Latest Project Photos - BP Partnership

[J Scott]

I don't post a lot of Before & Afters here (I know people get bored of them), but this one is so nice that I wanted to give some credit where it's due...

This was a three-way BiggerPockets partnership between @Todd Whiddon, myself and another BP member who would prefer to remain nameless (he shuns the celebrity lifestyle ;-).  We originally were planning on a very large renovation, but after digging in and starting work, we realized that tearing it down was probably the better decision -- so we went back to square one and did things right.  Good lesson that trying to save money by doing less can ultimately cost you money if you're not smart about it.

Todd did pretty much all the work, so he gets full credit...

Here is a Before pic:

Here are some During pics:

And here's the final product, getting listed today:

[Adrian Watkins]

wow that is amazing!!!  great work everyone!!  

[Shane Woods]

REAL WOOD!!!! YESSSS!!!!!!!! 

Loving the darker doors too.  Different, nice :)

With all the engineered hand scraped stuff these days, I think folks forget how sexy real wood floors are. I love them.  

[Desiree Boston]

Great job!

[Ramon Jenkins]

very nice work

[Joel Owens]

So even though you cannot give exact expected profit let me ask in a different way.

What percentage are you expecting back on your investment. Let's give a total hypothetical number.

Say you put in 100k as 1 partner out of 3. 1 month has passed by and when it closes you are at 12 months for 1 year. 

Are you hoping for a 20% annual return off of the money back??

I have heard of friends building new construction houses in subdivisions now but gross profit margins are only about 10 to 15% of sales price. Seems thin on having to give a home warranty with such low margins to handle future possible issues that come up as the builder.

I have never built a house to sell off just what it looks like to me from the outside looking in. It's like if I buy a business the yield has to be 25% or greater. 10 to 15% I might as well buy an asset with national tenants and do nothing for the return.  

I suppose if you do velocity with a home building business then it makes sense as costs go down and profit comes up a little.   

[Jay Hinrichs]

@J Scott

 very nice work... I agree with you though many times its just best to bull doze and go.

at least you get a good handle on your build costs without hitting the dreaded unknown.

[J Scott]

Joel - we're probably looking at about 20% overall return, which is pretty typical.  

Normally, we'd be in and out in six months, so that's about 40% annualized,  but this one took longer.   Still,  20% without much risk is worthwhile in my opinion... 

[Jay Hinrichs]

@Joel Owens

  Joel your assuming someone pays cash for the asset.. most builders do not.

so take my deals in Oregon for example... I have to put 10% into them ( used to get 100% financing pre 08 but the banks have gotten smarter)..

So when you have a new build at say 300k and you put 30k into the project and they build in an interest reserve so you don't have to make any payments either... and you sell for a net profit in the 30 to 50k range ( typical) your making 100% COC... that's how builders doing it and if you have velocity.. I E your closing 50 or more a year then its a sustainable business ... in the production building end. some higher end stuff builders will make 100 to 200k profit on and much more... but generally its about 100% profit.. not what your thinking. ( can be less if its private money or hard money I am talking about myself who borrows at bank rates) and only pays interest as the draws are taken down tetc.

[Ben Leybovich]

Guys - gorgeous!

[Justice Cannie]

Absolutely Jaw dropping

[Azeez K.]

@Todd Whiddon

 @J Scott

@___________

You guys did great! Pure Awesomeness!!!

[Joel Owens]

Jay H and J Scott how many do each of you guys have typically going at one time??

Do you perform any of the work yourselves or let everyone else do it??

Do you perform functions of the GC to save money??

Do you time most of your builds to be ready for the summer months when most buyers are purchasing to get settled In before school starts?? Example you do 50 a year but have 30 built and ready to go to market to sell in a 3 month span and then do 1 to 2 more every other month to limit exposure and market shifts for the development cycles??

Do you prefer building houses with empty lots in an existing new subdivision or on a regular street with a row of older houses?? It would seem building in a new development the comps and appraisal would be easier to target than an area that is transforming. The transforming area maybe the appraiser comes on the low side to CTA.

I have been looking at building strip centers but the lead time until cold, dark, shell and leased up concerns me until you get the money back. A friend of mine is doing a 40,000 sq ft one in Texas and the built in equity is about 2,000,000 when exiting at a 7 cap to a hold investor.

Throwing a house up to make a quick 50k in 4 months doesn't sound like that bad of a return especially with 10% down as it is not much.

J Scott are you getting the same 10% down as typical with what Jay H is mentioning??

I know lot's of questions but thought others on here could benefit from it. 

[Jay Hinrichs]

@Todd Whiddon

  That is a great price for real wood in place..  we have been doing bamboo in different colors.. is that popular in your area.. we get some good deals on that flooring

Awesome job you guys keep it up... its so fun to be looking at nice new upper end ... rather than a bunch of foreclosure junk like in years past :)

[Jay Hinrichs]

@Joel Owens

  I don't want to hijack the thread I have been accused of that.. short answer

I have

35 going in Portland.. one 27 lot sub.. recorded the plat today 6 pop out of the ground tomorrow.  Closed 2 this week . in another sub.. have 4 going on Oregon coast one closing next week etc.

and 7 going in Charleston with a 24 lot sub going through the development process break ground in Jan.. rest of my stuff is all rehab.. I was looking at new builds in Atlanta ( south ) production stuff but I passed.. to many partners so reward was not worth the PG.

I am mid range  350 to 600k is our product

[Todd Whiddon]

Originally posted by @Joel Owens:

Jay H and J Scott how many do each of you guys have typically going at one time??

I'll chime in for the Northern Atlanta portion of J Scott's Real Estate Empire...

Usually have 5-6 new builds going at once, mostly higher end 500-1M+ and a few smaller bungalow types in the 3-400s.

Do you perform any of the work yourselves or let everyone else do it??

EVERYTHING is subbed out

Do you perform functions of the GC to save money??

We pull our own permits and GC everything with our project manager running the day to day grind.  We're currently in the market for some more GCs so that we can scale over the next little while.

Do you time most of your builds to be ready for the summer months when most buyers are purchasing to get settled In before school starts?? Example you do 50 a year but have 30 built and ready to go to market to sell in a 3 month span and then do 1 to 2 more every other month to limit exposure and market shifts for the development cycles??

In a perfect world and building smaller houses we would try to time better, but since we've mainly focused on higher end infill development right now they just start when they start and end when they end. I own a cabinet company that handles a LOT of the bigger production builders in town, and while there is a slight summer bump, we run at a pretty even pace adjusted for growth with December actually also being one of the busiest months "builders trying to get their year end unit bonuses".

Do you prefer building houses with empty lots in an existing new subdivision or on a regular street with a row of older houses?? It would seem building in a new development the comps and appraisal would be easier to target than an area that is transforming. The transforming area maybe the appraiser comes on the low side to CTA.

We've been looking at some subdivision projects, but haven't found the right opportunity...YET

Starting out in Atlanta most banks will finance the lesser of 70% of Value or 80% of cost, with an interest reserve to cover the payments during the term.  Once you work with a bank on a couple projects and get a track record going you can start nudging toward them lending MORE on the value side.  Typically we'll acquire the lot or scraper house with cash and then the bank will refi us out a certain percentage when we do our construction loan so that we end up with 15-20% "of costs" skin in the game.  Sounds like we need to partner with @Jay Hinrichs to help get our rates down!

[J Scott]

What he said...   ^^^

[Todd Whiddon]

EXTERIOR FINISHES

I REALLY wanted a GRAY house! But since EVERY other house in the neighborhood that is being transformed is also gray, we took abit of a risk and went with some BOLDER choices!

Hopefully these will pay off with a quick sale!

Also for anyone out there considering using these or similar colors....

BEWARE!!!

I'd heard a rumor that you shouldn't paint PVC trim dark colors.... Turns out that rumor is TRUE!  The Windows are wood, but the exterior molding and sill were PVC... The back of the house faces west and BAKES in the afternoon sun, about 3-4 days after we painted the house the window trim MELTED!! Thats right MELTED!!!   

We had to rip off ALL the window trim and replace it with wood molding so that we didn't have to repaint the ENTIRE house a lighter color! Another one of the MANY lessons learned on this house!

[Jay Hinrichs]

@Todd Whiddon

I have been with my bank 22 years can't stress enough how long term relationships are important and how those that rate shop and take the cheapest rate can really shoot them selves in the foot... I am at 1/2 point and 5.5% pay on money drawn.. no junk fee's pay for appraisal 90% of cost Land and build not to exceed 75% of FMV when finished. Plus on my 27 lots that I recorded the Plat today on ( no kidding we recorded today) they gave me their first A and D loan in 8 years... it was funny we both were pretty rusty trying to figure out draws and such.

Atlanta is hot for infill  keep up the good work... ..I hope to join you there this year.. big city lots of opportunity. 

[Todd Whiddon]

Originally posted by @Jay Hinrichs:

@Todd Whiddon

  That is a great price for real wood in place..  we have been doing bamboo in different colors.. is that popular in your area.. we get some good deals on that flooring

Awesome job you guys keep it up... its so fun to be looking at nice new upper end ... rather than a bunch of foreclosure junk like in years past :)

 You see bamboo every now and then in Atlanta, mostly on modern builds.  The 5" dark prefinished is REALLY popular here now, and we'll use it on some flips that have a tight reno timeline, but anytime we can use the real stuff "oak" we do since it holds up so well. That dark pre-finished stuff looks GREAT when installed, but TERRIBLE a few months after the homeowners move in and scuff it up!

[Angel Rosado]

@Todd Whiddon and @J Scott Great job on this build.  Although I am focused on buy and hold (no investment yet still a noob), after this post I will have to try Flipping a property one day, the pictures alone are inspiring.

And even some of the most experience guys still had hiccups goes to show that there is always "excitement" in this industry.  But great job persevering! Looking forward to some numbers.

[Karen Margrave]

@J. Scott and @Todd Whiddon (my @mentions never work for J. Scott!) 

That's BEAUTIFULLY DONE!!  I love all that finish work, those ceilings are a work of art. 

I wish we could do that on modern, but it's minimalistic, simple, clean, so I have to get my fix looking at your builds! Congrats. Keep us posted on selling! 

[Rob S.]

Nice work! Thanks for sharing

[Drew Clements]

Just bought your book... 'nuff said :)

[Daniel O'Brien]

Amazing work. Thanks for sharing all of the info on paint colors, tile, flooring, etc. 

[George Paiva]

Awesome Job, love the results... Looks like one of those HGTV type projects.