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bluerush
09-01-2006, 08:55 PM
Can anybody share some insight or experiences with building a new house to sell before taking possession?

I understand the concepts, but am looking for ways to maximize returns.

thanks.

Canmorite
09-01-2006, 10:25 PM
Link, info, background, history...Can you supply us with anything?

danno
09-01-2006, 11:04 PM
it does work, but as far as i know most builders are building the houses to spec, once completed then they sell to make the most profit that they can make.

bluerush
09-02-2006, 08:54 AM
sorry for the lack of information...

What is "Spec Building? That phrase is short for "speculative building" which means you are building something with the intention to place it more or less directly on the retail market for sale.

With more people moving into the area than new housing lots are coming available, it would appear this is a low-risk, yet moderately high return investment, of course using other people's money.

The basic concept is you put your name on a house to be built by a builder - or subcontract it yourself if you have the time and know-how, at today's price. The end product is to be sold at/before completion at tomorrow's price - simply speculating on tomorrow's price.

My concern is: how do you make your house more appealing than a traditional spec., yet still profit enough to make the whole process worthwhile?

Celica TVS3
09-02-2006, 09:59 AM
^ You're esentially betting on the market, if the average house in your community is worth more your house will be worth more.

As far as making your house stand out from the others - thats tough because it depends on the price point of the house. If you're looking at entry level single family homes it may not be worth it to but hardwood throughout the main level and tile the bathrooms. But these things would be expected in the higher end home. But as a general rule people like hardwood, garages, and SS appliances.

But to be perfectly honest with you I think you missed the boat on this. Sure, property values may still be climbing but not at the rate they were a year ago. It's kind of like buying stock in an oil and gas company when oil is kissing $80/bar. There still is upside potential but not as much if you were to buy the same company when oil was hovering at $50.

frostyda9
09-03-2006, 07:49 PM
Originally posted by Celica TVS3
^ You're esentially betting on the market, if the average house in your community is worth more your house will be worth more.

As far as making your house stand out from the others - thats tough because it depends on the price point of the house. If you're looking at entry level single family homes it may not be worth it to but hardwood throughout the main level and tile the bathrooms. But these things would be expected in the higher end home. But as a general rule people like hardwood, garages, and SS appliances.

But to be perfectly honest with you I think you missed the boat on this. Sure, property values may still be climbing but not at the rate they were a year ago. It's kind of like buying stock in an oil and gas company when oil is kissing $80/bar. There still is upside potential but not as much if you were to buy the same company when oil was hovering at $50.

:werd: On everything. Building spec homes isn't about upgrades to differentiate the house from other similar houses, it's about prospering on the upward trends of a hot market, plain and simple. Unless you're sure your upgrades will add *over* 100% of their cost to the value of the house, they don't make any sense.

bluerush
09-04-2006, 10:29 AM
basically it would appear that you need to buy the lot at the right price, and be able to sell the finished product right beside the builder at about the same price they are selling them for.

and the buyer needs to be a person that doesn't want to wait for a new one to be built.

:thumbsup:

sputnik
09-05-2006, 08:52 AM
Originally posted by bluerush
sorry for the lack of information...

What is "Spec Building? That phrase is short for "speculative building" which means you are building something with the intention to place it more or less directly on the retail market for sale.


I thought spec houses were houses that the builders built "to specifcation" (so that they can get the city building permit approved) and then people would buy the half finished house and decorate it to their liking.

frostyda9
09-05-2006, 06:37 PM
I think "spec" can either mean "speculative" *or* "specification", as in built to a builders basic specs for materials and finishing, etc. I think this term also sometimes gets used loosely to describe a house whose owner decided not to upgrade at all, which would then just be built to the builders basic "spec". Don't quote me though, that's just the impresssion I got.

redblack
09-05-2006, 11:57 PM
when i purchased my new home , the builder asked me if i wanted to purchase one of their "spec" homes. From what she told me its just a brand new house where the builder makes all of the selections, you cant add or upgrade nothing. the only bonus to buying a spec home is that it would be done a few months faster. My house wont be done for a year

topmade
09-06-2006, 02:54 AM
"Spec homes" for a builder just means that it's a house they already have drawn up, mostly the most popular styles. It's nothing special and upgrades are very minimal if they give you any at all, becuause it's built to "Spec" as they already have it drawn up to make building the house a bit faster.

As "Celica TVS3" I also believe that you missed the boat. Before the builders didn't increase their prices in time and was not able to predict the increase, but now it's steadied off. The prices have already been increased for the value the house will be worth in 8-9 months time.

For example: we have lived in our house for about 5 months now, it's a 1800sq ft Shane home. To build this house right now would be $460k, but our house is only worth maybe 420-430 right now. So if you were to buy this 1800 sq ft home from Shane right now for $460k it will be worth $460k when you get possesion of it. So if you try to flip you won't make much if any at all.

But you never know you could get lucky, but IMO the market is back to normal now and we won't be seeing any crazyness like we've had in the last year for a while.

bluerush
09-06-2006, 07:51 PM
thx. everyone

:thumbsup:

Xtrema
09-06-2006, 08:51 PM
Topmade is right.

Hosing is readjusting now. We all know that housing can't grow on that pace forever. Most people can't afford single homes now because most people's income did not double in the last 3 years.

We are going thru a readjustment period. There are more listings and sales right now and I'm starting to hear homes selling for anywhere $10K to $100K below list which is something unthinkable 2 months ago.

The only way the market keep going up is the migration to Calgary stay the pace.

As real estate investment goes, I would put it toward condos or commerical. Those two area will be hot in the next year or two.

bluerush
09-06-2006, 08:57 PM
Originally posted by Xtrema


As real estate investment goes, I would put it toward condos or commerical. Those two area will be hot in the next year or two.

We're in condos now, we were just considering the single family thing as well. I picked up a lot at a steal of a price and was considering building on it, but may just flip the lot at a later date.

thanks though :thumbsup:

Celica TVS3
09-06-2006, 09:35 PM
Remember the Calgary residential real estate market is still pretty warm it's just not red hot like it over the last year. There still is demand for housing and if you picked up a cheap lot in a good location you should be able to turn a respectable profit.

Your biggest problem is finding a builder and trades willing to build your place for a reasonable price within a reasonable period of time. If you know someone who can do this you're laughing.

This is what you should do.

Look at other houses around your lot - see what they are including as avg. sqft and features.

Research the selling prices of comparable homes in your area.

Call around to a few of the smaller, but reputable home builders, and get them to give you an idea of what an equivalent home maybe slightly smaller would cost to build.

Take a page out of ZorroAMG's condo styling book and add a few nice features that don't cost a huge amount, so people walk in and focus on that. For example, I personally think heavy casing/moldings are worth the extra 50 cents / linier foot. The same goes for knockdown ceiling texture over popcorn - ~0.20/sqft.

Factor in some cost over run.

If the cost of your property plus new construction costs is less than equivalent properties go for it. Just be sure to factor in the cost of the hassle it's going to be.

rockym20
09-07-2006, 10:45 AM
You might still be able to do this in the condo market though. I know someone who wanted to buy a 1 bedroom condo in a new development. On the first day of the presale, all of the 1 bedroom condos sold out in 15 minutes.

turbotrip
09-08-2006, 01:54 AM
if ur thinking about buying from a builder and flipping it thats not the best idea anymore as that time has passed, but if ur thinking about building a house urself and flipping it you still have potential for worthwhile profit.