[ddog]

Looking for some real advice from GC's who build customs or spec building. I've got a vacant infill lot in a pretty good neighborhood with zero action. The county condemned the prior home which put us in a tight spot since we can't rent the project now, whereas a decent house stood prior.

Anyone in a similar situation? Any unique marketing ideas out there to attract a custom? Is it easier to sell a vacant lot vs something built...The lot is larger for the neighborhood and because of that could offer a unique product if I speculated and built a small house on a large lot (just nervous to take the plunge)? Also contemplated approaching investors to take on a project while trying to hedge their risk by offer 1/2 of my equity position (which is fairly large in this property) as collateral if it won't sell in the end? One final option is to sell the dirt cheap to someone looking to build right now (there ultimate price is unrealistic but may change) and try to make some up on the backend?

Just looking for some out of the box ideas rather than slash and sell.
Thanks.

 

[VBuilt]

Well, I would say that anyone that builds a spec in this market is playing russian roulette with all the bullets in. Unless of course you are in an equity position to offer a below market deal and are satisfied with the return.
As an aside, unless you have the disposable cash to front the build and handle a 3-6 month debt service, I would think it would be difficult to find construction lending in this market without considerable assets to put on the table. There is always so called "hard money" to be had at a premium but would advise against it unless you really plan out a strategy with a fixed exit plan.
Have you sat down with any realtors? You need a realistic feel for the market relative to the specifics of the market area you are talking about- market inventory, days on market, actual recent sales prices etc. Also, a good time to let realtors talk up their ideas on what would work best for the property.
I was about a third the way through a 26 lot subdivision in 2002 when things slowed down. I put together a marketing plan with the my realtor that aggressively promoted my willingness to work with buyers in creative ways. The most effecitive was a sort of partnership with the buyer where the buyer purchased the lot up front and I had the contract to build. They were provided a great construction package from my bank and I could show them real savings in the several thousand dollar range over and above what the competition was marketing at reduced prices and "enticer" "Freebies". I also provided free design work- (I do my own plans so not that big of a deal) and any "extras" after the contract were at a flat cost price- didn't make anything on the extras but moved inventory with a profit.

The best real advice if it is an option is to wait it out- just got to look at the time value of money. Is 50k now better than 80k in 2 years?

 

[ddog]

Thanks Roy, great advice. I will share with my partner and see where we will go from here.

 

[modterry]

How about marketing your company ?
1) Put a real NICE 4 color sign with a proposed elevation - spend good money on a color rendering of an idea that would fit.
Add a Take One box and fill with brochures

Sign would say: Design Build to your specifcations / Custom Home

To hide the some of the lot put up a 3 ft picket fence about 20 - 25 feet back. Gives the lot a finished look and lets the customer imagine they are home.

Get a Lender Now that might finance the project - approach them with they pay for the sign - you will put their name and number on it - that lets prospects know they can get financing.

Put a rider on the sign - "Will Exchange " - this may draw someone out that might be afraid their home will not sell. You become a buyer and can be more aggressive.

This won't cost much at all.

Terry