"Shipping Container" construction as a Model

[Ian Ray]

I have been noticing the competition stepping up in mainstream investing as of late. Well, at least in regards to preexisting inventory.  As a new investor, I can honestly say my first year in the game has been easier by far than this year in regards to finding deals that meet my numbers.  Now, I understand that markets ebb and flow and that is life, but a thought came to me: why sit in a traffic jam when I can take a new lane to the same destination?

Because of this, I have been thoroughly investigating shipping container construction.  During this investigation, I have yet to see a firm that targets the middle of the market with this housing type. I see designs that cater to the high end, and designs that cater to the off grid minimalist. 

Reading through some of the posts on the subject in the other threads, I have seen some people state that you can pull off stick built homes for the same cost of construction, but with the current inventory of containers, I am having a very hard time seeing how that is.  Now it is entirely possible that I am missing something as far as falling prices on stick built construction in certain areas, as I do not know everything. But, by comparison, I have had a design estimated at 25k for cost of construction, yet it will yield 2560sqft.  This is including MEP work being completed, but no upgraded finishes at all. 

Personally, based on my research, I feel like if you are fully aware of the permitting and inspection requirements in your market of choice, the costs of getting up and running will be taken care of very rapidly if you are planning to pursue shipping container construction as a model.  I plan to take the cookie cutter approach, having about 4 or 5 engineered plans, a dedicated team of contractors trained and experienced in this kind of construction that I work with exclusively, as well as an engineering team in place to consult with when needed. 

I plan to use this model for my multifamily investments as well, as my way to enter the space.  I have previously posted about my intentions in that niche, which I still hold.  But after speaking to mentors and brokers, I realize that I need to strengthen my background and experience before I am taken seriously when I ask for a seat at the table.  To this end, I will have multifamily designs that  I will execute in specific markets as a proof of concept, for both the viability of construction, as well as my ability to manage and maintain a multifamily asset. 

Regardless of which route I take (SFH or Multi), I plan to base my numbers off of the returns I would need to sustain a buy and hold investment. These projects will not be flips. If I do sell them, it will be a turnkey solution, or because the demand is there and it just makes sense to do so. I just can't pass up the chance to build something brand new for the cost of what some of the renovations to pre existing inventory I have acquired needed.

I am confident that once I am able to scale, this will be a very lucrative strategy when applied with discipline and forethought.

As always, I welcome your input, BP!