Owner-Builder Great Experience | Ready to Do It Again

[Stephen Backholm]

Investment Info:

Single-family residence other investment.

Sale price: $1,525,000

Custom designed and built an estate called Tolmie Edgewater on the Puget Sound. We cold called on the lot and did the whole owner-builder process. Lived in the house for three years and just sold it this year.

What made you interested in investing in this type of deal?

We love the design and build process and we believe that you can create value in any market by being a smart owner-builder.

How did you find this deal and how did you negotiate it?

We knew we wanted to investment in Puget Sound waterfront and my wife spent hours on Google Maps and driving around to develop a list of cold call applicants. She finally found someone

How did you finance this deal?

Worked with a local bank and brought in 20% of our own capital to get the deal going.

How did you add value to the deal?

Found the lot, designed the house, generaled the construction process, and chose were we invested more (e.g. windows) and where we scaled back (e.g. no crown molding).

What was the outcome?

Had a 7x return on capital in four years and since it was our primary residence we avoided a big chuck of capital gains tax when we sold.

Lessons learned? Challenges?

Be willing to be deep in the details, be onsite everyday during the building process, and negotiate everything.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

We had a lot of great local contractors that we worked with, but also several duds.