Thread: Which way should I get started?

As one, a couple states above you, I'll tell you that I built all my rentals and it was the best thing I ever did, course I have a GC's lic (required in NC to use for public use). I built at 60 cents, refi'd at 100 cents and pulled out out 20 cents worth at refi! The party is over in my area because of lot prices. I was lucky enough to get in during the five year window between 2000-2005 when rates came down, values were starting to come up, rentals (new) were few and far between and materials and labor was cheap. Now................lots are expensive, rents stayed the same, labor and materials are back down (as are rates) but the lots values kill it for me, no money left in it to pull out.

If you can build a little 1200 sqft box for under 100K (with lot), pocket a good 20K+ on refi and rent with cash flow...............do it! If not, then you'll need to decide what you ultimate outcome is. I wanted cashflow (primary income for me for a time), equity in the form of "pay" for being on the job 4 months and equity left over for future leverage............all of which I ended up with.

GL with whatever you decide to do.

I don't like this type of questions.
Why?
Because we have no idea about you, about your financial situation, and your goals.
The only way to answer to a question like this is, "it depends".
which is obviously not what you are looking for.

In very simplitic terms, if your goal is to own two rentals by the end of the year then you may be better off targeting the purchase of a duplex, as building it will probably take longer than Dec 31st.

Investing, money and your finances are very personal.

In order to be able to provide any type of guidance we need more information about your current situation and your goals.

How much money do you have to invest?
How much time? (yes, I know, 3 days off after a whole day on, but really, how much of those three days is productive? can you build a duplex on your own in the next 6 months? will you have help building it? financing for a vacant lot AND for materials to build the property?)
Can you get a loan with a bank or normal lending institution? (i.e. what is your credit score and can your current income support a vacant property? for how long?)
Do you own a property already? Equity in that property? can you get a ELOC on that property to finance the other one?

And that is just to get started.

Then we will need to discuss what is your goal (retire from your job thanks to passive income in the next five years? add some extra income and keep your job?)

And again, this is just part of it.

So, to repeat my point, the answer is "it depends" and there is a lot to cover.

Oh, and welcome to the forum. I hope I don't scare you with my post

PS: EasyMoney_in_NC's advice is great as he already did one of the things you seem to be looking into.

Hey Adam -

Welcome to the forum!

There are a lot of variables in your situation. A few things to think about:

• What type of properties are available in your surrounding market?
  • rents
  • taxes
  • insurance
  • pricing
  • inventory
• How much time would it take to build a property?
• What type of problems could occur to delay building?
• What kind of funding do you have available? At what, if any, interest rate?
• How long does it take to rent a vacant property in your area?
• What is the best use of your time?

Either way, you are going to want to take a good long look at the properties in your area. Hundreds of properties, all over town. You can do this on realtor.com, driving the neighborhoods, etc. It's fun, once you get into it.

There is a lot of good info in the Residential RE section. Spend some time reading, it might help give you direction and same you time.

Good luck!

In going back to the original post, I see he has been in construction before. having said that, doesn't mean one "should" do the actual construction themselves. There are all the issues posted here, but in addition unless you have a current crew that you are working with, you'll be better served to play a GC's role as apposed to assembling a work force. The work will most likely get done quicker and you can do more than one at a time and make your money on bulk instead of one at a time. If your property values have come up, there may be a much bigger spread and would be well worth building instead of buying, but again, we don't know enough about the situation to definitively answer the question you pose.

Thanks to all for the posts. From reading your replies I now know the questions I must answer to answer my own question. I'm going to do a little more research then I'll come back with results and more specific questions. I've got a pretty good idea of how I (think?) will be the best avenue. Once again thanks for the feedback. I'm new to the forum and I have learned volumes already.

Your welcome. I hope you can post more details about your plans and your deals later.

bump... almost six months later... any progress?

Andviv-

Adam's last visit here was in April (4 months ago).

I'll shoot him an email and ask him to give us an update.

-Russ H.

Yes, I noticed he hasn't login in quite some time... too bad as this is an interesting topic, IMO.

Hey Guys, Sorry for being lax on replies. No excuses just lack of action on my part. Think my paralysis by anaylisis may have answered my question. Lots of rentals standing empty in my local area. Alot more for sale cheaper than I could think about building them. Currently focusing on my building my second job into a true buisiness to produce the down payment cash for some of the bargains out there.Planning on trying to make it to Az. Hope to make it and meet as many folks as I can! Thanks for all the replies.