Hello and all good morning,
I have just a few Questions pertaining to my scenario. My father and I are in the process of starting our own construction company. My father has been in the construction business for over 25 years and can do many aspects of the project. The plan is to build a SPEC house, we will be doing most of the work ourselves to keep the price to build low. This business has been in the works for about 3 years trying to get started, saving and trying to get the start up money ourselves, then i found out after 7 years that the Army dont pay that well. We figure we can build the house in aprox. 5 months. I am currently in Iraq in the United States Army and will be getting out in a few months. I have a potential investor that are willing to invest money. The price range that we are going for is a middle range in the current sub-division that we are going to build in. the figures are as follows:
building cost------162,000 includes labor and interest payments for 11 months
total cost to build including lot -----244,030
projected sale price -----336,000
Realtor that covers that sub-division says the average per sq ft sale price is 150-175. My projected sale price is off 160 sq ft.
Now here comes my questions.
What is the average rate of return for somebody that puts in 62,500?
The investor wants to buy the lot he says that he wants monthly payments, is that normal?
I offered him 12% of his total investment at the sale of the house or 12 months which ever came first, he said that is not enough. His reply is that i am basically footing the bill to get you started i want more, he told me to get #'s together and get back with him. What would you do? Am i out of line by offering 12%?
I think that this deal will work the town that we are building in is getting a Coles and a Target so you know that they would not be building if the area was not building.
Is there another way to get started? My credit is not that good i think it is 615?
I would like to see something started by september to avoid to much of the cold missouri weather.
Thanks again for your help, it is greatly appreciated.