All Forum Posts by: Sue Hough

@Jesse Allen great questions!  It depends on the municipality you are working in.  Most cities allow homeowners to self-perform many home improvement projects without a license.  Some cities have stipulations if you are the owner and planning to sell, which you are doing.  Best to ask the building department.

Good luck!

@Scott K. good morning and great questions! There is no way to determine what the construction budget is on a “gut rehab”.  That term, in itself, is too broad and does not encapsulate a specific scope of work.  For example does all electric need to be replaced including the panel and new service?  Or; is there structural damage to framing members which need to be replaced?  Is there rodent/insect damage to be dealt with?  The definition of “gut rehab” is specific to every property and therefore there is no number which can be placed on it without due diligence.

You will need to get a bid or two from a good contractor.  One flaw to this is contractors are not keen on working with investors and you will have a hard time continuing this pattern for each property you are “considering”.  It takes time to property bid a project, from a contractors standpoint, and investors are typically using contractors as their budgeting resource.  Since investors evaluate many projects which don’t work out for the contractor, the contractors usually become very reluctant to serve as your budgeting agent.

I recommend finding one contractor you trust well and keep working with him/her.  This way you can establish a strong relationship and work together as a team.  The truth of the matter is; just because someone provides you with a bid does not mean they are qualified to determine every aspect of your project or are they able to complete the project for the price.  Unfortunately, there are a small percentage of contractors who underbid projects just to get the job and are unable to finish the task for the amount stated. 

Lastly, many investors are looking for the least expensive bid. If that is your strategy keep in mind you are paying for quality and accuracy, and if you are willing to sacrifice the integrity of those items go with the lowest price.  There are different levels of contractors, just as there are different levels of restaurants.  If you agree to a McDonalds budget don’t expect St. Elmo’s Steak House.  Not every contractor posses the same skills and their price will reflect that, it’s not bad just the truth.

Keep confident in yourself and know you will learn construction along the way! Before you know it you will be able to spot a faulty copper-galvanized connection from across the room and know it needs a dielectric fitting!  This just takes time and experience, I still learn something new every day.

Good luck!

@Brad Fallon if you would like to message me I am happy to share a spreadsheet I use to assist my analysis of buy and hold properties.  It can give you a good idea of where you will be financially month to month.  It does not take into account property appreciation, which you can add in simply enough.  I like using spreadsheets to quickly analyze an opportunity.

One piece of advise I would offer for your new venture; make sure you have a trusted contractor evaluate all of the construction expenses and on your part, when looking at a property always look for the construction concerns which will cause big trouble in the future.  There is no benefit to playing down construction disasters, as I see so many people do because they get excited about the project and want to make it work.  If you look for potential pit falls before you buy and calculate for their expenses your chances of success are much higher.

Good luck!

@Alex Greenberg good morning, and what a wonderful question!  Although law and construction are two integral parts of a great developer, I would add to that list.  Here is my take, in order of importance;

1. Vision; to see the unique opportunity available.  The ability to develop a space which will serve the wants and needs of the community in a way which separates you from the masses.

2.  Number crunching; without accurate numbers in every area, the project can very well be doomed before you break ground.  My spreadsheets have many pages and line items for everything from “advertising to soil testing” and everything in between.

3.  Great construction skills.

4. Knowing how to navigate through the local municipality, zoning, fire safety and land requirements.

5.  A great marketing team.

6.  Legal requirements and a great contract attorney.

Good luck!

@Jeremy Johnson after reading your comments, it is apparent you are looking to get rich quick.  This is not a forum for that sort of irrational thinking.  Investment in real estate is extremely hard work and requires many years of dedication, and above all the willingness to overcome obstacles.  If you are not willing to roll up your sleeves and put in the effort, I wish you the best of luck in life.

Good luck!

@Jeremy Johnson I will elaborate a bit more on the comment @Scott Krone made, along with @Jonathan Greene.  

Land development is a very detailed and intricate process which takes many years of experience to become versed enough to take on your own project.  Not to mention the construction portion, albeit ground-up is far less complicated than extensive remodeling.  You would need to forge a partnership with a great developer/builder in the area.  One who, not only has the practical experience, but also has experience in your market and its’ needs and wants.

The biggest hurdle is going to be funding the project.  Your lack of experience in real estate and development would prevent lenders from financing the deal, it is just too high risk.  The same goes for obtaining private money (private investors).  Without a strong track record of success I do not see private money being an option either.

It does seem you have large ideas, which is commendable!  I would suggest learning the ropes and getting your feet wet before entering into any large project.  Meetups are a great place to start, you can search your local area.  Attend a few regularly and you will begin to meet some great folks who you can partner with on a project or two and begin learning everything you can.

Remember; there are three needed valuables in Real Estate Investing and you need at least one to be of value to a deal;

1. Money

2. Experience

3.  Sweat Equity

Good luck!

Agree with all above, too volatile to predict solid outcome...

Good luck!

@Brennen McConnell please feel free to message me directly or you can contact me at my information below.  Happy to discuss.  Thank you,

@Brennen McConnell there are many expenses you are forgetting which need to be calculated with accuracy prior to the start of your project, or I fear you have the potential to loose money.

1. Infrastructure - Land clearing, water lines, sewer lines, utility hook ups, roads, sidewalks and so forth.

2.  Is there the possibility for contribution from the local city or county for any of these fees?

3.  Will there be “impact” fees for each home.  This is the fee added to the permits to adjust for the fact there has never been a tax-producing residence on the site.

4.  You need a contractor(s) to bid for complete (Including all finishes) and accurate pricing with a clause for inflation guaranteeing the pricing for up to 12 months. Guessing how much a construction project is by square footage is a sure fire way to be 100% wrong every time.

5.  Additional soft costs include; taxes, insurance, utility usage, attorney fees and so on.

To be successful in any business venture you need to have accurate numbers. At this point, you do not.  Please do not go forward until you have the numbers and are working with a seasoned developer, as there are too many line items to risk at this point.

Good luck!

@Kelly Beasley assuming you are taking your investment plus interest prior to any “split”, there is no rule off thumb!  It is what you negotiate with the person and each party feels they are part of a fair deal.  

It seems you have a strong long lasting relationship with this person and you trust them.  Having said that, 50/50 seems the way to go.  In life money often represents other emotionally entanglements. Anything other than “equal” in this circumstance would most likely disrupt the relationship you have already established.  Money is never the only or most important factor in a successful business venture.

Good luck to you!