All Forum Posts by: Marc Estepa

Thanks for the response Dan.  You’re right, it is expensive here!  I spoke to my realtor about the listing for the land, and he is saying that it sounds too good to be true.  That subdivision is a nice area and homes are pretty expensive.  He’s speculating that the land may be too difficult to build on due to its slope, therefore the cheap price.

I have a coworker in the middle of building a new home.  He is building a 1500 sq ft home through Lexar Homes for $247K.  That comes out to about $165 per square foot.  He had to come out of pocket $22K to excavate the land he is building on, add septic, water and power.  I dug around and heard that a home builder such as Adair homes estimates that the buyer needs to budget as high as $70K for excavation, water, power and sewer!  

With those revised numbers, here’s what I’m looking at now:

1. Land - $100K

2. Excavation, power, water, sewer - $70K

3. 3000 sq ft home x $165 per sq ft - $495K

All in = $665K

If we are able to sell this home at $700K, profit is $35K.  

I know there’s other costs such as realtor commission fees, closing costs, etc.  but overall, am I thinking in the right direction?

Hello BP fam!  Question for you.  I live in the Tacoma, Washington area and looking primarily for buy and hold properties.  Anyhoo...as I’ve been looking, a coworker of mine mentioned a one acre plot of land for sale in his subdivision for $100,000.  It was subdivided in 2008 with plans to build a home that never came to fruition.

This peaked my interest, so I simply decided to contact the listing agent to ask about the history on this property and why it’s being sold.  

The owner apparently had plans to build a custom built home on this land, but after the housing market crash of 2008 he lost interest.  His kids are all grown and he has no use for the land.  He has the blueprints for the home still.  Additionally, it is a challenge to build on that lot because of the slope of the terrain.

I asked the listening Argentina to see the blueprints and was given a copy.  I know that the median price of homes in that particular neighborhood are going for about $500,000, with some of the higher end homes selling in the high $600,000 range.

Running some rough numbers, I see that the price of the land is $100,000.  If I am able to find a builder to build a home for $300,000, I’d be all in at $400K.  If I sell it on the backend of the project for $500,000 conservatively, I estimate that I could get my money back for the purchase of the land ($100K), pay back the building costs on a construction loan ($300k) and potentially profit $100K.  

This is uncharted territory for me and I have no idea what I’m doing. But does this sound feasible?  I know I am probably oversimplifying this, but what other costs do I need to account for?  Am I off base or am I on the right track?  My coworker is willing to partner with me on the price of the lot.  

Our other coworker did something similar and bought land for approximately $40K.  He went to Lexar homes, picked out a floorplan he liked for about $240K, got a construction loan and is literally doing this right now.  All in, he is at about $280K and the house is apparently worth $430K in the area it is being built.  

What are your collective thoughts?  

@Nik Moushon, thanks!  No hurt feelings here, this is EXACTLY what I need to know.  I’m glad I asked.  The last thing I wanna do is go all in without doing my due diligence and knowing what my left and right limits are.  

The home in particular is in North Carolina.  I’m currently stationed here in Washington and work at JBLM.  After crunching numbers and looking at costs, it simply doesn’t add up and it’s more trouble than it’s worth for that market unfortunately.  Here, that’s another story!

@Ronsted Yuag, salamat!  No worries! I’ll let him know, in the meantime - keep me in mind if you happen to come across any contacts!  

@Alexander Felice, @Tina Tsysh, @Dan DiFilippo - yeah, you guys are right. I forget what market I'm at. I'm currently stationed here in Washington state and adding an ADU or having the potential for one definitely gets the numbers working in my favor. Not so much there. Once I pulled up the median price for 1 bedrooms in the area, I realized it's just not worth the work that'll have to go in it.

It is what it is.  This is why these forums are so good.  It’s not necessarily an echo chamber that repeats what I am thinking, but more of an immediate sounding board with opposing viewpoints to help you with your analysis.  

Thanks!

@Justin Tahilramani, from what I’ve gathered on BP insights, I see a one bedroom renting for about $575.  Is that about right from what you’re seeing?  

I guess I don't know what I don't know. Buying the home is one thing, but I'm curious about the costs for setting the ADU up. Metering, septic, foundation, etc. Once I had a better idea of what that costs and the pros and cons, then I could decide.

Bigger Pockets fam!!!  Happy New Year!  So, I’m looking at my financial goals for this year and making moves. What are your thoughts on this:

I have a Single Family Home that’s been bleeding me in Fayetteville, NC.  I was on the verge of doing a 1031 exchange last month, but have had to delay it due to some issues with my property manager not communicating with my current tenant.  All good, tenant is month to month, PM has been fired and the rent has been raised keeping me in the green.

Anyway, a friend of mine was giving me ideas to make it more profitable rather than selling it.  I’ve also come across these prebuilt, tiny homes on Amazon.  Some of them are as cheap as $11K and pretty cool!

Wheels are turning and I'm thinking about plopping it in the backyard as an ADU. I know I would have to check with the HOA of the neighborhood to see whether or not this is even allowed, but aside from that - has anyone had any kind of experience with this?

What are the pros and cons?  Do you mind sharing your numbers for pouring a foundation, running a separate meter, building a driveway, tying into local sewage, water, trash etc.?  What about permits to do this with the county?  Any issues with tenants in the main home?  Hell, is this even worth it?!

It sounds good on paper, but what's the reality of doing this? Assuming the HOA even allows something like this - I figure this would be a quick return on investment.

How does this effect the price of the main home?  

Wheels are turning!!!!  Let’s discuss!!!

@Ronsted Yuag, @Jason Lam - thanks for the responses.  I’m going to forward all the info to him to see what he decides.  I think a lot of the complexity with this is freezing him from making a decision on how to act.  If you have any personal bank contacts that he could speak with, message me and I will hook them up!  

He wants to get started in real estate, and sitting on a good chunk of money but has no idea how to pull it out and get started.  The complexities of doing it from overseas makes it weirder.  I gave him my two cents of how to use that home as leverage, but of course this is for doing business in the Philippines.  
 

@Ronsted Yuag, thanks for the note!  Yeah, he’s trying to figure out the next step.  If he sells it, how would taxes work?  I’m assuming there are similar taxes on the appreciation earned from the selling of the home.  I wonder how much he’d lose by converting from Pesos to Dollars at that point.

I was encouraging him to leverage it and pull a line of credit from the home to invest in a house in the US.  I just don’t know how the hell that works.  My assumption is that he would have to find a US bank that does business in the Philippines and is able to send an appraiser to the Philippines to pull comps and appraise its value.  From there, I’m assuming that same US bank would loan him a line of credit for that home to use in the US.  Do you or anyone know any good resources that could help determine if that’s even a remote possibility?