Creative New Building technique.. - Posted by GinoAz

Real Estate Investing
1

Posted by Tony(OH) on May 08, 1999 at 20:43:59:

Just an idea that I had, your post reminded me of the idea. Here it is:

If you own some land that can be developed (which I have a little), build a very small SFH, or even a double. Ex. - 84 Lumber has a 28’X 28’ basic 2br 1bh house package that can be purchased for approx. 9k. My idea was to sub, or actually do, most of the work. I figure that I could complete this project for about 20-25k. If one was to hold this property as a rental (which was what I had in mind), a small positive cash flow could be had: PI = 253, taxes = 50, water = 15, Ins. = 30 for a total montly of 368. FMV rent in my area would be right at 375. The beauty of this that I have figured this PI at 120pmts! A few of these units could give one a nice positive cash flow in 10 years. Seeing that I am only 28, units of this type could provide 20-30 years of great income.

Just an idea I had, wanted anyone else’s opinion. I guess the big question would be financing.

P.S. This type of rental in my area is a top end rental, in the nicest part of county, and would be in great demand. I of course realize this would not be feasible in most areas. Also, this would most likely have a FMV of 40-45k.

Best of investing success,
Tony C.

2

Creative New Building technique… - Posted by GinoAz

Posted by GinoAz on May 07, 1999 at 12:13:19:

Yolonda,

Heres a good idea on making money on new builds. Its a bit of work and takes awhile before you realize all your profit but its a good technique.

First you need to aquire some land at no more than 88% of FMV. Because we want to use the eq to cross collateralize.

Go to your local Degeorge or Landvest homes, they will have a list of about 18 floorplans for you to choose from. Pick one about 1700sf and that looks nice. it will include all materials to build a house delivered to your lot. The price runs 35k-60k depending which house you get. I recommend Landvest because they use extremely high quality materials, better than most tract homes for sure.

I have a construction lender that will start construction and release draws for $999 down with a 620 fico. Hire a General to put it all together or do it yourself (check with your local laws and see if you can act as your own general, on your own home you should be able to).

Anyway the loan is a 8% loan that after 8 months rolls itself into a 30yr.

so 5 moths later you have a new built house with about 20% eq in it. The thing that I did was sell it for 10% above market to people who dont qualify. Take the 10% markup as a second (and/or a promissory note), season the first for 1yr and sell it for 96% of face.

You cross collateralize the equity in your lot which you have no cash into if your tied it up right, for the ability to get the $999 down program. You get the $999 down by offering “Owner Financing on brand new Custom Homes, No bank loan needed, Low down, you pick the options! Call Gino”

Even easier, i like to get the little vinyl corregated signs made and it says “$2000 starts construction, custom home on this lot, No qualifying”…and just stick the sign on the lot.

breakdown.

Materials 40,000

General 8,000 or (0) personally i recomend just hiring the subs yourself

Subs 25,000

Carpet 3,000

Countertops 2,200

Lot 30,000

total $100,000 (108,000-112,000 if you hire a Gen)

Im using these approximate example figures here in Phoenix on 2 im putting up and im selling them for 135k and 143k

3

Re: Creative New Building technique… - Posted by babesy

Posted by babesy on May 08, 1999 at 23:13:53:

Gino, I don’t see anything in your budget for getting the lot ready. What about surveys? Don’t you have to bring in some utilities and isn’t that an expense?