All Forum Posts by: Jimmy Nguyen

Haha thanks @Karen Margrave.  I see what you mean.  Some of my family members are left brain dominant and have a hard time looking at my 2D plans.  I have to take them on a 3D tour on Sketchup for them to understand.  

Do you ever get any land through direct marketing? Or do you find most of your land as REOs through MLS?

Thanks @Devon Garbus and @Account Closed.  I think I will most likely do a spec house first.  Although, I've always liked the idea of working with a client to build a home.  

Land prices are very high right now in the Northern Virginia/Piedmont area.  I know some people like to only purchase land at around $20/square foot of finished house, but that number will likely be tripled or quadrupled in this area.  Even at those prices, I think if I keep construction costs at under $125/square foot, I can get 20% profit.  

After purchasing land to build a home on, it usually takes a few months to do surveying, site and soil evaluation for foundation/septic/well (if necessary), and other paperwork.  In those few months, is it a good strategy to advertise the land as a site for a custom home to a potential buyer?  I assume this would entail putting up nice designs and floor plans on the big online real estate sites. Possibly putting up flyers on a post on the property for people driving by to take.  

Or if I already have designs in mind for the land, should I just focus on completing those building plans, estimating costs, acquiring a construction loan, and getting the plans through the permitting process? Basically, what are the advantages and disadvantages of building a spec home that is compatible with the desires of the majority of home buyers vs building a custom home for a specific client?  

I understand that a buyer who wants to build a custom home on the land could take out the construction loan themselves and I would become the General Contractor.  Is this the only way to protect myself in case the buyer backs out and I'm left with a custom home that will be harder to sell? Also, in this case, what happens to the land, which I own?  

Finally, which one can offer the best return on investment while also accounting for risk?       

Thanks for any advice you can offer.  

Woops just realized that the last few posts were from half a year ago.  

@Karen Margrave - did you get those solar panels?

Hi Karen,

I am going to put solar panels on my custom house (I'll be living in it for a long time I hope) and got a bids ranging from $2.85-$3.50 per kw installed.  With the federal tax credit of 30%, which has been extended through 2019, I estimate that my payback period will be 9 years.  We don't get as much sunshine as Redding and Virginia does not offer any state incentives so your payback period may even be shorter.  A good place to estimate how much energy your solar panels will generate is through this website by the Department of Energy: http://pvwatts.nrel.gov/.

We are going to install a dc to ac inverter that is compatible with Tesla's Powerwall.  When Tesla finally starts shipping these out to customers, the Powerwall will act as backup power in case of outages.  Of course, you probably know that typical backup generators can be very pricey so the Powerwall can be a great alternative if a customer elects to go with solar panels.  The Powerwall can also be beneficial if your area charges different rates for peak hours and normal hours of energy use.  You can use the solar energy stored in your Powerwall during peak hours to avoid those higher costs.   

The best report I've read about whether or not solar is a good investment for a homeowner is the Going Solar in America report by the N.C. Clean Energy Technology Center. The report found that purchasing a 5kw solar array in 20 of the 50 largest cities in the U.S. is a better investment than the S&P 500 index (assuming 6.61% annual return).  In cities with low electric rates and unfriendly solar laws, the customer may not make a return on investment.

I think if you do the analysis for the customer, they can decide if it makes sense for them or not.  But I think you are wanting this on your own home?  I would say do it because as someone who wants to reduce our dependence on dirty sources of energy - solar pv is the cheapest and easiest thing you can do right now.  

Thanks @Bill S. I think I'll try direct marketing as land prices listed on the free real estate websites are too expensive bordering on lunacy.  I do live in the Northern/Central Virginia area so I guess standard rules of evaluating land for a spec home build might not apply.    

Thanks @Bill S. I just found Bigger Pockets' Ultimate Guide to Direct Mail and got some good information there too.  Should have looked there first.  

What type of seller do you find gives you the best results? (i.e. probate, divorce, out of state, etc.)

@Jay Hinrichs - I just saw this thread.  I like your personal approach to getting good land deals. I can imagine sometimes a potential seller will have a sentimental attachment to the property (i.e. it was in their family for a long time) and letting them know what your plans are for the property may help.  Not sure if you have encountered any situations like this.

My real question is - is there a list I can purchase to target potential lot/land sellers?  Can I send mailings to large landowners in the hopes they may subdivide some of their property to sell?

Thanks for any advice you can give.   

It's probably different for land that is not zoned agricultural, but I got a loan from Farm Credit of the Virginias pretty easily. The interest rate was 4.5% at 20 year amortization/5 year ARM. That gave us 5 years to build something on it and refinance to a lower rate.

Thanks @Mike Wood.  We only have to build for 90 mph winds and no seismic activity.  I can't imagine the extra wall bracing you have to do on your homes.

The $3200 figure is actually very conservative.  For recycled foam board, if my costs are $10/sheet and I need about 100 sheets (10 extra sheets to account for slop) to cover my house that would equal $1,000 for materials + $200 for screws, washers, and tapes.  I recently got a quote from a subcontractor to sheath my house with 7/16" plywood, tape the seams, and wrap it with 30# felt paper for $2,000.  That's where I got the $3200 number.  Of course, hanging up the foam board would go faster than sheathing heavier plywood and wrapping it with felt so the labor cost would be lower.  

For a double stud wall - it's harder to calculate.  The materials costs will be lower than foamboard, but labor will be higher.  However, I am sure a properly trained crew of 3-4 carpenters could knock it out in 3 days. Carpenters around here are generally $30/hour per person.  3 days for 3 carpenters would be $2,160.  It's just taking me long because I am doing it mostly solo with my 70 year old dad helping occasionally.  I hope I can get a good team together one day.  

The acoustical framing looks interesting.  It's still a standard 2x4 or 2x6 width though.  It wouldn't give you more depth to put insulation into and it doesn't cover thermal bridging through your rim joists and plates.  How much would a 92 5/8" 2x6 stud cost?