Anyone really interested in construction??

[Rich Weese]

I just replied to a thread and it made me wonder. I'm not on BP very often any more, but I still have a vast experienced history. One thing I haven't seen much is a how to or step by step approach to actually building a home with info from start to finish. I've probably done close to 100 spec homes in 3 different states. I assure you it isn't rocket science.
I currently have 2 under const in UT and a couple more in so TX. I've also built in OR and CA at other times. I'm not a general contractor, just a speculator. There are many ways to make money on your own home with proper knowledge and location.
If there is enough interest, I'd be willing to post regular reports on the process. If not enough interest, no problem either. Have a good day. Rich

[Rich Weese]

I missed by a couple days getting started. First a reply to the open question.

Jeff- your kind comments are always appreciated. As to the GC,I'd reccommend a different one in different areas. And some areas none! Here we go.

I've "speculated" with new single family construction in CA, OR, AZ, TX,and UT.I had a lot of replies from NY and I'm not familiar with the area. Sorry.
Different States have different regulations as well as counties and even cities, so you'll need to make sure you know the correct process.This is NOT rocket science.
This really is something ANYONE can do. You do NOT need to be a General contractor in any of the States listed above. (at least when I built in each, it was not required)Remember to check thoroughly your individual area requirements.
I've never been a licensed General Contractor, yet have built nearly 100 homes and have 2 under const currently and 2 more on the drawing board and 2 just completed.There are several ways to do this.
1. Hire your own GC and negotiate a completed home price, including his Fee.
2.Hire GC on a "cost plus" arrangement, with your involvement on all the costs and GC recives a % above the costs upon completion, where completion is defined by receiving the approved Certificate of Occupancy by the entity that provided your original Permit to construct. This % might range from 8-20% depending on the difficulty of const and availability of the GC.
3. Build the home as an "owner builder". Some locales limit the # of these you may build per year. Again, you'll want to check this out.

Like most Real Estate , the majority of your profit is made going in. This means the lot/land needs to be bought correctly. This is the first area where you have a chance to make more than the next guy, if you select your lot to build on with built in value. This value is obtained by:
1. Simply stealing a lot at rock bottom price.
2. Buy multiple lots to receive a reduction on all.
3. Convert a group of lots from standard lots to Gated Community
4. Obtain owner financing or subordinated financing .
5. Have the seller of lot do your const financing.
All of these items and others will lock in additional profit.

The other area to lock in value is in who builds the home and how much is the fee. Take a 100K project. The fee could range from 0 (owner builder) to as much as 20% or higher.
Looking at this 100K project, your total add-on cost could be 20K, raising your price to 120K. Now add the lot. Did you build value into the lot or not? I've doubled the value of my lot by doing 1 of the 5 options listed above.
With the two variables listed above and using a 20K lot (lot cost and Fee) the completed 100K project could end up as follows:
A. 100K costs plus 0 Fee plus 10K lot= total 110K
B. 100K costs plus 20% fee(20K) plus 20K lot =140K
Selling price of 150K. Which one do you choose, A or B? Remember, we built an extra 10K into the lot value and that is a difference in the calculation.
You will also determine your further profit by finding good competitive sub contractors. If you are doing the owner builder, any of those reduced prices go into your profit pocket. Cutting out the builder or finding a builder with a reduced fee is valuable to your financial health.With the economy in many places, fees are VERY negotiable. I've found GC's before that have signed the permit for the City in exchange for a week stay in Cancun($1500 value). I've had to satisfy the GC I knew what I was doing, would only hire licensed subs etc.
Less expensive is not always the best. Just as you could "repair" walls that have 100 Gigantic holes by placing cheap paneling over the holes, you could also repair it correctly with taped, textured and painted drywall/sheetrock. There is a point of diminishing returns with cheapening the product-DON"T DO IT!! Your reputation for future sales is very important if you want to keep doing this.
Feel free to ask/post any questions on material presented and I'll try to answer prior to next installment. We won't start building in the next entry. We're going to have a short discussion on why you might want to do this and what benefits you might derive from it. Then we'll start building. Till then Rich.
p.s. See you at the Denver get together in March.