11/12/2018 at 3:14 pm #51552
Sure thing.. Land in Atlanta isn’t cheap. Inside the I_285 is crazy and, it is hard to find in most places. What land is available will usually have ledge [rock] buried underneath or have other issues.
Most small .25 to .33 lots run $38k to $65 k per lot. WAY TOO high for a start-up or a first time home buyer. Builders all around here want to build $350k to $600k homes.
So we finally found 4 lots 25 miles up I-85 north in a small bedroom community right outside of a small downtown street like where your store front is located. 5 minutes into the town.
We got the lots at $11k each=$44k total plus some small over due taxes, etc. for about $45k total.
Having my friend as a partner who is a Georgia licensed General Contractor, we will be pulling all our own permits and supervising everything myself. So the GC profits and the Superintendants cost is all going to profit.
These homes will be starter homes for first time buyers. About 1,800 to 1,995 SF each, with some stone work, fireplace, screened back porch, hardy plank siding, tile, granite counters but everything contractor grade.
We have all of the subs we used to use, actually 2 or 3 for most of the trades and still have good credit standings with them.
Of course at this stage, this is very broad brush, but…We are targeting to list the two ranch styles which will be on slab grade for about $175k to about $180k. Then the last wto will be ranch style but have walk out basements [unfinished of course] and will list at about $195k-$199k.
We are very confident we can build at approx. $50 per SF and think we can squeeze out at $40 to $45 per SF cost to build. So about $90K to build plus $11k for lan = $100k gross total and trying to Target about $100k gross per house, then of course will come some “soft costs” out of that and what we have to “throw in” to close, like some commissions, perks, etc.
We can build a house from scratch in 4 months +/- weather, rain or cold depending. We are going to do the first two slab ranchs fairly clsoe together, then the 2 walk outs late next year.
We are hoping to get as close to approx. $350k to $375K as possible in about 14 months or less +/-.
The money comes from several sources. A small investor friend who has kicked in enough for the land and we will re-pay out of first house, the we will self fund the 2nd house, using personal resources. Then use the roll-back retained earnings for the last two. Projects like this you can’t dig into the income up front and run willy nilly with your profits. You have to be willing to plow back most into the company, but still keep a small revenue stream coming.
And we could of course go to the bank and do a construction loan of but prefer not to go that route if we can help it.
I can do some periodic posts if anybody is interested as we go, but know SL isn’t a place for real estate transactions.
Mike at MDC Galleries1+
11/12/2018 at 3:21 pm #51558
Mike, keep us informed on this new adventure!1+
11/12/2018 at 3:23 pm #51559
–So are you going to build one house and sell, then use that money to build each additional house?
–Or are you going to build all four at once while you have men and equipment on site?
–How much are you borrowing from banks, investors, or your own bank accounts?
–Will the projected $350k be split between just you and a friend, so $175k each profit in a year after four houses are sold?
I only ask because I see local guys build spec houses all the time and wonder what their true profit is. Almost $90k profit per house is pretty incredible. I can see the temptation to go all in as long as you think the market can handle it.0
11/12/2018 at 10:00 pm #51602
- Location: Northeast US
I think the post already answers your first 3 questions: “So are you going to build one house and sell, then use that money to build each additional house?
–Or are you going to build all four at once while you have men and equipment on site?
–How much are you borrowing from banks, investors, or your own bank accounts?”
– We can build a house from scratch in 4 months +/- weather, rain or cold depending. We are going to do the first two slab ranchs fairly clsoe together, then the 2 walk outs late next year.
The money comes from several sources. A small investor friend who has kicked in enough for the land and we will re-pay out of first house, the we will self fund the 2nd house, using personal resources. Then use the roll-back retained earnings for the last two.
And we could of course go to the bank and do a construction loan of but prefer not to go that route if we can help it.0
11/13/2018 at 8:39 am #51620
You’re right! I didnt read clearly enough. So self-fund the first two out of your own money. That’s a big gamble!0
11/14/2018 at 1:13 pm #51687
- Location: Washington State
Mike it is amazing how construction costs vary – (or escalate) depending on location! 50 sf is crazy cheap compared to Seattle- well over 100 per sf for new construction costs (If you are your own general or super as you say) and 200 for a pre existing home-
Good luck on your venture, it sounds like you know what you are doing and what to expect!
01/11/2019 at 3:55 pm #54945
Quick update on the “4 New Homes Real Estate” venture.
Due to holidays and rain we had to go with a later start than originally planned. AND another “Good” hold up.
We got plans for 2 of the 4 lots and were prepared to build them doing self funding. We posted the first two on the MLS listing service and before we even got a shovel in the ground we have got both houses sold, based on the lot location, the house design and pricing level.
So, two have signed agreement to purchase on them. Then we also got an investor to “invest” in the first one for a percentage return after the closing. Then from what is left [our profit] that will go for the second house expenses. We are going to build both at the same time. They are only 3 lots apart.
Rough numbers and targeting a 4 month build time … lot 15 sold for $188,900 and the lot and building costs [estimated] $116,081 = $72,819 gross profit and lot #11 sold for $198,000 with $121,860 lot and est. building costs for a rough ball park of $76,140 gross profit target or roughly ball parked at $148,959 after both are closed at the end of April.
2 lots are surveyed, boundaries and set-back lines marked, the house boxes are stacked and I met the grader out there yesterday. Permits went up yesterday and we will start clearing and pushing dirt probably Monday.
So.. that’s it for now. We will see how this goes.
Definitely taking a whole lot of time away from Ebay, Etsy and the start of the transition to SixBit. I may not go forward with this partner after these four because even though the money will be good, it is not my passion and I have a complete art studio I have waited 40 years to get into. I will have to decide on the quality of life vs. the money and tight scheduling thing that has been being discussed here on SL the past few weeks.
Mike at MDC Galleries and Fine Art.1+
01/11/2019 at 5:58 pm #54953
Amazing you have them sold already before they’re even built. What do you think the net profit of the two houses will be? Do you have a contractor that’s building them so you can just sit back and answer any questions?0
01/12/2019 at 3:12 pm #54997
The figures above are fairly close to a ballpark net because I do have some “soft costs” included such as an amount we are contributing to closing, the lot-land of course is included, the real estate comm. of 6% is included, builders risk insurance, a 2/10 Warranty for the buyer, Gen. Liability all are already figured into the “building costs” Actual building and labor costs is lower than shown.
But the figures are before taxes. What will be left the GC and I take our shares out.
The Georgia Registered and Licensed General Contractor is my partner and i do the admin. side of things, read and sign documents, pull the permits all as a registered agent for his company, which is an LLC corp.
But I can see how much time is starting to be involved and I may just be on board for these 4 projects-houses, then cut bait. I want to double the Ebay listing, then install and learn SixBit then get everything listed on Etsy. Then run those two online businesses then get into my art studio and start creating larger abstract original paintings and also limited edition prints and smaller sculpture. That I would rather do, than do more houses, as you have said Jay, it is not all about how much money. If that were the case why did I stop the mid 6 figure a year job. It was about shutting that darn alarm clock and not taking phones calls to come into the plant at 3 am.
Mike at MDCGFA0
01/12/2019 at 5:07 pm #55000
it is not all about how much money. If that were the case why did I stop the mid 6 figure a year job. It was about shutting that darn alarm clock and not taking phones calls to come into the plant at 3 am.
Preach! But glad you’re going to make out well on these houses.0
01/11/2019 at 6:44 pm #54956
Very cool Mike! Congrats!0
01/12/2019 at 3:21 pm #54998
Thanks Troy. But for 3 days in a row now, I have had to hit the road around 5 AM drive 30 miles up the road and be at the job site. With permits in place, it is time for the rubber to hit the road. Spent 5 hours today just being their for a front loader to clear the more wooded lot. It was freezing cold, sleet coming down and my phone kept going off with Ebay questions, offers and cha-ching offers. The bulldozer guy was on break when a cha ching came in and he asked what is that? Funny.
I turned 70 years old last month, I would just rather have been back in my office, coffee in hand and dealing with the Ebay stuff than what I was doing.
When I get through with these 4, I may not do any more, but by the end of April, atleast I would have made some good ROI.
Jay you were prying loose tile, I was digging holes with post hole diggers yesterday and today shoveling out dirt away from the storm drains and placing new, fresh sand bags to catch the silt run-off before it got into the drains.
When I dashed out this morning I had 2 small hand carved wooden figurines which sold for $90. I had to leave them unpacked. Luckily they dont have to ship until Monday. But I really like to ship same day when I can.
My helper ran out of stuff to do yesterday because the house pulled me away so much this week I didnt get done what I needed to do in the Ebay process.
Mike at MDCGFA0
01/13/2019 at 8:27 am #55015
Completely understand Mike…
Hike Your Own Hike!0
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