Beachfront Luxury Construction - Single Family

[Dominic Balconi]

Questions:

What useful tips have you learned through home construction, in any location?

Did you construct to build and hold, or sell off for profit?

If you built to sell right away, did you have an architect design the home or was a buyer lined up before-hand who designed their home?

Did you use cash, borrowed capital, partnered capital, or a loan to secure funds for construction?

If you are able to line a buyer up who will pay for construction during the building process, how would you structure the payments?

I am planning on building a single family home in Ecuador on the beach. I'm also considering building a duplex to build and hold. I'm not sure whether to go for a large payment up front, or smaller, consistent payments. I understand that this is entirely based upon my goals and the market.

Any other advice or tips about the construction of homes in general, not necessarily on the technical side as I have great contractors lined up, would be greatly appreciated. I'm going to build for my first real estate deal ever, so hopefully, everything works out well.

[Eric Teran]

There are a lot of questions here.

1. Home construction - Unforeseen cost such as hooking up to the sewer and storm drain system. Paying for fees that are much more than anticipated like a school board fee, water improvements, building sidewalks or curbs along your property line. I once paid $24,000 for school fees in Chino Hills, CA and recently I had to pay $6,000 to the Chesapeake Watershed Improvement plan. Be aware of all these cost. 

2. Both times I have built it was more for me and my family to live in. However, it was always with the mindset to make some profit.

3. When I worked with developers in Southern California they would build spec homes for $10 million. All the successful ones had a simple rule. Before you buy the property know 100% what your selling number is. If that selling number happens the first month you are building then you sell it. Don't be greedy. If it happens in month 10 of building then you sell it then. Don't be greedy. So have your selling number and if it is reached at any point during construction then you sell it. If you sell it during construction you can then reach an agreement that they can contract with the Architect to make any changes and you as the builder will make them but there will be change orders and they will have to pay for them. If not it will be a monster of a headache. 

4. I've used construction to permanent loans both times I've built. However, if they were for investment properties to flip I think I would definitely use investors. Bank construction loans are tedious. 

5. I just built a jungle house in Ecuador last year. There is a LOT of stuff you need to be aware of. For the jungle house I was there for the first 3 weeks building the foundation but then I had to come back to reality and work for a few months. If you are not there during construction or have someone you can trust you are going become very frustrated. They also build in meters and have different standard sizes. For example you can't make a wall 8' tall. It should be 2.40 meters because that is the typical board length. Since this is an investment property to serve as rentals I am looking into how I can write off the building materials for my US taxes. I have receipts for those but not for the labor. That was all cash with no official receipt. 

What beach are you building on? We are looking to buy a property as well on the beach in the next few years. There is a lot to tell if you want to build in Ecuador. Send me a message if you want to talk more. 

Good luck.