Author Topic: To build or not to build.  (Read 1675 times)

gojiberries

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To build or not to build.
« on: October 07, 2016, 05:28:26 PM »
My wife and I had a custom home built which we moved into a year ago. We are very happy with the house but perhaps unsurprisingly we ended up spending more than we had originally planned to and the 1.5 year process was sometimes rewarding but also extremely stressful at times.

I lost my job recently and am working part time now so the idea of working as a real estate investor is very appealing to me. I found what seems to be a good starter project that meets most of my criteria. I put together a proposal and showed it to my architect and another experienced real estate investor. They both agreed that there is a workable plan in the proposal, but that it is not likely a home run. It could be a good beginner project. While I wonít get into too many specifics about the deal, the basic idea is that the architect and I would be partners on this spec project. He would provide plans/design, I would provide financing, and both of us would manage the project. Our experienced investor friend would act as advisor and realtor.

The cash that I would need for the financing is about 12% of me and my wifeís joint net worth. She has definitely earned more than me since weíve been together over the last 14 years. If I had to guess it might be 65% her/ 35% me.

Our dilemma is that soon we need to make a decision about this project but we havenít been able to find a clear solution. It is a dream that I am very attached to but not so much that I would jeopardize my marriage. She wants to support me and let me do what I want but she also feels that if I did this it would create a tremendous amount of stress for her because she does not like the big transactions and the risks associated with this type of real estate speculation.

Please help, fellow Mustachians! We want to retire early and make progress towards that goal but we donít agree on the path to get there.


undercover

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Re: To build or not to build.
« Reply #1 on: October 07, 2016, 10:15:07 PM »
Most people here are choosing the stable 9-5, high-paying job, retiring in 10-20 year path, versus investing in spec homes. This isn't really the place to ask this question, not to mention with very limited information.

I mean, it's 12% of your net worth, and it's almost guaranteed that you won't lose the full 12%...the question is determining the upside AFTER including your own time spent on the project. Only you can decide if it's worth the risk or not.

deborah

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Re: To build or not to build.
« Reply #2 on: October 07, 2016, 10:32:00 PM »
MMM built a spec house and it didn't work out. Have a look at the blog.

shuellmi

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Re: To build or not to build.
« Reply #3 on: October 08, 2016, 06:23:30 AM »
I'm an architect as well, personally I'd be all for it, but I also know my wife would be similar to yours.  I think the big numbers are pretty scary to many people.  Maybe you can find another partner to dilute your investment?  The payout may be far less but I'm guessing that the experience is worth alot to you.  Once you have success your wife will be more amenable.

Are you proposing to manage the construction or hire a builder? 

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waltworks

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Re: To build or not to build.
« Reply #4 on: October 08, 2016, 09:01:34 PM »
The lack of specific numbers (or at least estimates) here is a huge red flag. If you're not a detail oriented person who uses math to answer questions like this, you should NOT start GC'ing/managing/investing in spec homes.

Maybe you already have a giant spreadsheet done with a variety of scenarios and numbers. If so, by all means share. Nobody is going to swipe your great idea, but we'll be able to give you some more specific feedback.

If you *don't* have that spreadsheet, go get a new job working for someone else, because this sort of gig isn't going to work out well for you.

-W