Steps to "flipping" a new construction for New Investors

Member since 2024 · 3 posts · 1 vote

Hello Team,

Currently I purchase distressed properties, flip and resale. I now want to look into "flipping" new construction or spec home building. My plan will be to purchase a vacant land with cash and finance the home build through a private money loan. I am currently building my team. I already teamed up with a home builder and private lender.

Are there any experience investors that could list out briefly the general steps beginning with purchasing the land to selling the new home? Also any cost that I may need to consider to pay upfront other than the land it self (i.e. survey, permits, etc)?

Thanks!

1 Reply

27 views

Most Popular Reply

Robert EllisBusiness Member

Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes

Quote from @Manuel A.:

Hello Team,

Thanks!

we do this in Columbus but instead of single family we do multifamily with no garages and stick to infill urban core lots. I refresh our lots list every few weeks and look at infill lots by price per acre, density allowed, new build average price and price per square foot, deliveries per year, etc as a driver for it. I'm not sure about Houston but make sure you find a great agent who's focused in your area. call agents who list new construction or who closed land purchases and represented people. on my closed transaction list and active listings it's land on the buy side and new construction homes on the sell side. make a spreadsheet, email and call every single one, have 10-15 conversations, meet with 3, pick 1. sales funnel.

[email protected]786-494-6766

Section 8 Launch52 Reviews

Website View Page

1 Reply

See this reply in the discussion

6 Replies

Jump to latestLatest

Sort by

Robert EllisBusiness Member
Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
2y
Quote from @Manuel A.:

Hello Team,

Currently I purchase distressed properties, flip and resale. I now want to look into "flipping" new construction or spec home building. My plan will be to purchase a vacant land with cash and finance the home build through a private money loan. I am currently building my team. I already teamed up with a home builder and private lender.

Are there any experience investors that could list out briefly the general steps beginning with purchasing the land to selling the new home? Also any cost that I may need to consider to pay upfront other than the land it self (i.e. survey, permits, etc)?

Thanks!

we do this in Columbus but instead of single family we do multifamily with no garages and stick to infill urban core lots. I refresh our lots list every few weeks and look at infill lots by price per acre, density allowed, new build average price and price per square foot, deliveries per year, etc as a driver for it. I'm not sure about Houston but make sure you find a great agent who's focused in your area. call agents who list new construction or who closed land purchases and represented people. on my closed transaction list and active listings it's land on the buy side and new construction homes on the sell side. make a spreadsheet, email and call every single one, have 10-15 conversations, meet with 3, pick 1. sales funnel.
[email protected]786-494-6766
Section 8 Launch52 Reviews
Website View Page
1 Reply
Kristine Ann
Investor · WNY/CNY/Adirondacks, New York State · Member since 2024 · 151 posts · 133 votes
2y
@Manuel A. I'm also thinking of doing this, though I didn't think of it as "flipping." I guess that's the area where you come from and your mindset. I am looking to do this on land where old vacant houses were demolished. I will rent to LTR when completed.

Personally, I am looking into modular homes for this. You have to get the foundation poured and be prepared for the delivery. They set it up in a couple days. Kitchens, bathrooms, plumbing and electrical is already set up and you just have to have the tradesman do the hookups, theoretically.
0 Reply
Robert EllisBusiness Member
Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
2y
Quote from @Kristine Ann:

@Manuel A. I'm also thinking of doing this, though I didn't think of it as "flipping." I guess that's the area where you come from and your mindset. I am looking to do this on land where old vacant houses were demolished. I will rent to LTR when completed.

Personally, I am looking into modular homes for this. You have to get the foundation poured and be prepared for the delivery. They set it up in a couple days. Kitchens, bathrooms, plumbing and electrical is already set up and you just have to have the tradesman do the hookups, theoretically.

to be honest my advice is to sell the lots you own and buy new. most lenders won't consider your basis in the land as equity, there Needs to be a new transaction created. at least from all the lenders I've seen. we talk to land owners every day in columbus that own land but it's unentitled and doesn't have any transaction recorded so the equity contribution that you are given credit for is vague. so if you sell your lots and 1031 into another one, in my opinion it's the best of both worlds. if you can'ts sell them, entitle them to get higher values and then 1031. talk to a zoning attorney.
[email protected]786-494-6766
Section 8 Launch52 Reviews
Website View Page
1 Reply
Kristine Ann
Investor · WNY/CNY/Adirondacks, New York State · Member since 2024 · 151 posts · 133 votes
2y
@Robert Ellis that's interesting. Here I'm thinking it'll be easier because there was literally a house there before and there's already electric, sewer, water and gas at the street to connect to.
I bought the land after the house was demolished. Does that make a difference? Maybe it won't matter if I'm not depending on the equity of the land to get the loan. Definitely something I'll ask the town about.

@Manuel A. Are you as tired of collapse ceilings, peeling wallpaper, and scary basements as I am? I just started to think recently, why don't I just build new?
0 Reply
Chris Kersey
Real Estate Agent · Houston, TX · Member since 2022 · 135 posts · 84 votes
2y
@Manuel A.
This can be a great idea and very lucrative if done correctly, in the right locations and with caution/attention to timeline creep. I build duplexes ground up in central Houston for long term holds.
The basic steps would be:
1) Buy Land- (up front cost) make sure you can build what you want ahead of time by talking with an experienced engineer/architect familiar with local codes and regulations. Houston recently passed the livable places ordinance which has changed up the game a little.
2) Plans/Permitting- ( all up front cost) Get with an experienced engineer/architect to drawe up your plans and submit to permitting. Then wait (2-3 month non-flood zone, 4-6 months flood zone) for approval. You will have to pay for surveys, plans, possibly a soil sample (elevation certificate if in flood).
3) Build- Once plans are approved and your financing is lined up, you can start to build.
4) Certificate of Occupancy- Complete the build and all inspections and sell. Most people pre-list the homes a couple weeks/month before its finished to get the word out.

I am a RE agent, investor and developer in central Houston, feel free to reach out with further questions or if you need help finding land that works with your numbers.
- Chris Kersey
0 Reply
Manuel A.
OP
Member since 2024 · 3 posts · 1 vote
2y
Thank you all for your feedback. @Chris Kersey that was very helpful, if any questions may reach out to you for further guidance.
0 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.