[Exotics]

I am a University student, residing in Ontario, with a born passion for real estate. I have been thinking of starting a custom home building company for a while now and have a few questions:

1. Does anyone own a company that builds custom homes (or is in general home construction) and could kindly give me advice (advantages, disadvantages, tips, etc.) on starting a company like this?

2. When is a good time to start this type of business?

3. Do custom home building companies hire subcontractors for projects? or have direct employees? or a combination of both? And if a combination of both, what would be some of the positions that would be directly under the company?

4. What are clients looking for when deciding to build a home?

Any advice is greatly appreciated!
BTW I am studying Business in University.

 

[db71]

If you want in this business you need a spec or a model. It takes money to compete. If you want to build 1mil homes you better have 3mil.

Can you borrow the money yeah probably if you do is there a 90% chance of failing.

The thing about building houses is it is all or nothing. It's not like you can sell part of it. You have to sit on it until you sell the whole thing.

Yeah most use subs they are usually just one or 2 people who sub everything out.

 

[CaliforniaSupreme]

I have a family member who's in this industry, he says the market is dead compared to years ago and people are trying to get the bottom line as low as possible- he's barely breaking even. It's definitely a volatile market, I wouldn't get into it right now because it's just scary.

 

[Justin D]

1. Yes I own one - I would suggest working for a custom home company first, there is a lot to learn. You have to be a bit of an expert of every part of the home. I would also make sure you're taking lots of business related courses at school. You will need good math, accounting skills, have to be able to understand/read/write contracts.

2. Anytime there is demand is a good time to start. However you better be confident you can take on the project. You can find your self in deep trouble if you get in over your head.

3. Custom home companies are structured numerous ways, some direct employees, some sub-contracted work. Depends on what makes sense for your company. Usually specific ares such as plumbing and electrical are sub'd since they usually require a special license. My company sub-contracts everything and only handles the management portion.

4. Most of the time it's value. But that's a tricky one because what is valuable depends on who is the client. Some are looking for extreme high quality, others are looking for cheap prices.

 

[Exotics]

Justin D - Thank you so much for your help!
Could you be so kind as to tell me the name of your company?
Could we maybe get in touch? I would love to learn a lot more from you. You seem like a very successful man in this industry.

In the meantime I have been learning all I can in the trades to get a better understanding of each aspect.

I currently study everything business related (management, business math, business computers, ethics, economics, accounting, etc.)

 

[Justin D]

Justin D - Thank you so much for your help!
Could you be so kind as to tell me the name of your company?
Could we maybe get in touch? I would love to learn a lot more from you. You seem like a very successful man in this industry.

In the meantime I have been learning all I can in the trades to get a better understanding of each aspect.

I currently study everything business related (management, business math, business computers, ethics, economics, accounting, etc.)

You're on a good start will PM you my company info

 

[Davi]

I'm planning on doing the same next year, Montreal area though. I'm starting a carpentry course next month, pretty exciting!

 

[Arone997tt]

I'm a builder also what DB is saying is true!!!! If u are going to client builds it will take you 10 years to earn your rep before u get up to million dollar level...if you have cash you will need to run multi projects so you will need millions to do so...not saying it cant be done GL!!! I made it, came from building decks

 

[Stance]

A custom home building company?..so are you talking about being a real estate developer basically?

You kinda need money to do something on this big a scale. Without any prior knowledge or experience, who's going to back you? The regulations alone for this type of business are probably a nightmare. I know a thing or two about trying to start a business with no money and no experience...get one or the other.

 

[db71]

I know a thing or two about trying to start a business with no money and no experience...get one or the other.

This made me laugh my arse off. But it is good advice I guess. I would think it would be a given.

 

[MasterWhite]

I am a University student, residing in Ontario, with a born passion for real estate. I have been thinking of starting a custom home building company for a while now and have a few questions:

1. Does anyone own a company that builds custom homes (or is in general home construction) and could kindly give me advice (advantages, disadvantages, tips, etc.) on starting a company like this?

2. When is a good time to start this type of business?

3. Do custom home building companies hire subcontractors for projects? or have direct employees? or a combination of both? And if a combination of both, what would be some of the positions that would be directly under the company?

4. What are clients looking for when deciding to build a home?

Any advice is greatly appreciated!
BTW I am studying Business in University.

1. U need cash, if u borrow money that will eat up your profits.
2. Look for areas where the value is going up, and the market is not saturated, I live near you PM me and I can point you in the right direction
3. I would do atlist one rehab and one basic new build from ground up to see exactly where u lack in knowledge and the things you are overlooking in your bussiness plan

 

[Justin D]

Are you talking "custom" which where I am at least means for a client? Or are you talking about "spec'" which means build and hope to sell? Both have entirely different business models.

 

[Davi]

Have any of you guys bought commercial buildings and flipped them into condos or renovated 5 plex's and flipped them quickly? I'm aiming to buy a triplex, renovating and living in one while collecting the rent off the 2 others and selling it 5 years down.

 

[db71]

I gave a short answer before. There is a ton of good advice here so pay attention to it.

What I mean by it takes money is if you figure out your expenses are going to be XXXXX they will go over only after you have built many houses can you get your costs close to what they should be because you know what ends up costing you more.

And yes there is a difference between custom home builder and home builder. When I think custom I think architect draws up drawings that only you will have. When I think home builder I think go to cool house plans and find a plan that has been perfected with a truss layout etc and build it.

Custom is more of a time and materials or sq ft price that figures for over runs and just expect everything to be 3 times as much. Also you may get people with open checkbooks but you have to prove yourself to these people either by building a model or finding someone who believes in you enough. (which would be very tough). The people in this demographic don't care about cost but when you say it will be done it better be and done right.

Home building is easier but in my opinion if you have never done it you still need a spec or model. It will probably just not be finished as nice inside or be as big and therefor will not cost as much.

Either way it takes cash and you may as well figure it taking 2-3 times more than you initially figured.

 

[Stance]

You have to understand also what kind of homes people want in terms of the layout, flow and interior design. Shag carpet and wood planked siding on the walls is not going to work. When we bought out house, we wanted something where the garage connected to the kitchen so bringing in groceries was easier. We also wanted an open floor plan with high ceilings... Know what people want to buy.

 

[Exotics]

My plan was to start by flipping houses to build capital, then do a spec/model to add to portfolio, eventually gain the rep and cash to do houses to client's wants and needs.

 

[Justin D]

My plan was to start by flipping houses to build capital, then do a spec/model to add to portfolio, eventually gain the rep and cash to do houses to client's wants and needs.

You need the cash for the spec' and the rep for the customs.

 

[Exotics]

I could use the cash saved after flipping houses for a while and do specs/models and then use the rep from that and go into client homes.
Do you think I could gain enough rep from flipping houses and go straight into client homes? Or would taking that extra middle step be worth it?
It's not that I don't want to do specs/models, its that I don't have a lot of knowledge on this aspect.

 

[Justin D]

there's no need to flip or do spec'. They are just two options in the business of residential construction. My company only does customs. You can work your way up to high end custom homes by starting with small jobs. Try a kitchen reno for someone, then try adding a small addition or renovation. From there you can move up to building a small house. That's how you build your reputation for custom homes, not by flipping.

You don't need much cash at all to start out - just enough to cover your insurance which should be recouped by your fees for the job, maybe a pickup truck a laptop and some office supplies. Of course remember the more things your sub-contract out, the more it will cost to get the job done. You can start lowering those costs by brining portions of the work "in-house", but then your overhead increases and you will need constant cash flow to keep in going.

 

[db71]

In my personal opinion you should go work for a company building houses. Work in the field get out and do it. It might not pay that great or it might be good pay but it will be great experience. I worked construction and then later got a 2 yr degree in construction the degree was quite possibly the biggest waste of time in my life. Seeing something done and then doing it is a million times easier than reading a book and figuring it out.

Find a big custom home builder and go offer your services for free or call it a internship and when you are there pay attention to every detail and overhear every conversation this is the only way you are going to learn.

Make sure if you do this you work for a reputable company no point in learning the wrong way. Once you work a year or so then you can start rehabbing and doing all the work yourself at night and on weekends. While maintaining a day job. Then just grow from there. Sky's the limit.