Spec Building vs. Flipping

[Mark Mathews]

I'm looking for opinions about what are the pros and cons in regard to spec building vs. flipping residential properties.

Thank you in advance.

[Khaled Helmi]

Originally posted by @J Scott:

Originally posted by @Khaled Helmi:

Originally posted by @J Scott:

Flipping is cheaper, faster and has less market risk. Spec building is more consistent on costs (fewer surprises) and typically generates higher profits (though not necessarily higher ROI).

 @J Scott - Whats the learning curve to go from Flipping to Spec building?  I'd imagine its much greater - is that true?

Much longer/harder.  Writing a book that covered the step-by-step details of flipping houses wasn't very difficult -- I felt like I could capture 95% of the details in a couple books. 

That said, I've wanted to write a book on spec building since we started doing it, but I don't believe it's something I can teach in a book.  At least not very well.  I could probably capture 60% of the details in a book or two, at most.  So, I've given up trying (for now, at least :) ).  It's really something you have to get your hands dirty dealing with the unique details of each project (and each location, each building department, etc); and having a mentor or someone who can show you the ropes is by-far the best way to get started.

 @J Scott - that would be an excellent book idea as I'd be the first one to buy it.  

Your other books are must reads for flipper newbies (helped me a lot) but I have yet to find a good book (for newbies or not) on new residential construction or Spec Building.  If anyone has please let me know, but maybe J Scott is accurate that its a bit difficult to write and that's why it hasnt been done (at least my knowledge).

But then again one of the famous rules of investing is that to find high-returns you have to go where people don't go.  So maybe that's why you SHOULD do it! =)