All Forum Posts by: Seth Elliott

I can’t say if you should invest with him or not, that’s your call. But, it sounds like fear is taking hold of you. Your self education is important, but you don’t necessarily have to postpone everything until that happens. There is a lot of education in the process of putting a deal together, even if the deal isn’t successful in the end. The most important thing is to make sure you run the numbers and the math is right. 

Well first, it would probably help to look at things from their perspective also. Just as you are worried about the risk of a GC walking away with your money, they have to worry about the same. I’m sure they have been shaft in the past as well. So a little good faith money up front by the investor could show that you are serious and trustworthy to pay later.  With that being said, for a large job you can expect them to want a certain percentage up front.  There are certain subs(pool, foundation etc.) that require money up front from them also.  It can often be substantial. For a smaller job, you probably shouldn't pay until after all work is completed and satisfactory.  Just make sure you get a detailed pay schedule, and that the GC meets your milestones fully before you release any checks.  You should probably push for a net 30 pay schedule with your GC's. That means that you send a check 30 days after you receive the invoice and that they don't send the invoice until the work subject of that particular invoice is completed when they send it.  This will give you time to check the work to make sure everything is completed and for them get anything fixed that is not up to par.  Out of curiosity, what terms were the GC's asking for?

Those are comps, which are not the same thing as construction cost. Totally different animal. It depends more on whether he will build them himself or hire a GC to build them. When you build it yourself(if your qualified) one would put their own sweat equity in the deal. Not to mention the value of the land not being included in that since he already owns it. If he hires a GC to build it for him, he would need to factor in the profit the GC would take for his time. When you develop out a piece of raw land, you must take into consideration the value add component.  Same as someone would if you bought a trashed out home and fixed it up yourself. Not saying the numbers would work either way, just need to do your own due diligence and determine construction cost.  Also the more you build at a time the cheaper it gets.  It takes almost the same amount of time to build a 4 unit as it does to build a 20 unit and so on.    Therefore the labor costs get spread out over more units.  The logistics do get more difficult though.

@Ryan Rush have you thought of taking out a loan against the home you have free and clear, to cover some if not all of your issues? Maybe it doesn’t cover all of the expenses, but cutting half of your debt than none of it.

Also I can’t quit thinking of the Robert Kiyosaki strategy of “Trading 4 green houses for one red motel”. Maybe you could sell your assets as a portfolio and trade up. 1031 exchange...

I say do it!  This will keep a lot of the fly by nighters that don't have a clue what they are doing at bay. 

How big is the lot? How close are the utilities currently? How deep is the nearest sewer main? These are some questions you will need answered. Depending on how extensive of a utility job you are talking about, you will need to talk to a Civil Engineer. They will draw up plans and assist you with permitting.  Then you would need to get bids from several Utility Contractors. If it is as simple as extending from current utilities in the adjacent street, then you could probably just hire a plumber to get the required permits and perform the work. Electrical is going to require a conversation with CPS or the local service provider if it’s not in San Antonio. 

Josh Thomas  what is DoN?