Cheep LOTS!!!

If your having a hard time finding properties to aquire that need rehab or just finding properties that will work. Try looking for lots. I looked around and found over 450 lots in the houston area that are cheep enough to build on and still turn a huge profit. The plus side is you have a brand new house/townhome what ever to rent/sell and don’t have to worry about getting 20 contractors to fix it up just one ;D.

Hello JB. You are exactly right.

(remainder edited out for solicitation)

Nels Hofland

When we build a new home/ multi-family for someone it is nice to know the outcome before we start. ie we do comps. to find out how long it should take to sell, what it should sell for, how long it will take, and even what isuses we need to take care of. But in knowing all of this is makes alot less work for me the contractor and for the client. And unlike in rehabs it is easy to sell/rent during construction. Most of the times we have paper work on site to help the process. As well as web cams 24/7 so the client can watch the going ons all the time (our version of big brother but with better ratings, and less swim wear.)


But how much sense does it make for a person to buy a lot and then have to hire a general contractor to build the structure? I would love to do what you describe, buy a lot cheaply and have say, a nice sfr or up to four units built. But from what I have learned the margin is not that great for us non GC types. Tell me I am wrong and make me happy! :-*

Paula S.

Buy my new book…I am just joking. Really it depends, on were you live, the best bet is to find someone that you can trust that has a good rep. and someone who knows what they are doing. It would be easy for anyone who has a brain to do my job but I am sure big shot investors (Donald Trump) would tell you the same thing about there profession. I really can only tell you if you cannot find someone who can devote the time to your project then it will never work, but the same is true for rehabs, flipping etc. It is just another way to spend money to make money. You can find lenders to loan 100% of the construction cost for 12 months and you only pay the interest (around 4%). In the Houston area I build homes multifamily, and rehabs. On a rehab I can make anywhere from 1000-10,000 dollars depending on the work but I am constantly waiting for ya’ll to find me work. With new homes I usually make around 5,000 (in 90 days) That is not very much to have me get all the laborers, materials, dirt work, permits, liability, etc. Not to mention making sure the roofers are there working at 6:00am because it is suppose to rain at 2 pm. But that is with the idea in mind that I turn 2-3 homes a month plus my rehab work and individuals jobs. WOW…so long story short (too late) DO RESEARCH! Just like anything else if you really want to do it just put you mind to it. AND MOST IMPORTANTLY NEVER EVER EVER believe someone’s word check his or her WORK>.

JB wrote: “Buy my new book… just kidding”

Oh very nice! You had me worried for a second.

You suggested I do research. That is what I am doing right now. I want to understand that with a resaonably cheap lot, a basic house plan, using a GC who will get the job done, can you ballpark a margin the owner would see if he was to sell at completion? It that too general of a question?

You said you make about $5,000 on new contruction. What type of house would that new contruction be? A $80,000 house? I have no idea what the real estate market is like in your area. I know it is a lot cheaper that my area! So Calif.

Paula S.

Well I guarantee that the investor/ owner will have the home appraised for 20% more than what they have invested (if I do the deal) so on a 100,000 home I will have built that for 80,000 including the lot. Now I don’t suggest trying to get 100k for it as it would take longer to sell then if you sold it for 90k. But like I said if you do one a month you will get a nice chunk of change regularly and you don’t have to deal w/ renters. I have done work in SoCal and have several friends that live there and I understand that labor/ material prices are much different but so is the value of the home upon completion. If I built a 3-2-2 1800 sq.ft. home in a nice part of Houston it would be worth around 150k-200k and cost the investor between 120k and 170k where that same house in SoCal. it would sell for 300-350k and you could (with effort) build it for 260-300k.
I hope that helps! If not let me know


Yes, that is very good info. But that 1800 sq. ft. house in a nice area would sell for closer to $450K here in San Diego. The only place you’ll find houses in the low $300’s is in the undesirable or remote areas.

Let’s get back to your cheap lots. You say you can build for a cost of about 20% below market value. So what are the prices of the lots you are seeing that would make sense for new construction - and still see a profit by selling at completion?

Thanks for the help.

Paula S.

20% below market includes the lot.

To me that’s a recipe for disaster…

A 20% margin after it’s built… on a 100k house… and intended for a resale with a retail buyer…

Loan Payments…
Closing costs…

Forget about if they go FHA… and you pay more their closing costs… or contribute to their down payment…

You’d be “lucky” to walk with 10k… but, probably less…

Top 10% is air…

David Alexander

Loan payments 4% for 1yr (home built in 90days, and can sell during construction.
Marketing is minimal if your smart
Closing cost are no more than 2000.00
Insurance is covered by the G.C. until sold (if sold in 12 months)
As Emerle would say BAM!
If you did only make 10k every 90days that is 40k a year I wish that kind of disaster would happen to me every month…servile times a month.
P.S. I guarantee that my homes will appraise for at LEAST 20% above cost.
David you obviously hate money so please don’t ask me to build for you.

Were just in different worlds…

Making 10k every 90 days… or 40k a year… Ain’t money…

Not worth the risk in my eyes…

I could do that buying and selling with NO RISK… NO Loans…

When I started in this business… I had a deal where I was going to make 5 - 10k on a deal… A mentor… that some of you may know (Jim Piper) told me… don’t mess with it… there ain’t enough room… Luckily, I listened… I was soon doing deals making 20k plus, which is the minimum you should be shooting for unless you have some sort of really good system in place… Not involving your time and a way to to mitigate the risk… When you make mistakes in this game… the checks written are big… And you have to make alot of good deals for every mistake… becuase… you will make them… You just don’t wan them to cost to you your business or investments…

Different strokes for different folks…

David Alexander

Most of my new construction deals the investor makes 20+k and they never leave there couch. There is no such thing as zero risk.

I guess risk is a broad term…

How about no need to get loans or use your credit…

How about not using your money… except when absolutely neccessary

David Alexander

Your preaching to the choir. I don’t use my money, or credit and if your creative as an investor you don’t have to use yours either to build homes to sell.

Hey, at least were on one of the same pages together…


David Alexander

It’s a very viable strategy that can be highly profitable. Make sure you know your numbers for new contruction, which is a bit different than rehabbing.

Good tip,


JB Contrs wrote:

Well I guarantee that the investor/ owner will have the home appraised for >20% more than what they have invested (if I do the deal) so on a 100,000 >home I will have built that for 80,000 including the lot. Now I don’t suggest >trying to get 100k for it as it would take longer to sell then if you sold it for >90k.


I have to agree with David A. here $10K is not a lot for your time and effort. After closing cost, selling comm., days on market etc… You’ll be lucky to come out with $5K. Your building cost should be much lower, on a $100K house your cost should be around $50-$60K.

And what is exactly are you baseing that on “hope and dreams” because the lot is 10 thousand, So your saying that rughing in the plumbing, pooring a slab, framing, sidding, electrical, roofing, windows, doors, sheetrock, trim, cabnets, flooring, fixtures, etc. and all put together for 40-50k… your nutts. I am the contractor and I pay more than that. You couldn’t even buy just the materials for that kind of money. If you like I can send you the specks and a material list and if you can get me all the materials for under 50k I will write you a check,No I will give you a money order for 10k on the spot.
I love how everyone is an expert on everthing. If you can do that deal why aren’t you? Like I said if you want a 10k Bird dog let me know I will pay it to find all the materials for my jobs for the kind of cash your paying for them. (The materials must be within 50 miles of down town Houston, and quality no junk.)
Good Luck…

My fealings won’t be hurt when none of you even attempt to collect on this deal.

Whoaa…chill out. First of all, I never claimed to be an expert on anything let alone your job. 2nd you need to read. 3rd, your numbers don’t make sense. I wouldn’t do that deal, as an investor, why would I buy a land for $10K (yeah good luck if you can find one in DT houston) and pump another $70K for the building and sell if for $90K???. I work as a financial analyst for a developer/builder for custom homes. Trust me, we make a least 30-38% on our projects. I don’t see us working with you. either your cost of labor is too high or your charging too much on materials.