Building a house just to sell it and make a quick buck...

[NuclearNed]

I'm always trying to think of ways to make a few bucks...

It seems like a person could make quite a bit of cash if they could afford to build a house with the intention to immediately turn around and sell it. I'm wondering what the risks are (some are obvious), and how much return one could expect on the investment?

 

[cliftonite]

Your about 2 years too late.

 

[NuclearNed]

Originally posted by: cliftonite
Your about 2 years too late.

Possibly... I know the market is slowing down, but there still has to be some opportunity there.

 

[AStar617]

http://iamfacingforeclosure.com/

/thread

 

[Epic Fail]

Middle of nowhere = negative return. NYC = bajillions.

 

[MedicBob]

Depends on if the buyer got a home inspection, it meets/exceeds code, you can get high end material at discount prices, etc.

Yes, construction is a profit driven enterprise.

You have to know, off the top of my head:

Market Conditions
Significant Changes to Neighborhood, good or bad
Subcontractors
Alot about being a General Contractor
Ways to have smooth inspections
Price range in the Neighborhood

Just a few items I would think about before even trying to do that.

 

[TallBill]

I know someone who did this for a bit and made a good bit, but is stuck with 3-4 $400,000 houses right now. Granted, he's not hurting for money.

 

[daveymark]

Originally posted by: cliftonite
Your about 2 years too late.

more like 5.

 

[Fingolfin269]

"Too Late" obviously depends on location.

 

[mugs]

My friend does this for a living. But he actually builds the house, he doesn't buy a house from a builder.

 

[Oakenfold]

Originally posted by: NuclearNed
I'm always trying to think of ways to make a few bucks...

It seems like a person could make quite a bit of cash if they could afford to build a house with the intention to immediately turn around and sell it. I'm wondering what the risks are (some are obvious), and how much return one could expect on the investment?

Depends on the area and as others have mentioned other variables, sounds like you need to do quite a bit of research before taking the plunge. Just be aware that foreclosures are on the rise due to subprime lending and high risk mortgage products and some builders are selling at cost. You have some tough competition, this is a buyers market right now.

 

[imported_Mike]

You're a little late and unless you can build/remodel a house yourself you're going to be contracting out all the jobs on the house....bye bye profit.

 

[jadinolf]

Originally posted by: Fingolfin269
"Too Late" obviously depends on location.

Sure applies here.

 

[AlienCraft]

It's all about location.
If the developers are having a hard time selling new houses, selling a one off will have all those unsold houses to compete with.

In an idyllic location that one can build on, one might be able to sell before completion.
However , even here in NorCal Gold Country, I drive buy several houses that were built as speculation, finished months ago, and still sit unsold.

The "reduced price" signs only underscore the pressure the owners feel.
Unless one has free property, can afford to sit out the soft market, and has the ability to impart sweat equity, it doesn't seem like such a slam dunk as it did 4 years ago.

 

[mugs]

Originally posted by: AStar617
http://iamfacingforeclosure.com/

/thread

That son of a bitch is writing a book about how he managed to borrow and LOSE $2 million by lying on mortgage applications! :| He should be charged with fraud!

 

[TheNinja]

A lot of people have made money doing it, but it can be risky. I know a guy who built 1 house, made money, built 2 houses, made money, built 3 houses made money, built 4 houses and the housing market took a big crap. There he sat with 4 houses that he couldn't give away and lost money on all 4. So, ya, you can make money but you better have some cash in the bank in case you need to wait for the market to heat up again.

 

[xgsound]

I wouldn't call it quick money, but building a house (yourself or thru contractor) and living in it for 2 of the last 5 years means all profit up to 250,000 (500,000 for married) is federal income tax free. State and local may still get you though.

If you keep it (rented or not) for over 1 year without living in it, it is Capital gains and federally taxed at 5 to 15% depending on other factors.

The housing market is not the only factor to consider and you have to live somewhere.


Jim

 

[HomeAppraiser]

Buy a repo under market value and fix it up to flip it instead.