All Forum Posts by: Merle Sauvola

I’m finally making the leap into the build/hold homes.  Been building/selling new homes for a number of years.

I’m getting a pitch deck together for my investors, and and needing some insight on some expenses.

On new construction, what is the best realistic percentage to figure for maintenance?  There will be “some” but not near as much as an older build.

I did a county estimated property tax calculation, but not sure if i trust it.  What is the go to figure to plan for property taxes in upstate sc?

Insurance.  Is there a percentage of value to figure?

The properties I’m working to get going will range from 8 doors (duplexes) to 64 doors.  (Multiple properties)

Ps.  He’s probably shooting you close on the cost (without land).  175k with the lot.  Depends on when he bought the lumber of course. 

No problem.

If Texas is similar all around, I would figure 7k bring a cat 953 out to get the lot pad ready (if it’s clear)

You say that you cold called your way into a lot that you could make 10-15k.  With a home price point in that neighborhood of 225k (yep, price just went up since you posted 2 hours ago lol).  If this is true, you can get about 35-45k for that lot.  If you’re still in the profit with that number, I would flip the lot to the builder down the street, and start cold calling on more property.

Find a handful of builder that you can flip easily dividable property to (road frontage).  Talk to a civil engineer about how many lots that you can divide without getting into major subdivision standards.

Keep flipping land.  I’m not trying to be negative Nancy, but If you don’t have the experience in building right now, building a spec will eat your lunch.  The reason I say this...

Building a house as a GC is not hard at all once you have the process (I hired someone 3.5 months ago that didn’t know anything, and he’s currently running 10 houses that are on schedule, and homeowners are singing his praises)..  The hard part is getting, and keeping a list of great subcontractors that will get you on budget (but you need to know what budget you’re shooting for to sell 1400-1500sf for 225k.  Believe me, I know this price point is a tight budget, because that sounds very similar to our S Carolina market).  

When we started this building company, it took 6-8 months to line up a list of solid subs that would get us on budget.  I knew what we were looking for because I have many friends that build, and used to build houses before the housing crash.  But with no experience, I would expect you to break even on your lot, and house for the first few specs.

So, back to flipping land.  A builder needs to spend 15-20% of the sale price of the new home on a building lot.  If it’s steep, less (10-15%).  If it’s a clear, flat field, more (20-25%).  If you can keep some small builders (up to 25 houses per year) fed with lots that meet this criteria, then you can do well.  I just bought a 6 lot road frontage piece where the wholesaler made 80k on the flip.  I overpaid a bit on that one because we were running out of lots, but that’s not a bad deal for my friend, the wholesaler...  sounds like you have that skill, and possibly the time to cold call on land?

I’m in the process of buying a piece of property that is 3.5 acres, and will develop/build it to have around 35 units. I will likely do townhome style units, but still deciding.

My engineer is asking if I want to go ahead and put separate tax map numbers on each unit or just keep them all on one property.

Can anyone give advice on the pros and cons to dividing up? I want it to qualify as commercial, so maybe this answers my question right away, but I’m not sure because this would be my first build/hold property.

As a builder/developer, I’d be shocked to hear that there is enough room in the deal to discount the houses to you, for you to pay a cut to your colleague, and for you to make enough all said and done to justify the risk of tying the house up personally.  🤷🏻‍♂️

@Greg Dickerson you’re right. I need a mentor. I don’t personally know anyone who is doing what I do, and definitely not what I want to do. Are you volunteering? I have questions. :-)

@Ben McMahon “You’re still getting the 800-1 million a year”. Thank you! I don’t know why, but this just now clicking for me lol.

It’s just ran through my head “Why hold when you’re getting this kind of return?” Still am, but now getting all the other advantages that come with holding/renting out.

@Jonathan M. The first part that would make me nervous is “business credit card”. Just be careful. As a builder, and a wife as an agent that only represents our building company, I would say virtual walk through (3D) are great, and knowledge on how to frame features. Those two things (besides time) will cost as much as an iPhone, and about $300 on a 3D camera.

We hired one recently because his well designed post cards were at my wife’s brokers office. The photographer did good, but didn’t qualify us enough. He took pictures thinking we were listing a property (wide rooms) rather than features and finishes that we could use on our website.

One tip. Respond to everyone quickly. You will win that way.

@Merle Sauvola and people are literally contracting before we have a floor plan (contract based on square footage, and price).. it’s crazy.