All Forum Posts by: Garen T.

I'm in the middle of a duplex build on a piece of property that I own. The arrangement with the builder is that on the 1st of the month, he will send me the invoices received from the previous month from the various sub-contractors. THere is a 9% builder fee added to the invoice total, and I am to have the money to them in 5 days. Yes... 5 DAYS. I was amazed. 

What is even worse about this, is that a company I own is a sub-contractor of this builder. So, at some point, I'll be receiving and paying for my own invoice. I know how slow they pay their subs. Their policy is that any invoice received by the 25th of the month, will be paid on the 10th of the month of 2 months following the submitting of the invoice. 
If I submit an invoice on Jan 24, I can expect payment to be mailed out on March 10. 

However, they want me to pay in 5 days. Even a credit card company gives me 20 days. 

Any suggestions on how to deal with this? I'm asking from the perspective of me as the client of the builder. Not asking about the late payment to me as a sub-contractor. 

Thanks 

Post # 6 on my duplex construction project.

Builder asked me a question this week about locating the gas meters. He suggests putting them on one side of the duplex making it a one-stop trip for the meter reader. However, this seems like it could cause issues between the tenants. Based on suggestion from here, I'm already going to put a rock strip down the center of the driveway to make it very obvious where the driveway ends for each side. 
However, same issue for the gas meter?

Separate water meters will be out at the street, so no issue there.

Advice?

Thanks everyone. I'm now leaning towards having them installed. One interesting thing about where I live is that I can buy them across the state-line at 0% sales tax, but that means I have to install them myself.
I wonder if Home Depot or somewhere similar would offer me a discount if I buy 1 Fridge, 2 WD all at the same time?

I just signed my deposit on a duplex I'm having built on a lot that I already own. Making all the decisions now with my GC. Kitchen on the ground floor with engineered wood laminate floor. Laundry room is on the 2nd floor. Laundry room will have a washer pan with a drain to the outside with tile floors. 

Fridge: I'm planning on providing the fridge as I don't want some old ratty fridge dragged across my floors. 

Same logic on the washer/dryer? If I have them put in myself, I keep most dents and dings from occurring. I can make sure the right hoses are used, and that the connections are secure. 

But I'm looking at 2 fridges, 2 washers, 2 dryers in expense. 

What would you advise?

I do have one existing rental. I provided the fridge, tenants provide the W/D. I did have to fix a ding in the wall going upstairs. 

I've been doing property development for a few years and I've rolled each project into the next. I've never taken much  income out of the project. This next year that needs to end and I plan to start receiving something back. 
The following numbers are fake numbers, but I'm trying explain my situation. Put an extra few zero's and you'll get what I trying to do. 

My original investment: $4K
Total that I'll get back next year: $20K
So, I'd have to pay income on the $16K at regular income. I'd like not to do that. 

If instead of $16K, I take ownership of buildable lots. Lets say the lots are worth $4K each, but the properties transfer to me with a very minimal value. I hold the 4 lots for a year and day, sell them for $4K and pay the long term gain instead of short-term gain. 

I would end up with 4 lots sold in a year that I'd get 16K out of. If I went ahead and built on them, I could stretch this out even further and 1031 them until I'm ready to pay taxes. I'm not trying to get out of taxes (except the short-term ones). 

Is that ok to do?

Just another thought on this topic. 
This last time I had an open rental I did something different. People would contact me via Trulia and the request would come through e-mail. I would reply with a canned message stating that I was glad they were interested. I would be happy to show them the place and open them for consideration. However, before doing so, I asked them to "pre-qualify" THEMSELVES. I sent them my criteria. It is a list of about 25 items and includes credit minimums, statements of no pets, all the normal items. I would simply ask them to read through the items so that they would know before coming to see the property if they qualified. 

It worked out great. The only people I had to spend more than 1 minute on dropped by a huge number. I got about 50 e-mails asking to come see. After seeing the list of criteria, only about 5 contacted me again. I had 5 really great pre-qualified candidates that I could focus my time on. 

Worked out fantastic.

I'm collecting bids and getting ready to pull the trigger on a duplex built on a lot that I currently own. Here is my cost breakdown so far. 

1632ft2 per side =3264ft2 * 100 = hard cost of $326K

Builder fee: 9% of hard cost = $29K
Permit fee: I'm setting aside $18K. Estimate $15K for building and then sewer and water are added. 
Tax fee: 8.2% of hard cost  = $27K
Insurance for coverage during construction. ?? Still getting quote. I hope less than $1K
Plan design and engineering = $4.5K

Total all that and I'm in at $111/ft2. I'm going to finance the construction loan myself by doing HELOC on 2 existing properties. Once the project is finished, I'll take a 1st out to cover this amount and pay off the HELOC's. I'm expecting rents will be $1600/side and the mortgage will be $2200.

What about just using "quickpay" or a similar service such as what Chase Bank has. I've been using it for about 2 years and see zero downside. Fully free from what I can tell and the cross-bank issues are dealt with by the banks,

Hi @chris 

@Chris Potter. You mentioned the Clark County area. I've lived here for 20 years and am involved with property development, building, and investing here in Vancouver and to some extent, the Portland Metro area.

I'd like to chat with you to see what you have in mind. 

I'm going through this right now and have worked with builders quite often as a sub. The way I would do it is like this. 

If you are building for a rental and will not be putting high-end items into the build such as marble and very expensive appliances, you find out what the cost/square foot is for production builders in your area. I have checked with 3 builders in my area and found between $90 and $100/square foot. This assumes you already have the lot and own it. This is cost of construction ONLY. Ask them if this is hard cost only. No profit. Most builders will give you a cost of material/labor break out. 

Add $15K for a permit.
Add ??% sales tax. Whatever the tax rate is in you area.
Add 10-15% builder profit fee. This is normal for my area. If you can't find someone in the low teens, keep looking. 
Cost of financing the build. You need to pay for the building materials. If you pay for this yourself, great. Otherwise plan on adding about 3% for doing the construction loan, either to the builder, or a bank who may lend you funds. 

So...Assuming you own the property and want to build a 2000 square foot home and have to pay for construction loan.
2000*95 + 15K = $205K
Add tax = $221.4K
Add builder profit = $243K
Add the loan = brings it really close to $250K

These are very rough calculations and I'm probably off by a bit. 

With most lots in my area running in the $70-100K range, this means the final valuation of the house would need to be $350K or more to really be compared to a new home being sold by a builder.