Over the years, many of our construction students have asked questions such as the size of a house; what i put into it; Where will I build it? Looking back, it is easy for me to make these decisions now, but when I first started building in 1975, these were trial and error situations. And my back point is crystal clear. It is very easy for me to look back and see what I wanted to know when I first started building. This is what you will learn in this article.
You will learn about the pros and cons of creating a speculative or specialized builder (as opposed to a contractor builder). If you are not familiar with these terms, the developer of the specification is the one who chooses the site, select the design, build the house, and then sell it to the client. The contract builder is the builder you hire to build a house for you. By the way, the construction of special equipment is how I suggest you start, and not build a house for someone else. I will explain why later.
First, I will show you how to become one of the best specification developers in your field, even if you have never built a house. I will extend this information by discussing points that are unique to building a specification. Then I will talk about points that are unique to building contracts, as well as points related to both the specification and the contract.
Word of caution
I want to emphasize that when you start your construction business, you must separate your business from your personal life. In the early 70s I was on commercial real estate. I barely survived a severe recession. Almost everything that I had was on my behalf, and most of it was returned. If I knew then what I know now, I saved this big house, this Mercedes and this plane.
There are many things in the construction industry that can happen to you, some of which you have absolutely no control over. According to the Annual Report of the National Center of State Courts for 2008, in 2007, Americans filed more than 90 million lawsuits, more than a third of which were civil cases. This does not include the volume of legal disputes that were settled before filing a lawsuit. Based on a large number of legal disputes arising in and out of court, it can be said that most Americans are at risk of being involved in a legal dispute at some point in their lives - for many people - more than once. This is especially true for those working in professions with a high degree of lawsuits, such as doctors, dentists and, yes, especially builders! You should invest in hiring professionals to help you protect your assets. It is easier than you can understand. This is one time when you can not procrastinate. I can tell you some amazing horror stories, but I don’t want to scare you in the early stages of the game. In any place, do not live in fear of what may happen. You lose if you do not play.
I. Speculative building
A. How to become one of the best manufacturers of specifications in your region
Before buying a lot, before buying any house plans, the first thing I want you to do is to assemble your team of success. I call it the philosophy of Henry Ford. If you read about Henry Ford, you will find out that some people consider him illiterate. Once he sued a newspaper in Chicago, which wrote an article in which he claimed that he was illiterate. In the lawsuit, Henry Ford stressed that he did not need to know everything about everything, because he hired experts to help him in everything he wanted to do. This left his mind free and clear to do all the things that he really knew how to do. Well, I myself have studied this philosophy over the years. I understand that in this life there is not enough time to do everything. Now I hire experts to help me make decisions, and this was a positive factor in my success stories.
Your success team should include the following:
1. Real Estate Agent
2. Landscape Architect
3. Artist / Architect
4. Kitchen / Bathroom Designer
5. Interior Designer
6. Lighting Designer
I will discuss each of these team members in detail when we complete the course. Do not worry. When you start, you do not need the best. These team members are more accessible than you ever imagined.
B. Getting your first loan
Let me tell you a story. And the further you go from this story, the harder it will be to borrow money to get started.
Suppose you are working successfully. If you did not work, and instead engage in self-employment, then you must have a high credit rating or withdraw tax returns for the last three years to get a loan. If you are currently renting a house or an apartment, and you want to build a house for yourself, you are the main candidate for money to build a house for yourself. So you get the money. You build a house. You put it on the market during construction. You sell it. You go to the bank. You borrow money by the same promise. You get the money. You build a house. Put it on sale. Sell. Do it again and again, and pretty soon you go to the bank, and the banker looks at you and says, damn it, you have to become a home builder. And you.
Now this is the easiest way to get started. Most of the developers I know started in this industry. This method will also give you the least risk. What for? Because if you don’t sell the house, you’ll just go to it. In turn, this will facilitate your sale, because the house that comes will be sold faster than unfurnished. In fact, you sell it and you can start the process again. The bad news is that you can move a lot. I remember one couple who wanted to own a house for free and clearly. They used this method in five houses, plowing their profits back to each house. Their sixth house was completely built of cash. They owned this free and clear and left the construction business. They just wanted to do what was needed to own their home free and clear.
The further you avoid the above scenario, the more difficult it is to get an initial loan when you first start.
For example, let me say that you currently have a house, and you want to borrow money to build yourself another house. The banker will usually be negative. They tend to look at the flaw and can comment on something like this. “It sounds very good, but you currently have a home. Your answer: "I put it on sale during the construction of this new house, and then I will sell it." The banker comments: It sounds good, but what if you don’t sell your current home? “The banker usually looks at the flaw - this means that you are stuck with two home payments. If you can show you can afford two home payments, you can get money very well.
You should always have a successful conclusion of your story that you tell the banker. Never look at a banker and say: “Well, damn it, I borrow only 70% of the assessed value. Return on your investment. ” Never use such logic with a banker. Bankers do not want to be in the homeowners business. Never assume or even think that this will happen.
If you have not earned a profit, or have problems with your loan, or have no money, your next best way is to find an investor who will be a joint venture with you. I did this in many large projects, when I did not have the finances to afford it myself. What I used to do was to structure the investment so that the joint venture partner would receive very little or no money. Investors like it a lot! What I needed was their strong financial statements. You see, there are a lot of investors, such as doctors, who have huge financial reports, but they have very little money. Therefore, if you can structure an investment, so that it requires very little or no cash, it becomes a reliable investment for sale. When I worked with a joint venture partner, after the sale of the investment, the investor would repay the cash that he had invested, plus a fair interest rate that was agreed in advance. All remaining profit will be divided into 50% for me and 50% for the investor. Usually in such a situation, the investor allowed me to deduct any cash expenses, but, for obvious reasons, they did not allow me to receive any salary.
You would not believe in some of the wild, crazy, ridiculous investments that require large amounts of cash, which I saw when these people invested money. Many of them have the same luck in the stock market as I do. These people need to feel blessed that you came into their lives with viable real estate investments. I found these people by talking with friends, visiting investment seminars and showing advertisements in the newspaper.
