All Forum Posts by: Eric Teran

@Jason H. And @Bryan LaRoche I have been able to remove my emotions when needed. It is like drawing in Cad or Sketchup where you can zoom in and be anal about every line being perfect but in reality you don’t need to zoom in so far. It all depends what is being drawn. Just like the emotion part.

I’ve grown in this aspect a lot since I branched out on my own. I always ask a potential client what they are going to do with their property in 2 or 5 or 10 years from now. It helps me focus their attention as well as mine. Do they want to pass it to their kids or make some good money in a year or two? Is it a developer who wants to make money. Then I have to design something with a positive return. What makes client X happy and how do we get them there with a great design? You design for your client and not yourself. It’s a lot easier that way and your personal emotions don’t become involved.

I see it more like a puzzle. When it comes time to do your own investment you have to put on that hat. For example, a skylight will look nice but it isn’t going to change the world so don’t knock down the bearing wall and rip up the roof because the $10k investment is not worth it. The developer thinks in terms of returns. So the skylight didn’t work but a nice big window does and that investment is only $1k. It doesn’t mean it is going to be ugly but there are always solutions.

Not every project is falling water but you can make every client feel like they have their own falling water within their means. This has helped me utilize my time wisely because it isn’t fun working for free.

I bought a vacant lot in 2015 in the city of alexandria for around $215k and then built a 3,000 square foot home for $400k. Plus permit and engineers the total was around $650k when we moved in during the summer of 2017.

I am an architect and drew everything myself. I acted as the GC of record and did a lot of the work myself. IKEA kitchen! I had a few GC to provide a bid and they were around $525k just for construction. A big savings doing it yourself but I am in the industry so I have some knowledge.

I saved a lot of money and time by using Superior Walls for the basement and a custom modular house for the two floors above grade. I wrote a daily blog during construction that I can share with you if you PM me. BP doesn’t let me give it out in the forum because it goes to my architecture website.

You have two routes; 1) Find a vacant lot which is hard to do in the beltway. Easier as you get further out. You will pay a lot for all the utilities to get to your house. 2) buy a dump of a house, tear down, and build new. You will still pay a lot for a tear down.

Using a GC, Architect, engineers, etc. Will cost around $200 SF. I think you can make $1.1 million work but you need to stay under 4,000 SF or choose incredible cheap finishes and get a good price on the land.

Let me know if you have any questions about the process. It is fun but lots of work.

@Stephen Mattison, I agree with everything that @David Edwards said. Manufactured is never on a solid foundation. Modular or prefab is on foundations. I wrote a blog a few years ago titled, "I love Modular Construction and so should you!" I believe there are more advantages than disadvantages. 

The majority of Modular companies will make you use one of their certified GC to install the home on the foundation so you can definitely find a GC with the knowledge and process of modular construction. The house also has to be a certain size, easy to get to, and designed with modular construction methods in mind to make it make sense financially. A custom home designed without the requirements (mainly width of boxes and structure) can't just say it wants to be a modular home. There will likely be too many modifications. Additionally, the design wants to limit the number of boxes that will be used. For example, a crew can set up four boxes in a day but if the house is 8 boxes they have to be out there for two days and a crane company will charge around $10k per day. 

So Modular can save money if done correctly. What it will save every time is time. No question about it. Time is money. 

I designed and built my own modular house. After calling around 30 modular companies I settled with Excel Homes as they were the ones that were most comfortable working with a custom design and Architect. I also used Superior Walls which is a prefabricated system for basements. That was also amazing. If you have a big lot then you can probably choose a predesigned plan which makes life much easier. 

In regards to banks, you just have to find a local bank that has experience doing modular. Typically a bank has 6 or 7 withdraws and they are more or less the same amount. Each draw is a few weeks apart as construction progresses slowly. With modular you will do 3-4 draws and they all happen within 3-4 months. The first draw is for site work and foundation, the second is for the modular installation, and the third is finishes and so on. The big one is the second withdraw. It will be around 50% to 70% of the loan. It also has to be coordinated so that on the day the trucks are on site ready to install the first box the bank has to wire the funds. It is kind of a catch 22 because the bank doesn't want to wire the fund until the first box is installed and the modular company wants the wire before the first one is installed. It is a very tense morning. 

Finally, appreciation. Modular homes appreciate the same as stick build. There is no requirement to say that it was built modular and no one kind tell. If you PM me I can send you my blog that I kept everyday during construction. BP doesn't let me link to it because it goes to my Architecture Website.  

Just like traditional buildings you have to be careful. Anything can go wrong if you don't have a good team behind you. 

Good Luck. 

@Sadia Ali there are a few things to consider.

1. How close are the utilities? Bringing electrical, water and so on will become expensive.

2. Is there a road? If not you may have to pave it if it is only dirt now.

3. fire insurance is expensive if you can get it. Some home insurance companies won’t cover you if you can’t get fire insurance.

4. Prefab construction may not work because the big trucks can’t get up there. My first question to any prefab company is to ask them if they can make it to your site.

5. The house will need a fire sprinkler system and defensible landscaping around the house.

It can be done but there are lots of items that will drive up costs. It depends what homes sell for in the area. Is this also a spec house that you will sell or for yourself? Can you subdivide the 4 acres and get more homes on there?

Good luck.

@Brandon Coleman when I was 22 I decided to use my $18k and travel the world for 18 months. I visited five continents and 60 countries. I travelled by car, plane, boat, donkey, mopeds and anything else that moved. I ate the best pizza in South Africa, I got mugged in Cuba and then got my money back when I mugged my mugger, I got lost in the Sahara desert, I used the toilet in Ghandi’s child hood home, I met a girl in the Czech Republic and then another one in Thailand and then Spain, I ate amazing beef in Argentina, I partied with Russians in Moscow’s until sunrise, played soccer in Ghana and Turkey and Brazil, I saw the most amazing sunrise in Vietnam, I had Guinness in Ireland which taste better than anywhere in the world, I met my wife in Ecuador, I met incredible people everywhere and so on and so on and so on.

Before I left on my journey everyone told me to save my money, to invest it, to start a life. That is what everyone does after graduating college. I knew I would one day have a family and it would not be the same as a solo trip around the world. If I waited until I retired to do my world trip I would not do 95% of the things I did.

I did invest it! I saw the world and grew as a human. I had $1k left at the end of my trip but gained an appreciation for life. It made me a better person.

You don’t have to be as extreme as me and spend almost everything you have and I’m not saying buy a boat either but enjoy your life. Be smart in life and in work and success will come. You might have to wait until you are 40 rather than 30 to be a millionaire but enjoy life and what you do.

Spend $30k on a house hack, rent all the rooms so it pays the mortgage and then go travel the world with the other $10k. Come back a changed person. Good luck!

@Jason H. I read the engineer thread and thought of doing an Architect these as well. I'm glad you did. I have seen a few Architects post on BP and I even wrote about 10 blog post on BP a few years ago about real estate investing from an architects perspective. I need to start that again. I graduated with a BA back in 2001 and finally got licensed in California in 2012. Now I live in the DC area and am licensed in DC, VA, and MD. In 2018 I started my own firm and it was the best decision I made. I make more, work less, and spend more time with my family.

I agree with you that we work for developers and get nothing in return so my goal is to become an Architect + Developer with my own projects. BP has helped me understand the thinking of an investor or flipper and about 50% of my clients are real estate investors. It is different speaking to an investor compared to a home owner. It is a completely different set of goals.

My wife and I built our own modular house in Alexandria and we own three properties in Ecuador so we have some passive income and the goal is for that to grow. Eventually I want my firm to slowly die out and the developing side with my own project to become my sole focus. I tell all my clients my business plans and it has lead to a few good contacts.

Architecture is a tough field and we don’t get that much respect. The problem is that there is a lot of bad architecture out there and DIY shows that do not show reality.

@Errol St Marthe I use Jason Osser based in Fairfax. He even has a book about using Quickbooks to your advantage called, Riding Quickbooks to the Promise Land. Google him or sending me a PM and I can give you his contact information.

There are a few reasons why STR (Airbnb, VRBO, etc.) will bounce back and will do so before hotels.

1. In a hotel, there is a lot more contact with people. Social distancing will be harder to maintain. In an STR there usually is no contact with anyone else (unless they are renting rooms and not the entire place).

2. In an STR there is a kitchen so meals can be made. There is no need to go looking for a restaurant.

3. Businesses have figured out how Zoom works. Traveling for work will be limited as the new normal will be video conferences. STR reliant on businesses may hurt for a while but the vacation STR will bounce back as everyone is going to want to go to the lake for a weekend and get out of the city.

4. STR has the option to become long term rentals. The profit may not be as much or just breaking even but it is better than nothing. There is a housing crisis in the USA and that is not going away.
 

@Erin Spradlin we will definitely be able to keep all the properties. For the two condos in Ecuador, we are searching for long term tenants as their tourism industry is going to take a while to recover. Luckily the monthly costs to maintain both of them are only around $600 so we can afford to pay that until things turn around. As for our basement unit, it was always considered extra income that was nice to have but not necessary to survive. The same goes for the condos. Luckily I have my own Architecture firm and we are still keeping busy and that is our main source of income. 

We are one of those responsible (semi-responsible) investors that @Joe Splitrockmentions that we can weather this storm.

@Joe Splitrock

@Erin Spradlin I still see STR as a good investment if done properly and agree with your points. It would have been nice if the pandemic happened between October and March as those are my slow months. The pain would have been a lot less.

Two of our STR are condos in 10 story buildings in Quito, Ecuador. Unlucky for us the condo committees have decided not to allow for any rentals under a month. In addition our cleaning crews can't even arrive to the condos due to strict curfews in the city. If it wasn't for those two factors we would have been able to keep our condos occupied. Not as much as before but at least 50%.

We have one more Airbnb in our basement in Alexandria, VA and we have also received a lot of interest. However, as a personal decision we have decided not to rent it out until things calm down.

With that said I don't think STR is dead and every location will have various factors until things get back to semi-normal. However, it is still better than having long term tenants not required to pay their monthly rent.