NEW INVESTOR - SPEC HOMES W/SALEABLE NOTE? - Posted by john

import · August 19, 2003, 3:09pm

Posted by John on August 19, 2003 at 15:55:37:

I was really hoping to get a little more advice than what book to read. I’m not really interested in mobile homes, yet. I’m also not interested in rehabs. I don’t have a lot of time to invest, just some money.

import · August 19, 2003, 3:09pm

Posted by john on August 19, 2003 at 15:09:49:

I know the people on this forum are ‘creative’ investors, but I’m thinking the best advice for a rookie comes from the creative veterans.

I am considering having a couple of spec. homes built, probably in the $100K sales price area. I’m considering building in north central Florida. I have the cash to cover the deal and I wish to turn the profit quickly. I would like to do this more than once, if feasible in a year.

Generally, how much can I expect to make from a straight build-and-sell deal (what % of cost)? If I owner finance, how do I sell the note? What should I be careful of? I don’t want to tie my money up. I just want to turn it over. I only have a portion of the money available for a year. I’m open to any and all suggestions, even if it’s a completely different approach.

Thanks in advance for your advice,

John

import · August 26, 2003, 7:00am

Re: NEW INVESTOR - SPEC HOMES W/SALEABLE NOTE? - Posted by Jonathan RexfordFL

Posted by Jonathan RexfordFL on August 26, 2003 at 07:00:38:

John,

I build mainly spec homes. I have not read the entire thread. To make a note saleable you need to contact note buyers and find out what type of terms as in discounts that they are looking at. I look for a 30% gross profit. If I net 12-15% I am happy. Returns are not that great but if you do a few more each year…its better than working at Walmart…lol.

I am sure by now you have been emailed from a few note brokers or buyers. Learn the terminology. For me I really never could make the numbers work by selling a SIMO note at closing with the buyers that I had contracted with.

Some note buyers want the 1st note to be in the 80-85% range. Which I can definitely understand

If my buyers have 5% down. That leaves me holding a 10-15% second. Which eats into profits. Not counting the cost of sale…which ads another 10-12%.

Just a few thoughts