Build Wealth by Building Your Own Custom House

I’ve been talking about how you’ll save 10-15% or more by building a new custom home rather than buying a new house that a builder built on spec., so here’s how the numbers work:

In Chicago, when a builder sells a house to you that they built, they have to pay about 7% commissions and closing costs right off the top. If they made only a 7% profit for all their investment, that’s 14% that’s already 14% you’d save by building yourself the same house.

Believe me, the builder is shooting for much more than a 7% profit. Think about it, the builder had to purchase the lot, design the house, build it and sell it. For a smaller house in the city, this process will take a year’s time anyway and they’ll have to invest their own cash (probably about 30% of total costs) to get the construction loan.

If they build the same house for you, they don’t need to take out a loan, there is no construction or market risk for them, so they’ll be happy to do it for a smaller profit.

You save the closing costs, a good chunk of the builders profit and the financing is going be cheaper for you because a loan for your primary residence is less risky for the lender than a spec house. you are getting exactly the custom house you want and you get it at wholesale.

If you do it right, you’ll have built yourself instant equity the day you move in. This equity bump is the game changer that builds wealth for you independent of any market appreciation.

Amazon New Book Release:

Don’t Buy a New House! BUILD IT 

What’s your return on your biggest investment?

Your home might be your biggest investment, so shouldn’t you be earning a good return on that equity?

Suppose you put a 10 or 20% down payment on your new house. And let’s say you sell in 5 years. If market appreciation happens to be low during that period, it might just cover your commissions and closing costs and now you made 0% return on your equity.

My new book “Don’t Buy a New House! BUILD IT” shows you how you can build your brand new own custom home. And explains that you can save 10-15% or more by having someone build it for you. That’s a lot of equity the day you move in!

Now, suppose instead you put that 10 or 20% down payment toward building your own new custom house. And then you sell in 5 years. And again we assume that appreciation is low during that period and just covers your transaction costs.

If you saved only 10% by building yourself, That’s a 100% return on your 10% down payment, or a 50% return iof you had a 20% down payment. Divide that by 5 years, you’ve made a 10 or 20% annual return on your equity! It’s likely, these numbers will be quite a bit higher, because a new house is very likely to appreciate more in those first 5 years than an older house.

Now we know most people are just not going to want to put in the effort to build their own new custom house. The idea is just outside of their comfort zone.

Yet those same people will go out right now and buy and older home that needs work, And it’s definitely going to need more work over the years they own it! Then they’ll be lucky if they break even when they sell. If they get really lucky, it will appreciate more and they’ll do a bit better.

But instead of starting at zero and hoping for appreciation, Wouldn’t it make more sense to start with a better, brand new house and with a substantial return locked in?

You miss a lot of opportunities by staying in your comfort zone!

My new book: Don’t Buy a New House! BUILD IT Might help you stretch that comfort zone a bit. It will show you how the numbers work and how to find your site and find the people to help you design, spec and build.

Grab a copy on Amazon and learn how it’s done. https://www.amazon.com/gp/product/B09PSFMC6Z/

From the new book release:

Don’t Buy a New House! BUILD IT,

We’ll compare investing in Purchasing a New Construction House from a builder vs Buying a Newer Re-Sale House vs Building Your Own Custom Home.

You can adjust the parameters as you like, but I think you’ll be surprised to see how the numbers will work out for you when you sell your new home a few years down the line.

You can find:

Don’t Buy a New House! BUILD IT

on Amazon: https://www.amazon.com/author/rogerluri

There’s a special price on the ebook this month. It’s a short read, but will give you a lot of great information and an eye opening perspective on building your own home.

Please post a review on Amazon. Your feedback is really appreciated.

If you have questions or want more info you can also check out: http://ld2development.com/custom-homes/

My new book was just released, it’s called:

Don’t Buy a New House, BUILD IT.

Yesterday I said that this is the best time I’ve ever seen to build your own custom house and I mentioned that you’ll save 10-15% or more compared to buying a new house that a builder built on spec.

Why? Let’s look at how the numbers work. Suppose you are able to find & buy a new construction house that a builder just built. and let’s say you purchase it for $1.3M.

In order to build that house, the builder had to purchase the lot (probably a tear down) and put up maybe about $300,000 of their own cash to get the construction loan to build it. The builder’s cash has been tied up for at least a year til the house is sold.

At closing, the builder pays commissions and closing costs of about 7% right off the top. That’s about $91,000. And to keep it simple, let’s suppose that the builder makes a profit of 7% on the sale, that’s another $91,000.

Now 7% of sales is not a very big margin considering all the work that goes into it. The builder would certainly be targeting a profit closer to twice that. But let’s just say the builder makes only a 7% profit. By you building that same house yourself, you would save the 7% closing costs and 7% profits that are built into the builder’s selling price.

That’s 14% savings for you right off the top! In this example, that’s $182,000 of instant equity the day you move in.

You might even get the same builder to build it for you. This is a win/win for both of you. They can make money building for you at the same time they can invest their money into building another spec house.

In the book, I explain more about how the whole process works. It pays to understand the numbers! There is a link below to get the book on Amazon.

https://www.amazon.com/gp/product/B09PRTVBMH/

It’s a quick read, but gives you a lot of insight and all the steps to get started.

If you read the book, I’d appreciate it if you could review it on Amazon. Your feedback would really be helpful.

If you follow or subscribe to this channel, I’ll be going into more or the specifics of how it all works.

Let me know if you have questions.

http://ld2development.com/custom-homes/

Thanks