After living with my wife’s parents for a long time and really skimping, we got our student loans paid off. There is a lot of competition in the area of law that I am in. I tried a couple of things outside of my law practice, just to see what is out there. I tried to start a compost business (making compost out of sawdust and chopped up rotten food). I almost died of inhalation poisoning the first night of composting.I got my real estate license and passed the tests, but I have never activated it with the State. I’m not too interested in taking people around and pointing out how neat everything in a house is. Not for me.
Later, I was approached by a lifelong friend who was bored with his job and wanted to fulfill his dream of being a full time home builder. He had money, but not enough. He had time and was motivated. I trusted him and felt comfortable with him from the beginning. He asked that we team up to build a spec home and split the profit. I consented and put my current house on the market and began the process.
My Wife The Designer
My wife is a Pinterest follower. It is her favorite website and the only one I ever see her on. She knows trends and she loves houses and house plans and house finishes. She knows what people like. I put my wife in contact with the builder and they began immediately with a house plan. I set the budget and picked out the best land available for a spec home. The problem was it was expensive. $92,400 for .77 acre, right in front of a beautiful apple orchard. We sold our home, tapped our savings and bought the land.The land became our down payment on the Construction Loan. We began to rent a home. A big, old, somewhat smelly box of a home. We like it though.
Our plan was to build the Spec home, let it sit on the market for two months after completion and move in if there were no takers.Our goal was 1/3 or 33.33% Markup. Heck, it was the same price that I charged my contingent fee clients. I felt it was a fair markup price.
The Initial PlanThe initial plan was to build a 3500 square foot home for a total price (including land) of $400k. We would list it for $533,333.00 and sell it for no less than $495k. We would split up $95k (appx 45k) each and move onto the next Spec home. We Initially decided against using a realtor.
We are both down to earth people. Skeptical of anything that screams ‘easy’ or ‘deal’. We both knew that there would be changes to the initial plan and that we would be fortunate to sell the home for a modest profit.
Reality Sets In
Reality began to set in when we got our completed plans back from the architect. The home was not 3500 square feet. IT WAS 4626! There was no way we were going to build a 4626 square foot home for $400k. Remember, the land alone cost $92,400. I asked my wife if we could “scale down” on the plans and have them re-drawn. But, alas she was set on the plan and preferred to move forward as it was.I do admit, I love the house plan. It has a HUGE KITCHEN and HUGE GREAT ROOM. I did my fair share of internet searching for a house plan that we could buy. Most house plans were a thousand dollars or over and none of them offered what this house plan did.So I consented to the house plan. Ever since I consented, my stress level has gone way up and I haven’t been sleeping as well. I don’t use medicine to sleep, because I don’t like medicine. I did however buy a sleeping mask and ear plugs and sometimes I sneak in a swig or two of the kids Benadryl. So, we began looking at ways to reduce house cost without trimming the quality. Here are some of the ways that we saved cost and increased the value of our Spec Home. Again, these ideas were for our First Spec Home Adventure and may change if we ever get to build a second...To read more about spec home building click here.