All Forum Posts by: Ryan Frey

Hi Justin,

I have a development project kicking off this summer in Great Falls.  I would love to grab coffee next time we are in town?

I have installed Next Century submeters in my new construction builds.  For a minimal annual fee a monthly usage spreadsheet is emailed to you.  The systems use wifi or cell signal to transmit the data.  A retrofit install of these should be fairly straightforward for a plumber.  You just need power somewhere near the meters.  

I am wondering what project management software developers out there are using.  We have used CoConstruct when self performing the construction, but it is more geared toward GCs.  Our group is growing into larger projects where we are running construction management and hiring GC's.  Is there a platform out there that people are using to track and run the entitlement process and the soft cost budgets for the pre construction stage that has been working for you?  

See if your lender will accept a realtors opinion of value. This has worked for me in the past. Granted this has been with local and regional banks. 

@Alexander Kingsley

Hi Alexander,  Welcome to BP and real estate investing.  I would first start by finishing your BP profile and adding a picture.  I may be a bit old school but I am more inclined to give advice to someone who has posted a background, interest and has specific questions.  There is a ton of information on the site to learn the basics and we have a meet ups happening monthly in most cities here in Montana.

The construction company has to be kept separate from the investment company.  The investment company hires the construction company at normal costs to do the project.  This sounds like an equity deal, the Construction company puts in 70k capital contribution (more if profit included) and investor puts 40-50k into investment company. I would structure the split on ratio of capital contributed.  

I agree with @Nathan Gesner This deal seems tight.  Have you factored in builders risk insurance, closing costs, realtor fees, price increases (lumber up 180% in the last 14 months), etc? 

I would look into a builder's risk policy for the time it is being remodeled and then switch into homeowner's policy once complete.  Always confirm with your bank and insurance.

@johnathan 

@Johnathan Simeroth Back when I was starting out, I did a lot of remodels.  I would get a lot of calls from real estate agents, prospective home buyers, or investors asking me too come and provide a quote on a property they were looking to buy.  I would set up a meeting to walk the property (1.5 hours), then come back and work up a quote (3 hrs min) then drive out and meet the prospective client to present bid (1.5 hr).  i quickly realized this was taking up a lot of my time and 9 times out of 10 they used my quote to as a negotiating tactic to reduce the sales price, then performed the work themselves or put it out to bid again.  I thought, something is not right with this model.  Everyone in the transaction gets paid, the real estate agents, the home inspector, the title company, the banks, etc.  Except for one person, the GC.  I quickly started charging $300.00 for this service and only providing estimates.  Granted few people took me up on that offer, but it never hurt my business. 

So, in response to your question, don't be afraid to pay a GC upfront for his or her time giving you a quote on your project, even if you don't end up buying it.  Call that person again for a quote on the next property, I bet you will get a great response and attention to detail, because you have proven to the GC that you value their time and they will reciprocate.

I would caution you on trying to do a new build in this situation.  First of all, I think you uncle cost of $80.00 per square ft to build is very low.  I basic construction cost here in Montana at a minimum of $120.00.  Aslo, it seem like you have a full time job, building a house is a full time job.  I don't see this as something that can happen on nights and weekends.  Your construction loan is going to be at a higher rate than a conventional 30 yr mortgage, so each extra month that the project takes means you are paying that much more in carrying costs. 
I would suggest finding an existing house that you can move into and either add on a second unit or build a mother in law unit on the lot.  That way you are in the house, paying a mortgage and not rent, and utilities are already in place, meaning you may only have to add on to the leach septic leach field vs a whole new septic system, etc.  

@Andrew Schrader

I agree that it is something you should clean and move on from. In my rentals, I make sure to wire the fan to the light switch, so every time a tenant uses shower, the fan is running. Also, a lot of older homes in Montana have bath fans venting into attic space. You might want to check if this is the case in your rental and get the ducting to vent outside.