Categories: Blog

Breaking in to New Home Construction

In the past few weeks, I had the opportunity to hang out with some of the top investors in our local community. It opened my eyes to one of the latest trends in real estate investing…ground up construction.

It’s Easier to Get a Deal

With a traditional rehab project, you’re competing with everyone who’s trying to purchase the property and improve the inside of the asset without doing anything outside of the envelope.

You’re more vulnerable to market shifts and typically have to live with a weird existing floor plan. You also don’t know how extensive the rehab project will be until you actually open up the walls and take a deep look inside. All of this uncertainty can cause a good deal to go bad once you start working on it!

It’s Less Risky

But most of these issues are non-existent in a new development. Going in, you know you’re going to demolish the existing structure. You already know that you’re going to build everything from scratch, so you’ll know your exact build costs. There’s very little that’s unpredictable in this situation (besides the volatile price of materials in our current market). Everything’s new, and you can rest easy knowing that you’ll be selling the best house on the block.

You’re also able to offer market price on a home. Right now, investors are trying to purchase properties at 75% of the final sales price, minus the rehab costs. Trying to buy a $1,000,000 home for only $650,000 is possible, but it’s very challenging.

Look for dingy homes in good areas. If you just attempt to purchase and rehab it, you may get $1,600,000 for it, which means you need to acquire it for under $1,200,000. However, if you’re looking to sell a new home for $3,500,000, then you’re able to purchase the home (for the lot) for around $1,500,000!

It’s been hard to find deals that make sense as a traditional rehab project. Everyone’s looking for the same stuff!

Learn From Experts

That’s why I’m looking forward to learning how to break into new construction with David Herrera at next Tuesday’s meetup in DTSJ .

He’ll teach us how to evaluate a new construction project as well as how the whole process works.

David Herrera is the Founder of DMJ properties, a Real Estate Investing Corporation focused on new builds in the South Bay and in the Peninsula.

In this meetup, he’ll be explaining how to evaluate opportunities as well as how to avoid the pitfalls of new construction.

You’ll learn the differences between flipping a home versus building from the ground up and how you’ll be able to maximize your profits in a competitive market!

This event is great for people who want to:

✅Learn how to maximize profits in a competitive market
✅Learn how the building process works
✅Find a safe place to invest their funds with an experienced investor

See you there!