All Forum Posts by: JP Falk

Mortgage 

Taxes 

Insurance 

Management 

Maintenance 

Vacancy 

Repairs 

What else ? 

This is basically a possible framework for my semi retirement.  5 year plan 
Assumptions

-My own company is building everything (except electric) and cost savings can be opportunistic on overstocks, returns etc, but my cost assumptions don’t include any savings here. We will also birddog the best opportunities on the contracting side so i figure we can boost out hourly rate up to at least $100/hr (from 80), and jump from the build to contract jobs to take advantage (we have our own heavy equipment and dump truck).

-Rents will be steady for the foreseeable future , no rent increase factored in

-interest rates are steady state (unlikely, downward bias is likely)

Y1 Build one triplex - one detached with apartment and one detached garage with a apartment above. Total build costs of 600k )this includes lot, soft/hard costs, and 60k overhead recovery to my construction company

Amortize @ 20 years, all expenses equal gross rents so break even cash flow. This initial build is funded by my cash and equity in personal residence. After completion the 600k is pulled out ARV will be about 750k. The 600k is rolled into the Y2 build (same as above), this is repeated for 5 years at which point the Y1 build is refi (will have approx. 120k in equity build just from mortgage pay down, no apppreciation factored in. So construction only lasts for 5 years, after that its just a refi every year which will produce an essentially tax free income of 100-120k per year. Houses are designed/built as rental hardened so minimal repair/maintencance for at least 15 years. Super energy efficient to save Op Ex.

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i'm looking to do a semi-retirement project/investment. ive got 25 years of hands on construction and GC experience and now looking to do a vacation build for my wife and I, that would also be a STR or MTR when we arnt going to be there. Something like 1500 sq ft but with a lot of outdoor living space (semi enclosed). My idea is to buy land in a place , first with reasonable costs (doesnt need to be waterfront), but also an area where building costs are very high since ill be bringing in my own guys to help me with the build and we will live on site for 4-6 months. So kind of a geographic/labour arbitrage I guess. Possibly a detached secondary cabin/tiny house for STR all the time too.

Just looking for some insight from everyone here, or suggestions for a different idea too.  Thanks

one of my businesses is basement repair/waterproofing...it sounds like the cheapest solution (which will also work as opposed to cheap that costs more later) is an interior weeping system to relieve the hydrostatic pressure which created the problem and then a vertical I beam buttressing system. You will probably be around 10 grand.. but that varies greatly geographically 

Yes agree the separate warehouse space would be a plus, also setting up as a condo scenario.  I have discussed the rough concept with some contractor friends and subs as well as potential price points and they are definitely interested.

I had also looked at brrrr for housing my business similar to what you were thinking Craig but the numbers in my area are more favourable to a new build if we do it ourselves (I’ve spent allot of time training employees in a wide scope of work) we are able to do everthing ourselves except electrical .  With the new build I’ll have at least 25% equity right away just through cost savings in labor and materials, maybe more .

Toying with the idea of developing a project which would be targeted at tradespeople/smaller contractor. Each tenant (or partner, not sure of the structure yet) would have their own office space (approx 200 sq ft), a shared bathroom/shower room, conference room, and kitchen .  There would also be a shared heated garage/workshop space with 14’ ceiling and big overhead door, vehicle hoist.  Outside would be a fenced area with secure keycard access, with a few parking spaces for each company, off loading space for deliveries and a forklift or loader for loading/Unloading trucks.  Probably a 20x40 outside storage space also for each company , inside the fenced compound.  I have a 17 A.C. site I’m looking at which already had the correct zoning and was filled  over the last 20 years with good material.  I originally thought of this as a business version of house hacking , as I run a general contracting firm with 10 employees. We would build the project out and take one of the spots out of 8 total.  There would be no overlap of trades; one sparky, one plumber etc. , Probably a good network effect with cross referrals etc.   Numbers look good

Land purchase.   150k

Build out hard and soft costs. 250k

Total 400k

Lease up numbers

Gross rent     8000

Expenses   3000

Net   5000

ARV (not a ton of comps) but just going off a

10 cap rate I would say  600k

7 cap - 850k 

Though the few comps I could find would be closer to 5-600k

Would do equity take 60% LTV out after lease up so hopefully pull out a good chunk of my cash or set up as LP with 8 shares each one @ 100K ...keep my one share and pull out 650k after legal and closing expenses

If someone approached me with this deal I would probably be all over it if I had all those amenities for 100k , considering rent for a similar space would be 900-1200 right now in my area 

Any feedback or thoughts?