All Forum Posts by: Patrick Philip

I've been building single family homes for a couple of years now. I now have lenders that are willing to lend to me. I plan to finish 10 houses within the next year. I am reaching the point where I can no longer manage it myself. How do I scale this up so that I can just be the money man and have hopefully someone else do all the work? Every time I've contacted a GC, they want such a large amount of money that I can't do it realistically. They are asking for what amounts to almost half of my profits for their management fee.

People love to hate on Uber driving like it's some terrible job... Now I've never driven Uber, but all I know is I pay $50 for a 25 minute trip to the airport these days. And don't the drivers keep 85% plus tip?

 How do I find a "team" like this? They find lenders for other people's projects?

I always thought that "syndicating" meant finding equity partners.

Going to a bank would be ideal, but if that option is not available for some reason.

I don't have a lot of experience with crowdfunding platforms. The one time I talked to one, I was told they don't deal with new development of condominium complexes (either debt or equity). Anyone know if this can work?

I've recently been looking at vacant land in the Miami and Ft. Lauderdale area that is zoned for building condos. I've noticed that a lot of the listings already have approved architecture and environmental studies. Is this common practice when getting into this type of real estate?

These are multi-million dollar properties. Is it common that I could get bids on the construction during due diligence period?

Ok, I see what I was doing wrong. I wasn't going to even mention the money I spent constructing the house until the tax year that it was sold. So I was going to leave lines 36-39 on Schedule C all as $0. But in your example, they should add up to $200,000, not $0. So that solves my problem. Thanks.

I also don't think it's necessary to use Specific Identification method now. No sense making things more complicated than they need to be.

Ok, then I have one more question that hopefully isn't too complex for a quick answer if you don't mind...

Why are unfinished houses not considered inventory on Schedule C? If I listed them as inventory, then it would result in that weird situation of a huge loss one year, and a huge gain the next year, which common sense says is not the way to do it.

I am not asking about how to acquire financing. This is about the logistics of doing larger developments.

Currently, I am building single-family homes. I am managing the projects myself. I have a licensed General Contractor who gives me Power of Attorney to use his license. I pay him $1/sf. I am hoping to get my own GC license within the next year or so. I believe I could manage 10 home builds per year, although I have never done more than 1 at a time yet. Even doing one is constant work. Every day, I am going to the store (Home Depot, Lowe's, Floor&Decor, etc.) to buy things, return things, look at things, etc. It's possible that it would be too much to handle to even try to manage several houses at one time, but I will try and I think that I can. I also have to manage all the subcontractors. I have to pay them, inspect their work (although the goal is to get a good enough "team" of subcontractors that the work doesn't require too much inspecting).

My goal after this is to start building condo complexes. I want to buy vacant parcels in expensive areas and build as many condos on the property as zoning allows. It would be great if it could just be this easy...

1. Locate a suitable vacant parcel and buy it.

2. Get architecture/engineering done.

3. Hire GC to do the whole project for a price that will leave me with a nice profit.

4. Sell the condos.

I think my main problem here is #3. If I'm doubtful of whether I can even manage 10 home builds in one year, I don't see how I could manage large condo projects. Some things might be easier since it's all on one parcel, but at some point I'm going to have to either hire a GC or defer some management to others.

I think most developers just hire a GC to manage everything. I don't believe most developers have a GC license, although it is still my plan to get one.

Ok, that makes sense. Is there any concept of "inventory" for home building? If I was doing a larger project that cost $10 million and took 3 years to complete... would the IRS find it strange that $10 million went "missing" for 3 years? (if there is even any way for them to know).

This also creates a problem with my eventual plan to lower my tax burden once I begin doing more houses. My plan was to purchase many vacant lots towards the end of the year (for future development) so that my taxable income is always low. So I guess that won't work. Are you aware of any legal ways to lower my tax burden here?