If you buy the second house, doesn’t that also open up the opportunity for your crew to begin demolition/clean up at the second house on days when you’re waiting on approvals to do various things at the Point Loma house? And perhaps, more time to thoughtfully consider what changes you’d like to see to house #2?
There is risk. I’m not sure that it is an unreasonably risk given your track record.
Well, if the margin is too small to be comfortable, that is a real risk. It has to be worthwhile to do it.
I have discovered that my carpenter is my most valuable critical path. In fact, just yesterday I found out that he had been offered a job to go back to work with his previous employer, a major developer, where he lost his job during the crash. So, he will be getting a small raise when we start our next project (whatever it may be). But, he does basically everything on the jobs except electrical and roofing. I find out that I cannot spare him one minute on something else while we are in a project.
So, I’m not going to make the fatal mistake I did with the Pacific Beach remodel / Spanish Bungalow project and try to get a Crew #2 to do the 2nd house. If I do start a 2nd project, I will just focus on tasks that can be performed easily by subs or laborers.
The flippers on Flip or Flop work a little differently than I do. They appear to hire different General Contractors for their projects - I don’t think they have a permanent crew or employees. I’ve never tried that, but one of my investors is recommending a GC that just did a great job on their daughter’s first home purchase, at a very reasonable price. I might entertain hiring a GC to do a portion of #2 such as decks or kitchen remodel.
@CB I have been watching the latest season of Flip or Flop and just started following them on FB. It appears in the last year or so they started their own construction company. They still use Izzy and a few of the other contractors (because they have multiple flips going on at once). But they explained that Izzy’s business is expanding as well which is why you don’t see him as much.
Coralbrook, I find that it helps to think of the money burn rate in terms of time, right?
So, if you squeeze in your demo work for House #14 (?), which work is less needing of supervising and fine planning, while you are more focused on planning, construction and finish out for Liberace House, then you have economy of scale to some extent. Only you know the reliability and quality of your crew, which is what makes for the profit margin.
My worry is the same as with supervising too many transactions at once, that something gets overlooked that should have been done 3 steps prior but the deadline is past or it costs time (money) to correct. But it sounds like you have a good template for start to finish based on your prior flip projects. Comb through that and see what you can shave for time savings.
It also looks like you have a network of agents who could scout potential buyers (who aren’t flippers or DIY buyers) while you are close to finishing Liberace House so that you can cut short the sale to closing time, which equals less money burned.
Oh boy… starting a construction company. Yikes!!! Lots of risk there. Someone has to be holding a contractor license and a lot of insurance and bonding. Plus, my understanding is that a contractor has to provide 10 year warranty on their work. Who the heck wants that headache on top of trying to flip houses? One of the key reasons that I decided not to try to get a contractor license - like I would ever even pass a test or something 
I subcontract out the key items that really should have a warranty such as roof, electrical and HVAC system. Most other major systems come with the factory warranty such as appliances, water heater, cabinetry, etc. I try hard to limit my risk as much as possible, plus I always stand by my buyers. If they find an issue in a reasonable amount of time (say 6 months) I will always do the right thing. Have never had an issue with a buyer except Mr Crazy who tried to extort $15,000 to repaint his house.
I know that artloverplus and others may feel differently… but I am a homeowner selling my home to a buyer. I provide all homeowner disclosures, plus a 5 page description of everything in the house, including any issues that we could not correct or need explanation. I make sure that buyers understand that the houses are old and will need maintenance and I point out the areas of maintenance that they need to watch. For example, if the house does not have gutters I always draw out a drainage plan and explain where there might be potential drainage issues and suggest they might want to install gutters in those areas (gutters are not common on older homes in this area).
Attorneymother… Yes, I do think there is a possibility that Liberace House will be in contract before we finish. Point Loma is a hot market and I think that all I will need to do is get the word out to the local agents about ‘Coming Soon’ and we might have a buyer. Problem is… I haven’t set a realistic asking price yet and that is the first thing someone is going to ask I have been put in that situation before and sometimes make a fatal mistake because I haven’t ‘tested the market’ yet.
The listing agent and two other agents from his office have already visited the project. They are one of the bigger offices in town. Plus, I found a flyer on the door the other day from another agent saying he has buyers looking in area if we are thinking of selling. I might actually give him a call (when things settle down).
That’s great about Liberace House. How do you normally set asking price for reno’ed homes, especially if they are out of character for the neigborhood. I recall you said one next-door house is recently redone, but how far out can / do you use comparables
Edited: it strikes me that a buyer would ask the same question, no matter the desirability of the individual house. I know that it’s an uptrend market, but I’m speaking as a buyer here.
Too bad you can’t market it as the “Liberace House”. That has a nice ring to it.
Point Loma is a lovely area of San Diego. It has a lot of pluses beside the views…it’s pretty close to almost anything one would need (not walking distance…but a very short drive). It’s also a lovely place to walk, and the neighborhoods are beautifully maintained.
I wish I could afford to live there! I would look at CB’s house.
CB, could this be a situation like a new home where you can market it,many buyers could make some choices…like paint colors, or carpet?
“Too bad you can’t market it as the “Liberace House”. That has a nice ring to it.”
Unless the buyer hated Liberace!! :-S
As most of you know who followed Flip #2, it is a royal pain in the butt to sell to buyers who want to select their own design choices through the process. They just cannot move fast on making decisions and making purchases. I have been in the situation twice and it adds a huge amount of overhead to the project.
I do understand that someone that is buying in a ‘Coming Soon’ situation would expect the right to make some choices. I would consider it again, but there will be a ‘premium’ on the negotiated sale price. I have learned my lesson !
Plus, if what you really enjoy about the job is the ability to make design decisions, having a client dictate those choices could diminish your enjoyment of the process.
Even if you work out certain allowances with a buyer over certain line items, it seems like allowing them design choice could eat into your profits because it would limit your ability to take advantage of sales, etc.
Coralbrook, if you are trying to avoid entangling yourself too much with buyers after the sale, I would go with presenting a house as a fait accompli or very close to it. Based on my reading so far, your aim is to make a profit, not to establish your reputation as a contractor or builder to the market.
Working with allowances is too much like being a custom builder. People hardly ever stay within their allowances (speaking as one of those people).
cb, I agree that you do not want to sell the house before you are done. You don’t want to be in the situation of waiting for the buyer to decide on colors, or of having the buyer insist on a very expensive something. Complete the house and then sell it as is. Any potential buyer who is sincerely interested in your house will just have to wait until it’s done.
Yes, learned my lesson from Spanish Bungalow. Although Cynthia was a wonderful person and very understanding of all the issues we encountered during the renovation, she had definite quirky taste (and expensive!!). I basically became her contractor catering to her wishes. Not to mention that I sent progress reports and photos to her every single day. My best guess is that it added at least a month to the renovation (but partly my fault because I was trying to finish up Pacific Beach remodel)
Who can ever forget the days of exterior color choice ‘by committee’
Funny thing is… in the end she moved in and changed the entire kitchen. She didn’t change main cabinets and countertops, but opened up walls and moved several cabinets and doorways around, including the custom utility closet that took forever to build.
Oh well. It’s probably better that you didn’t know that. Just finish the Liberace House and sell it. Don’t get into any negotiations before. Just don’t.
PROGRESS UPDATE
Back to the Liberace House renovation
New ABS sewer and drain lines complete in the garage ceiling up into the bathrooms. There was only one section of ABS that had to be replaced - the line that ran from crawlspace out to the Master Bathroom in the new addition. All other lines were replaced at some point by prior owner and are in good condition (so we don’t have to go out to the street and try to tie in)
Electrical rewire complete in original part of home
Electrical rewire complete in kitchen (to move things around and add things)
Electrical rewire complete in both bathrooms (to move things around and add things)
Majority of demo of cabinets and stuff in garage complete
Opened up garage ceiling to investigate joists
First draft of conversion and deck plans complete - meeting with structural engineer on Monday morning
All wall changes upstairs have been drywalled, mudded and sanded. Including all the holes that the electrician put in the walls to pull new wire to receptacles, switches and lighting
New pressure regulator and main shut off valve installed in front yard
New copper water lines partially complete for master bathroom. The layout of the bathroom is changing to provide a large shower with dual shower heads and a 60" dual sink vanity. Hall bathroom layout is staying the same
cb, you’re making great, rapid progress.
BUDGET UPDATE
Original budget (without garage conversion) was about $82,500
TO DATE
Demolition and dump runs $1,500
Wallpaper Removal, Framing, Drywall $2,000
Plumbing Materials and Labor $1,900
Electrical Materials and Labor $1,350
Miscellaneous stuff $100
Total spent to date = about $6,900
Large expenditures coming
A lot more dump runs!
Roof
Appliances
Kitchen Cabinets
Bath Tile and Tile installation
Floor Refinishing and new oak floors
Deck build
Painting
Front walkway and landscape
Front garage door
MAN, your workers area CHEAP!
Especially your electrician! 
Can I borrow them for our next project? 