Okay…I am back.
I don’t know if anyone remembers me but close to a year ago I drowned myself in articles, books, and market research to start building detached, single family homes. I am now coming up for air to gather more info and move forward with everything. So far whats on my plate is this:
While reading and absorbing info, and watching the home sales like a hawk in my area, I have also acquired some equipment to help things start:
Brand new PC, copy of QuickBooks Pro, Printer, Fax, Copy, Scanner, And 2 software programs for drawing site plans, plat maps, change orders, etc. I am having 2 new lines put into my home office for a dedicated fax and tele.
Now my intentions are to take a real estate course to learn more of the terminology and home selling process, to use as a tool. From here, I want to acquire a set of home plans (1,300-1,600 sq ft range). With those plans I will then get preliminary bids from all the contacts I have acquired, and some of which helped build the home that I currently live in, so I know the quality of work they do. With all the bids put in place, I will take those #’s, along with a lot price I intend to build on, add ?% mark up, then add all overhead operating expenses (liability insurance, interest, closing costs, selling fees etc etc), and come to a final selling price. Then compare that # to the other homes of similar style, location and amenities, and adjust my price as needed, very carefully. Then I will take this and apply it to a business plan and approach a private lender to gain access to funding. When the green light for funding comes on, I acquire insurance, licences, warranty package, etc, then acquire lot, acquire permits from county, then call subs and reconfirm the prices and estabish a schedule with them, and then let the excitement begin!! So I ask you professionals out there…am I missing anything?? Constructive critism is encouraged….I REALLY strive to do everything as perfectly as I can. Someday I hope my skills help me gain the respect needed to be a successful builder. So if there is some thing, book, article, process, anything that you think I may need or might help me with this I would absolutely be grateful. This will be my 1st time building a home, so I am trying to keep all costs down and a relatively small home to begin…..wish me luck.
Thanks for reading…
~Brian
PS I should mention I am targeting 1st time buyers, NW location.
Replies
"am I missing anything" - a hammer?
Got One....
18oz solid titanium head w/carbon fiber stalk and impregnated rubber handle...fully balanced & blueprinted.
"rrarr aarrr arrr" (My Best Tim Taylor impression) ;)
Sounds like your building a spec. Who will handle warranty claims? Who is your target? What does your target think? What do you want your target to think? What are the other builders doing for/to that target? How are you, or are you, going to differentiate yourself from the others? How will you communicate this difference?What's your break even for price versus call backs versus volume?
Brian, what's your background? This sounds like you are going to borrow the money to start a new business. I don't think this would fly at a bank, maybe with a private party, but be real prepared for that private party to be an expensive guest.
You're asking someone to take one helll of a risk, unless you are going to put up something as collateral for this loan that will make him whole should your dream not materialize.
Don't think you're going to need "2 new lines put into my home office for a dedicated fax and tele" cuz you are going to be at the job site if you want this to have any chance of working. Office is for shuffling papers and playing on the internet, whatcha gonna do with that HiTec Titanimum hammer in an office? Smash the phone a good one when one of the subs doesn't return your tenth call? Those printers and programs won't hang drywall or shingle a roof, you need to be there.
What's been selling this year is not an indicator for what might be selling next year. Find Ron Strobecks' thread "Spec house from Helll" somewhere here. There's a who is guy in the biz, being caught by things beyond his control while he had both eyes on the ball. Good luck, Joe H
21082.5 in reply to 21082.1
Brian, what's your background?
I have some business background and light carpentry, but I work as a CAD/CAM programmer, + digital design. Yes, sounds unrelated to the building industry. But the 2 actually go together quite well, mainly because I have a very mechanical, structured way of thinking. Hard to put into words I guess, but I can take large projects like this, and know how they should go together, how fast they should be done, when each one should be done, how much it should cost, all while judging the quality with a eye for detail.
This sounds like you are going to borrow the money to start a new business.
Yes, this is my plan, I have a contact with a few wealthy retired builders on the area who are willing to help. And yes...these 1st few homes will carry small returns as the loan fee will be so high.
You're asking someone to take one helll of a risk, unless you are going to put up something as collateral for this loan that will make him whole should your dream not materialize.
Collateral is there.
Don't think you're going to need "2 new lines put into my home office for a dedicated fax and tele" cuz you are going to be at the job site if you want this to have any chance of working. Office is for shuffling papers and playing on the internet, whatcha gonna do with that HiTec Titanimum hammer in an office? Smash the phone a good one when one of the subs doesn't return your tenth call? Those printers and programs won't hang drywall or shingle a roof, you need to be there.
Yes...job site it is, but, not all day. Do you have an office yourself? It is extremely important to have those phone lines and printers and those programs for managing the business end of the company. You cannot run a company by swinging hammers and you cannot run a company by hiding in the office. I won't shingle a roof. I won't hang the drywall. I will if I need to, but it will be all contracted out. And that HiTec hammer....hehe..that was a joke =)
What's been selling this year is not an indicator for what might be selling next year. Find Ron Strobecks' thread "Spec house from Helll" somewhere here. There's a who is guy in the biz, being caught by things beyond his control while he had both eyes on the ball. Good luck, Joe H
I hear ya loud and clear....real estate building buying selling is as predictable as the waves in the ocean. real estate is alot like surfing: As you surf, you constantly have to "read the waves" ahead of yourself to adjust for your stability......
Brian, Good response.
#1. Knowing how things should go is good. Realizing that quite often they ain't gonna go that way is another thing to keep in mind. The best laid plans........don't usually include rain, injury, absolute zero co-operation from the people you thought you could count on.
#2 Sounds like the money is there, but if the source is "retired builder" watch out that you don't end up being pushed into building your dream the way your money man wants it done.
#3 Then you have more to lose than the money man so don't let them run the show. That doesn't mean don't listen to advice from someone who's been there & done it.
#4 I have an office, it's where the damn phone lives & I play with the computer and look at all these papers piled up waiting for me to move them around. Shoe boxes full of receipts don't really count as an office, you're right about that.
#5 Surfing you want to be watching the wave breaking just behind you, not on you. Good luck, Joe H
Go get'em TIGER. Some us started with less.
BrianM3,
I'm willing to bet that in my contact group there are about 1000 guys with better credentials than yours who are just acheing to get a chance like you describe. Untill then they are makin payments and buying groceries working in the field.
I know a few who have made it as you seem to want to. Three things seem to be common.
1.
Contacts. Not guys who talk about someday etc. but actual get it done kinda guys who take a shine to you and help you over the hurdles. When push comes to shove they gotta put their money up on your word.
Those start because of family, friends, or golfing buddies. They know you well enough to take the risk on you. Not someone you met, not someone you know or had drinks with, but someone who knows when you go to bed and why you wear those soxes etc. (just think if you needed to keep your money but had a chance ,who do you know you'd lend your bankbook to?
2.
Luck, timing whatever.
recently in St. Cloud a major employer closed up. thousands will lose their jobs which will trickle down through the city. Hundreds of builders with spec homes are stuck. There will be big fallout from them and it will cost more than a few of them everything.
3.
Grit and determination,
Nothing will go as scheduled at first. If this is a way to earn a paycheck, it's so risky as to be foolish. A Los Vegas gambler has better odds. Once you start what's your fallback position? I mean if you use the equity in your house to guarentee the loan and things fail, how will you keep from getting tossed on the street?
without taking a chance little will happen but taking a chance is always risky. are you prepared for that risk? don't imagine what will happen if you succeed, think of what could happen if you fail. if the result is something you're prepared to accept then maybe you stand a chance.
Good Luck.
O.P.M......
had a very successful builder round heah.. bought all the passed over lots.. built a lot of specs with a lot of nice features and good curb appeal design.. always had a silent partner for the money..
decided he didn't need to make the guy any richer so he cut him out...tried to use his own money and his suppliers and subs......took about 1 year before he went bankrupt....nothin like greed.....Mike Smith Rhode Island : Design / Build / Repair / Restore
Don't quit your day job yet.
You have a goal, knowledge, and are organized.
You are not experienced, well funded, and solidly realistic, though you may be on the way there.
Let's pretend that I'm the banker and you've just brought me your proposal...
Well now Sonny, how can you convince me that this house will sell?
How will you pay the insurance and intrest on it untill it sells?
what is your plan if it doesn't sell?
Show me a paid for piece of land with a building permit and twenty percent of your anticipated costs - then we'll talk.
BTW, do you know that we charge a higher rate of intrest for business loans of this nature than for homeowner/FanieMae financing?
How does your wife feel about this project/life goal of yours?
I'm quite sure you'll do well young man, just as soon as you come up with the answers to these questions and a co-signer so come back to see me then.
You got it right on Piff; I think perhaps we sound a little pessimistic on this topic , but then experience will do that to a person. I bought a fixer with room for three new lots in back. Was in Real Estate sales at the time, and thought I knew what was what. I did manage to build one house, broke about even, sold the other two lots for about what it had cost to develop the three, and became a handyman. I am willing to admit that It was a dream that I am not capable of doing. Go ahead and try, but make sure that you can afford losses, both money and time, because it can happen to anybody, and more likely to the newcomers. Just rememberthat if it was easy, everybody would be doing it. Nothing is as easy as a real pro will make it look, trust me on that.
Dan
I WISH YOU LUCK BRIAN.
I just completed a 6 figure bail-out for a young man who has all the bells and whistle. He also had years of watching his dad build. Plus he worked two years with a nail apron. and as a labor,while working the business end partime.
Building requires more than fax machines computers and book knowledge. You must learn how to build and when to schedule subs, know if their job is completed correctly before you pay. You must know if the framing is right,if the electrian gets in and out on your schedule,etc.. You've got to finish quickly and hope it sells fast.
Again good luck
Charlie
Here's the "spec house from hell" thread:
http://forums.taunton.com/n/mb/message.asp?webtag=tp-breaktime&msg=20924.1
Good luck, if you decide to do it.
I went to the museum where they had all the heads and arms from the statues that are in all the other museums.
A) Buy a couple dozen rabbit's feet.
B) Tear out your lawn and re-seed with 4-leaf clover.
If skill, planning and hard work actually did lead
to success, we would all be rich. A wise man once
said "no, you're not paranoid. They ARE out to get you."
Statistically, EIGHTY percent of all businesses fail
in the first 5 years. Eighty percent of the remaining
fail in the next 5 years. You have a four percent chance
of being in business ten years from now. If you are dead
set on being in business, plan on restarting about 20 times.
I have more college degrees than I know what to do with.
Lots of experience. A good planner. Have had businesses
with professional plans and experienced venture capital people.
I'm working on about business number 6 now. It may work,
or I may have to try another 15 times.
A single actual piece of advice: Do not, under any circumstances,
no matter how attractive it may seem or what the relationship
is, accept investment from a friend, relative, or anyone who
cannot cheerfully afford to lose every single cent. If you
involve friends and relatives, you will eventually have a whole new
set of friends and relatives.
"you will eventually have a whole new set of friends and relatives."
Naw - Your relatives won't change. As the old saying goes:
"you can pick your nose, but you can't pick your relatives"
Sex is like pizza. When it's good, it's really good. When it's bad, it's still pretty good
The way I always heard it from Kaptain Kangaroo was:
" ... you can pick your friends, and you can pick your nose,
but you can't pick your friend's nose"
Boss, it's the in-laws that can change. Seems like you should have thought of that?
That was something I had thought of but forget to ask Brian, what does your wife think of this?
Joe H
I wish you the best of luck. It sounds like you've done your research. I always admire someone who is willing to take a chance and go for it. I hope it works out for you. I read the Thomas Edison tried approx 174000 or so experiments before He had on that worked and that was just the light bulb. Who knows how many experiments he performed on his other inventions. Good Luck
Darkworksite4: When the job is to small for everyone else, Its just about right for me"
Brian
You are going to be inundated with pessimists on this thread, don't be discouraged, If you have a good idea and it does seam like you have thought it out well then go ahead with it.
I know several owners of businesses that have gone belly up for nothing less than dumb luck, they did not get discouraged they kept on trudging along, some have made it and made it big, others have fallen to the way side, but they tried. And I think that is important.
It seams like you have a good idea and there is no guarantee that you will make it otherwise we would all be rich and own our own business.
I wish you good luck.
Doug
1. Do not Count on this venture to pay your salary for at least one year.
2. A good carpenter is always a good builder, and vice versa. So as helpful as experience is it not the only route to being successful.
3. A small 1200 sq. ft. house targeted at first time buyers is the most difficult home you could ever try to build. You have to cut every corner that you possible can, and then cut some more. Your subs prices cannot be a little high(as is common when they have not worked for you in the past). You will be competing against large builders(in my area) that have there cost, plans, and materials down to a science. If you are not competing against large builders, you will be competing against small hands on builders(carpenter/builders) who have been in the business, save money by get there hands dirty working, and have good subs.(cheap)
4. I started out done repairs, then remodels, then larger remodels, then new homes, and finally moved into just high end residential, and smaller commercial work. I received my education the slow, hard, and often expensive way(but it was a good way in my opinion) If I could go back and change one thing, I would have not quit trying until I got a large builder, or commercial contractor to hire me. I would have worked for about three years and sucked up as much knowledge as I could. I have been up and down for the last ten years, and have finally reached a point where I feel comfortable that my business will succeed.
Good luck
Hello All:
Sorry I haven't responded to any posts in awhile...been out doing alot of things and also just got back from camping. Nice Trout and Kokanee off a beautiful lake we stayed at. 90+ degrees the whole time too! Anyways, I am glad to see everyones input....I do understand the 'pessimistic' side and 'encouraging' sides to all of you, and that just goes to show that you all care for my well being...thanks. I would hate to fail as well....thats why I am going so slow and taking "baby steps" I know once I get out there, I will be a bit wobbly at 1st, and mistakes WILL happen...its just a given, regardless of all the planning, but hopefully my determination will pay off. Oh and some people asked how my wife feels about this? Well to be honest she is scared, as anyone would be, but she also is backing me up 100%...and lets not forget that she works for a very succesfful custom home builder, so needless to say she is quite savvy with real estate and the building market as well. Thanks for he input...keep it coming!
PS Happy 4th of July to everyone!! Celebrate like you love this country! =)
~Brian