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Lethul 1 · Guest

I'm a green pea in the real-estate business, I haven't even got my foot in the door. But for right now, I am trying to develope a business plan, and I like to think about where can I be 5-10 years from now, and what steps do i need to take to get there? So my question is, how hard (other than the required $$$) is it to get into developing? If I had 15-20 hears to play with, would it be worth the effort? Even on a small scale basis, to buy 50 acres, and build houses, and streets, and sell it off bit by bit, is this a wise consideration, or should I quit while I'm ahead? Any advice is much appreciated, thank you very much!

nemmar · Site Admin

Lethul 1,

Becoming a successful new home builder takes a lot of learning and effort to be profitable. But once you learn what you need to know then the profits can be very high. It doesn't cost a lot to build a house in most areas and the sale price of new homes is very high in most areas. The difficulty is in learning what you need to know so you don't "lose your shirt"!

If it was easy to build a new home then many people would just buy a vacant lot and be the General Contractor themselves. Rather then taking many years to learn the details of construction methods and the pitfalls to watch out for, you are probably better off doing a lot of research to find a very knowledgable General Contractor that has experience working with the different tradesman needed to construct new homes. The General Contractor will earn his profit but it should be much lower then if you paid a new home builder to build the house for you using his/her existing crew/staff of tradesman. You also have to make sure that you or your General Contractor know how to purchase the building materials. You can really lose a lot of money by not knowing the market prices and quality standards for building materials.

When building a new home you need to hire:
1) Architects to design the house.
2) Town hall to approve the plans and inspect the construction at different stages.
3) Foundation contractors to excavate and pour the house foundation.
4) Siding and Framing contractors to do the wall framing and siding.
5) Roof contractors for the roof.
6) Electricians, plumbers, heating and air-conditioning contractors.
7) Interior design and decorating contractors and consultants.
and the list goes on.

There is a way to build a new home with less financial risk and without having to spend an extremely long time doing research and finding the best contractors for the work. That is to use Prefab Construction components. Prefab home construction is more cost-effective than conventional "stick-built" home construction. You will need to do research to make sure you choose the best factories/companies to supply the highest quality prefab construction components of the new home at the best prices. This method can really reduce your risk and headaches of having to deal with individual tradesman and contractors that may become unreliable or unethical after the work starts.

So in summary, yes you should definitely do some research in your area and look into what's involved in becoming a new home builder. If the current home builders in your area are friendly they may be willing to sit down and talk with you about it and give some advice - unless they're worried about competition. General contractors should be a good source of information. You may also want to ask your local town hall building inspector for information since he/she is the one that has to inspect and approve the different phases of all new home construction. You can become very profitable in the business if you do your homework and don't cut corners.