Financial Projections for The Kingsford Project - Real Estate Investing #9
Hey everyone, I finally got the last of the quotes that I needed and here are the financial projections for The Kingsford Project!
A few Updates:
- The Brunner Renovation is still on-going
- We just started digging at The Kingsford project site this morning and will continue the foundation process over the next few days
Totals for the Project:
| Description | USD |
|---|---|
| Listing Price | $639,900 |
| Actual Sale Price | TBD |
| Cost of Land | $140,000 |
| Realtor/Closing Costs | $40,000 |
| Expected Cost to Build | $380,000 |
| Actual Cost | TBD |
| Expected Profit | $75,000 |
| Actual Profit | TBD |
Here's the Question of The Day, don't forget to post your answers in the comments!
QOTD: Do you have any questions about these numbers? Do you have anything specific you'd like to know more about?
Thanks for reading! Don't forget to leave your thoughts below and I look forward to seeing you in the comments!
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Owk cool seeing these numbers but I am curious as to how you guys determine your profit already when the project hasn't started or is still in its early stage.
How long did you say the construction was gonna last again?
Can't wait to see some pictures of the digging process.
Working on the external renovation of our village family house at the moment and would soon make a post about it, though I am not done yet...Just wana let you know In advance so when I make the post, you can go see how I am going about it and render some professional advice. Hope you wouldn't mind? Thanks!
Weldon boss!
The profit is a projection and goal of what I'm aiming to make. In the chart there are 2 listings at the very bottom: expected profit and actual profit.
The expected profit is our goal and the actual profit is listed as TBD to signify (to be determined when we sell the house and see the actual profit). Hope that clears it up!!
It will take anywhere from 4-7 months. I'm aiming for 4 months, but some delays are unavoidable! Plan for the best, be prepared for the worst!
I hope to share the digging pictures really soon!
That sounds amazing @sistem, please let me know when you post it and I'll check it out!!
Glad to see the next Real Estate project! But this is interesting what state are you in? A $560,000.00 investment here would net you way more than 75k. 75k is for about a 330k total investment for 400k resale value. Your buying land to hmmmm. Well I know expected build cost is always taken on the high side. I hope you net a lot Khaleel!
Hey @jason7282! I'm in Illinois, but keep in mind that I'm not putting up $560k as the investment. I'm planning on making some posts that focus specifically on what I do in terms of the investment part of these projects. When I invest in one of these projects, I buy the deed to the land - in this case, it cost about $140k - and then I take that deed to the bank and get a construction loan to work on the project from which I take my "salary" (it's called a builder's draw and constitutes small portions of the 75k) each month. At the end of the project, I'll receive back my original investment (140k) plus my "salary" plus any left over profits after paying all the fees/interest associated with the loans, realtor, etc.
Hope that clarifies it a bit, but I'm planning on writing something a lot more in-depth about this topic! Let me know if you have any questions!
This is a real endeavor to venture. You are a special person in your generation to start with what you have and make something out of it. Awesome!! Hopefully the real price of the work is not much more than the estimate. I didn't know the realtor costs were so high. That's how my brother can afford a yacht. Great update. It shows that you are working. I have another project I am getting into on Github and this may turn out to be prosperous for me. Thanks for keeping us posted. Have a good night.
Thanks @mineopoly, I appreciate it! The realtor fee is pretty high but isn't the full 40k, that also includes the closing costs. The realtor will also have to pay a few fees on their end of the deal as well, but they do make a lot of money on each home especially when you consider the volume of homes a typical realtor is able to manage in a given time period. Your github project sounds interesting, you'll have to tell me about it!
Thank you always for keeping up on the comments. You're right it just looked like that figure was too large. I understand. You will see some of that project in about a week if it works out. Thanks for your encouragement.
Hey! I appreciate your kind words @mineopoly! Kind of ironic because I missed this comment, haha 😂
I'm looking forward to it!
Just doing the math in my head it looks like you're projecting the typical 6% realtor commissions on the sale. I have a relationship with my realtors that if I use them to list a flip that they brought to me on the purchase (meaning they already got paid their 3% when I bought the investment) then they are willing to sell the final project at 5% (they take 2% and the buyer realtor gets their usual 3%).
Wow your bro must be a broker? Typical is 3% for the seller and 3% for the buyer and closing cost is another 3%. That's in the DMV area. Good luck on your project!
Yeah the fees for realtors are about that %, but keep in mind that the size of the home can really inflate the $ amount of those fees. 3% of $1M is $30k!! Thanks for your support, I appreciate it!
He's actually not in DC but a MidWest city. I think he is just lucky. Thanks. I'm a little confused but will have things straightened up by next week.
I'm interested in the investment project but this requires considerable capital and extensive experience, do you have a web to be learned?
Maybe I can read reviews and your experience.
This is a great question! These projects do require signifcant capital up front. It depends on how you arrange the deal, but here's the typical way that I do them:
So long story longer, to do what I do takes about $100k-$200k in cash up front to buy the land. Once you have bought the land, you can take the deed to a bank and ask them for a construction loan. If you're approved (you need good credit and typically a track record for building homes) then you can build the home without investing any more of your own capital.
This comment ran a lot longer than I anticipated lol. I'll make a full post on this process soon! Thanks for the question @milend!
thanks for best information @khaleelkazi
I suggest you talk to a local Realtor who's done flips dozens of times. The unexpected can happen at any moment. They will give you the most accurate information since of course that is what they do for a living.
This is also a great idea. It can be an amazing learning experience to talk with multiple realtors and potentially even get an internship/assistant position with one of them. I have the good fortune of having family that is heavily involved in real estate going back to my grandfather! My family knows a lot about real estate and I would definitely not have been able to go off on my own and do the business without learning from them first! I highly recommend seeking an experienced mentor before jumping in on your own. Lots of things can go wrong in one of these projects.
A good question, he seems really experienced to me and I would love to learn from him too...My Passion for real estate though!
Thanks @sistem! I'm hoping the vlog will be a great learning tool and a great outlet for me to engage with you all about real estate in a more detailed way.
Love seeing all the updates, I wish you nothing but luck my friend.
Hey @koldy! Thanks! I appreciate your support!
Hey khaleelkazi, I'm kinda wondering how the cost of the land is a little bit below half the price of building the entire building..
I feel its relatively on the high side though.
And how about labour cost too? Is it also included in the cost of building as well?
Thanks for sharing Man! Even without been into real estate full time, we've already started to have ideas how it looks like..
Hey @couragekebs001! The area is pretty high end and targets the upper-middle class in the suburbs of Chicago. Though I think you should base the cost of the land and compare it to the cost of the finished home (a.k.a. the listing price, which is $639,900).
The labor cost is included in the cost of the project. Thanks for asking great questions! I'm glad to be able to give you some insight into the real estate biz!
Glad the weather could let you start something now. How long do you think you will need to get this project done?
Thanks! I think it's going to take anywhere from 4-7 months. The goal is to be done in 5 months, but plans change and things happen. Sometimes the projects can be really quick if nothing goes wrong, but there are some issues (a great example being this weather issue) that can cause delays of days or even weeks.
How much time does it usually takes from the begging to the end of the project? I guess Americans can build houses faster since they are mostly made out of wood, in Europe building is done with bricks which makes it harder
Hey @teutonium!! For a project like this it usually takes between 4-7 months. My goal is to finish it in 4 months, but unexpected delays always arise in these projects! I'd say the average time is 6 months.
Will you be walking us through the journey of it being sold in the future as well? 😊
That's the plan! I'm also going to start vlogging in the near future so that I can give you all a better look at what I'm doing on a day-to-day basis at the projects!