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.
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.