty phenomenal. They are priced competitively at around $250K+ and include ALL utility hookups, trenching, delivery, etc. They just launched in San Luis Obispo County and for the most part have pre-approval from City and County of SLO. They have concierge service to be able to handle all permitting for you, etc. I attended a recent informational event and was super impressed. 

Based on your strategy, you could have them bring in your ADU in about 6-8 months and live in that while building out the main home.

Let me know if you're interested in learning more! I agree it's a GREAT option! 

[David Maldonado]

Quote from @Janelle K. Eagle:

Hi David -

Have you looked into Abodu? It's a company that builds full pre-fab ADUs that are pretty phenomenal. They are priced competitively at around $250K+ and include ALL utility hookups, trenching, delivery, etc. They just launched in San Luis Obispo County and for the most part have pre-approval from City and County of SLO. They have concierge service to be able to handle all permitting for you, etc. I attended a recent informational event and was super impressed. 

Based on your strategy, you could have them bring in your ADU in about 6-8 months and live in that while building out the main home.

Let me know if you're interested in learning more! I agree it's a GREAT option! 

Hi Janelle,

Thanks for the info, I did not know about that in SLO. But I'd prefer to build it myself. I own ADUs that I built myself for under $100 per sq ft. With a 4 month build time.

[Nicola Rutherford]

Are you a licensed General contractor? Sounds like you've got some experience with the ADUs which is great. 

Disclaimer, I've been looking into this for myself (as an architect, design build is very compelling), but I haven't done it yet, just got the land this month, so others may have better info. 

I believe in California you will need to live in it for at least 12 months before you can sell, after you get your CO, and you can only do this twice in three years. There are certain things you will need to contract out, making you an employer, so make sure you are insured for that and handling the proper tax docs. 

[Adam Bartling]

@David Maldonado if you are GC in your state then you can get a construction loan,   But for the ADUs Ya that is popular in CA, I would just check your county Regs.  

Just curious on why you would not get a loan 1st, but if you have great liquidity.... I you would have to evaluate the #s

[David Maldonado]

Quote from @Nicola Rutherford:

Are you a licensed General contractor? Sounds like you've got some experience with the ADUs which is great. 

Disclaimer, I've been looking into this for myself (as an architect, design build is very compelling), but I haven't done it yet, just got the land this month, so others may have better info. 

I believe in California you will need to live in it for at least 12 months before you can sell, after you get your CO, and you can only do this twice in three years. There are certain things you will need to contract out, making you an employer, so make sure you are insured for that and handling the proper tax docs. 

No, I'm planning on taking the GC license exam sometime early next year. I am aware of those limits for owner builders, but that only applies to selling a new build correct? I don't plan on selling any of my future builds. I want to BRRRR with new construction.

[David Maldonado]

Quote from @Adam Bartling:

@David Maldonado if you are GC in your state then you can get a construction loan,   But for the ADUs Ya that is popular in CA, I would just check your county Regs.  

Just curious on why you would not get a loan 1st, but if you have great liquidity.... I you would have to evaluate the #s

The reason I don't want to use a construction loan is to avoid the headache and pre-approval process and extra costs associated with working with a lender, not to mention that most lenders require a licensed GC. I can avoid all of that and be in complete control of the build by using my own or private funds.

I'm still a little guy in the game, so I do as much of the work on my builds as I can to save on labor costs. Plus I built 2 of my ADUs simultaneously, in under 4 months. GCs in my area take up to 6 months for a similar build.

[Adam Bartling]

David, most cities for permitting you will need licenses also. If you are in county, that is a different set of rules.  Each city in each state is different. Please look into it before you start.  Wind load engineering will need engineering, and electrical are always going to need a Lic.  Non permitted structures, since adoption of current building codes can get you buildings demolished.

Also check out programs like UBuildIt so that your *** is covered.  Trust me I built my company with my hands and back and I am sure you can, looks like you would enjoy the workout also.

FYI I just recently sold my sign and electrical company that I ran for 11 years, we pulled permits in 14+ municipalities.

[John A Murray]

The California Department of Justice, in conjunction with the California Department of Housing and Community Development, is investigating the charging of School Impact fees. They are looking to find out what cities force ADU applicants to pay School Impact Fees on less-than 500 sq. ft. ADU's.

Please let me know if you are aware of the cities that do.

Thank you!