Real Estate Investing Adventures

With the decision to move forward with this real estate development, we quickly pushed the start of construction. The site was cleared, the septic system installed, foundations placed and framing started. Here’s some photos of the actual construction:

Foundation Wall from the Lake

Aerial Photo of Foundation Walls

Framing Underway

Other than a number of framing issues because of the multiple angles and roof pitches, construction went well through this part of construction. However, construction of your project rarely goes perfect from start to finish. This one was no exception as future posts will prove.

Revised Financial Model

Our last post walked through our revised financial model. In running the numbers, we had a dilemma. The highest priced spec luxury home sold to date on this lake went for $1,700,000. In our latest financial model, we would have over $1.9 million in costs! The model we put together had us selling this development project for $2.3 million (a 35% increase over the highest selling home to date) to make our desired profit numbers. We asked the question, “What would you do?” Build the highest selling luxury spec home to date or start over with significantly lower expectations? Read the rest of this entry »

We must be finally making a name for ourselves. In the last week, we have had close to 1,000 separate pieces of trackback spam! What a pain, but it must mean that we are worth the effort to spam.

In addition, our posts are starting to be selected as the top posts for a number of blog carnivals. Recently we have been listed on the following blogs:

http://www.canigetrichonasalary.com/2008/04/blog-carnival-round-upquiet-after-storm.html

http://www.llamamoney.com/carnival-of-net-worth-1/ 

http://georgiabuyer.com/?p=70

http://daily.hotpads.com/hotpads_daily/2008/03/the-greatsfunny.html

If you haven’t checked out the selections in a blog carnival lately, you are missing the opportunity to read some of the better posts on topic.

Actual Second Financial Model

Our previous post discussed  that we would need to develop a second model that more accurately described this real estate investment after we had received a revised design and more accurate contractor pricing. Our initial model was flat out wrong. Our bankers were willing to finance the increased investment. Was the risk worth the reward? Here’s our revised model for our development: Read the rest of this entry »

Our contractor did a good job pricing this new preliminary design discussed in our last post. He provided us with a 31 page estimate with the detail we needed to fully analyze this pricing. We couldn’t afford to get this wrong and have to go back to the bank a third time.

The Numbers

The contractor’s estimate came to $1,073,514. Using 4,164 of heated square feet, this equated to $258/SF. We knew we would be over on raw square footage. Now we were also more than 25% higher on price per square foot. When it rains, it pours. The contractor explained that our unheated to heated square foot ratio was way out of whack. We had tremendous amount of outside space in covered and screened porches and decks. We had almost $7.00/SF in just the fireplaces. Then the high end finishes and materials were also driving the costs higher than normal. Read the rest of this entry »

In a previous post, we discussed how all of the conceptual floor plans were around 4,500 SF, which greatly exceeded our initial financial model which was based upon 3,200 SF of heated space. We had made some changes to various room sizes and layouts and had sent the architect back to clean up the drawings and present a final floor plan. We were hoping it would be around 4,300 SF. The path forward was to then price this revised plan, re-run our financial model and make a decision on how to proceed with this real estate investment. Build a much larger building and try to sell it even though it would be one of the most expensive homes sold or scrap the plans and start over with much smaller expectations. Read the rest of this entry »