All Forum Posts by: Chad Lubke

I wouldn't do any spec building in the "modest home price market", you have too much competition from the production builders like Pulte, KB Homes, etc that have enormous buying power and can sell and make money for less than you can build for... Our initial strategy was spec building, but have made two tweaks.  We were buying land and marketing a "to be built home".  That worked out really well, our competitive advantage is that we have a "live in model home" at the price point, and in the area we are working... Going forward we have slowed down on the land acquisition side and have started to target realtor with vacant land listings and bringing them our build package, with images etc and selling up front.  We have executed that and have much less risk.  I agree with Victor, $50/sf would be the bottom end of profit you would want based on 3000sf minimum

We always stage and hire a professional photographer.  We typically stage all rooms except for guest bedrooms.   As for dropping the price that really depends on the area.  We have one listed now that's been on for a while but we haven't reduced the price.  We completed the home in August, but being in a beach neighborhood in Florida our season doesn't really start until the end of October.  We listed a little before completion with a few photos and started having open houses and brokers opens once the house was staged and landscaped.  I know some builders that do hard hat open houses, but we have found most people don't have very good vision, hence the staging

Here are the signs we use on homes, we place on vacant lots, keep up during construction and usually add a large banner if there is visibility from the road.  We have been getting our signs printed on die bond, metal sheets, $150 for a 3'X5' sign...

Yes typically collateral is the land on a construction loan hence the lender only going to 70%.

I use private mortgages on 90% of the land deals.  I have one lot that I bought and another I am closing on in a few weeks that I used 100% financing with a private mortgage.  I am also the realtor on those deals so I get some of the commission back (have to pay attorneys fees etc).  As for construction I have one private investor who lends 70% of the cost.  I also know of a company in Florida that does spec financing, here is what they are offering:

Builder Specs: Loan Amounts up to $300,000,Non-Recourse Loan, Up to 65% LTV/70% LTC (SFR only), Free and Clear real estate owned can be used as collateral to reduce or eliminate down payment, 12 month term, No Credit, Income or Asset minimums

I have never used them before as we are building homes beyond that price point...

Yes, you can do it with private money or do a partnership.  Just like a bank any reasonable partner is going to want to see a track record.  

I agree its the buyers obligation to verify square footage, but I don't care about there buyer, I care about mine, and when they see the square footage on the MLS that hasn't been recorded by the property appraiser yet, they are going to trust that its accurate. I haven't known any buyers to verify square footage on pending sales etc... I am looking for a way to tactfully remedy the problem.

The listing also specifically says there is another 296 conditioned square footage not figured in the number...

We are building spec homes in a community where there are other builders. The house two lots down from us was originally listed as 3178sf for $769k which comes out to $241/sf. I noticed the house went "Active with Contract" and the MLS description now shows 3474sf $769k which reduces the value to $221/sf. In speaking with the builder prior to noticing the descrepancy (builder not tied to the owner or Realtor) he said the buyers were obtaining financing on the home. I am assuming she may be concerned about the appraisal so she upped the square foot figure. I verified the original 3178sf on the builders web site and had one of my guys measure the exterior (single story rectangular home so easy to figure) and came up with approximately the same 3178. I am concerned that this reduced cost per square foot will adversly affect my offers. This house in question is scheduled to close at the end of October and we have a lot of interest on our home as well so I don't want this to be an issue.

We pay between $800 and $1600 for a soil borings.  When using pilings on a site we know will need them, just not the legnths, we use a guy that comes out and just does one boring and gives recommended piling depths.  For other areas / sites they do two tests and provide about a 16 page detailed report.