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Hello,

I've been hanging around the Rehabbing forum a lot lately, but for me, I will most likely be involved in a single family detached house development. I will be looking out for an older house on a good sized lot in an area where new houses are going up and plan to build a new house on it.

My question is, what formula do I use to consider if the house is a worth while project to undertake? Do I use the same formula for rehabbing which is 70% ARV minus expenses? Or is there a different formula to use when doing an entire rebuild project?

Thanks for the help!
Aaron

I will be in need of a contractor within the next year to build a single family detached house. Prefer to have a general contractor who already has good networking with subcontractors and trades and has good construction management skills. Should have good experience in standard residential wood framing construction. Must have strong ability to meet budget and time constraints. References are a must.

If any contractors are out there, or in anybody knows who I could contact to find general contractors, please PM me.

Thanks,
Aaron

Hey John!

Nice to find another newbie starting out in Ontario! Where are you located exactly? What type of real estate do you hope to get started in? I'm hoping to start off in rehabbing, and then eventually go into new home building once I get a little more experienced. I'm just finishing an Architecture program, so I really enjoy the design + build aspect of the real estate business. The great thing I've been learning about RE investing is that you can customize the type of work you do that suits what you enjoy doing.

Nice to have you aboard, and I would definately be interested in connecting in the future.

Good luck!

I posted this topic on the rehabbing forum, but it didn't seem to get much attention.

What I was wondering is as follows:

Say you find a piece of land with an older, smallish, run down house on it selling for a low price. To maximize profit, would it be ideal to rehab the existing house and fix it up or to tear down the house, excavate, and build a new bigger house from scratch? I know the latter is much more involved an more expensive, but when it comes to selling, could the newly built couse be more financially rewarding in the long run?

I'd like to know this because I am thinking of starting a project really soon.

Thanks,

Aaron

Do you deal internationally? (Canada in particular)

Do you have any tips for a person starting out what is the best way to go about trying to find these deals? I've already signed up with a local website that gives leads on to local foreclosures. Is this a good start? Are there any other methods of looking that I should try?

Thanks for all the help guys, I've already learned a ton from this website in the short time I've been here!

So keeping this all in mind, I have another question now. After you determine what your buying price should be (using the 70%ARV - repairs formula), How easy is it to actually find a property that is priced within your requirements? In other words, are these low priced properties as easy to find by just searching through the MLS directory? Or do you have to have to do some hard scouting or be in touch with real estate agents 24/7 to find such a property?

have you ever considered partnership financing for your first project? I'm not exactly sure what area of real estate you want to go into, but I have been in contact with people who will offer partnership financing. That way, you do not need to borrow as much, and it is realatively easier to get loan approval. It's worth looking into comming from another young person (24 yr old) starting up in real estate

Good luck!

Thanks guys, that clarifies everything. I understand it perfectly now :D

Thanks again! I think I have a better idea now what you're saying. Also, the link you gave me was very helpful of showing a concrete example :D

I've just been thinking about it for a bit and want to make sure I've got it clear with this simple example:

Assume asking price of house is $70k, ARV is $100k based on COMPS and repairs have been estimated at $10k.

70,000/100,000 = 0.7cents to the dollar, or 70%ARV

My percent equity would be 100% - 70% = 30%

*now this is where I may be mixing things up with subtracting my repair costs*

My profit would then be $100K - ($70K + $10K) = $20K profit, or 20% profit
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do I have this right?[/b]