Comments on: A Low Capital, High Labour Real Estate Strategy

By: Melanie Reformed Spender

Melanie Reformed Spender — Fri, 22 Jan 2010 20:00:26 +0000

” I�ll accept Melanie�s comment as evidence that people do this although I�m not sure about the �doing it without putting in much of their own money� part. They need to buy the land, pay taxes, buy materials etc.

I guess if they take long enough to do the building then the costs get spread out.”

That’s pretty much it. They do put in a lot of money, but it’s a “pay-as-you-go” strategy. They usually use family land and we don’t have property taxes here so all the money goes into materials.

By: This and That: Interest rates, Couch potato blog and more… | Canadian Capitalist

Fri, 22 Jan 2010 13:35:39 +0000

[...] Mr. Cheap and Mike had a friendly wager on a low capital, high labour strategy of becoming a general contractor for your principle residence. [...]

By: Jess Valenzuela

Jess Valenzuela — Thu, 21 Jan 2010 16:16:08 +0000

I once read it somewhere that you shouldn’t fall in love with a particular investment.

I find it myself that If I DIY, I have chances of falling in love with it. Be it in Real Estate, Portfolio, or Internet. For example I have renovated a Condo and it turned beautiful. I couldn’t let it rent for a few months. So it cost me money to maintain it and finally giving out my control over it. I learned the hardway.

By: tctc

tctc — Thu, 21 Jan 2010 14:47:42 +0000

My brother-in-law does this. He started out about five years ago by building a house for himself. I’m not sure on every detail but I’m pretty sure he got an offer on the place before he was finished. After building a couple more and selling them he packed up and moved to Alberta and cashed in on the boom times. To date he’s built nine or ten houses out there and is still going strong.

By: Mike

Mike — Wed, 20 Jan 2010 00:49:05 +0000

I’ll accept Melanie’s comment as evidence that people do this although I’m not sure about the “doing it without putting in much of their own money” part. They need to buy the land, pay taxes, buy materials etc.

I guess if they take long enough to do the building then the costs get spread out.

By: Million Dollar Journey

Million Dollar Journey — Wed, 20 Jan 2010 00:38:17 +0000

Sorry, a little late into this conversation. I think it’s definitely possible to be a general contractor without previous “handy” experience. A bunch of my friends built their houses by being a general contractor, many of them now are on their second house. Mind you, they do have Engineering backgrounds, but no real construction experience.

A thing to take note of, it takes a lot more time to build a house than you think! The sheer amount of details, trying to arrange sub contractors, re scheduling everyone down the line when someone doesn’t show up etc etc etc.

By: guinness416

guinness416 — Wed, 20 Jan 2010 00:24:20 +0000

Mate, if you put as much effort into building your house as going after this beer it’d be a Vaughan-esque mcmansion for sure. If you win the bet ask for a pricy Belgian bottle!

I know several people who likely have the construction chops and skilled/helpful friends to do this but not the time. Working on someone else’s site all day and then going to your own is burnout, social suicide and/or divorce in the making for sure.

By: FirstGenerationWealth

FirstGenerationWealth — Wed, 20 Jan 2010 00:09:16 +0000

Keep in mind from the construction loan side, depending on institution, you usually have to own the land outright and have anywhere from 20%-50% cash reserves for the build. Constrution loans are typically lawyer administered with a series of progress draws after an inspector/appraiser qualifies what percentage complete your property is.

A trick I suggest to clients, would be to setup a Home equity Line of credit on your primary residence for the construction cost. Assuming you have the equity, you will save thousands in legal fee’s as each disbursement of funds is a cost to you for the lawyer. Using this plan you could get a raw land mortgage, usually 20%-50% down for the property and float it, and the LOC interest only until the property is complete.

I do know people who have lived through reno’s and were quite successful at either selling once complete or moving onto the next and holding as a rental.

Much easier to do if your single.

Just my thoughts…

By: Squawkfox

Squawkfox — Tue, 19 Jan 2010 23:49:23 +0000

My BIL and SIL just built a home here on the farm. It took several years to get the building permits, easements AND get power, water, sewage hooked in. THEN they had to build the thing. Digging for the well was not fun (will there be water?) Gaw! No water means NO PERMITS. FUN! Plus, buying land isn’t exactly cheap. They hired a very experienced contractor with team to raise the roof. Seriously, building a home from scratch isn’t for the casual weekend warrior handyman.

By: Tweets that mention A Low Capital, High Labour Real Estate Strategy -- Topsy.com

Tweets that mention A Low Capital, High Labour Real Estate Strategy -- Topsy.com — Tue, 19 Jan 2010 23:24:09 +0000

[...] This post was mentioned on Twitter by Russ Noble, Mr. Cheap. Mr. Cheap said: Help me win a bet with Mike: http://www.moneysmartsblog.com/2010/01/19/a-low-capital-high-labour-real-estate-strategy (please pass this along) [...]