Spec Home Journey
SPEC.U.LATIVE: of, relating to, or being a financial speculation
A spec home is a speculative venture for the builder (or in many cases, investor), meaning it was built with the intention of selling it for a profit, as-is or with minimal changes.
I have been given countless opportunities since joining Property Revival Realty in 2016. That’s a blog within itself. My favorite one, (I think, don’t quote me, haha) is the opportunity I’ve had designing and building spec homes. I get asked all the time what a spec home is. I give them the definition above and then they ask me if it it’s worth the financial risk. This is what I always tell people…You will make more money on a spec home than I will.
I don’t build them solely for the profit like most investors do. Don’t get me wrong, I wouldn’t take the risk for free, but I am in it to create beautiful homes, over more profit. The builder we use knows enough now to up my budgets from his other investors because the details are important to me and I refuse to have a single boob light in my new builds!
When I became a Realtor, I quickly learned the value in investing in real estate. It’s a no brainer! I had become a landlord by means of desperation years before, and really had no interest in managing more rental properties. The other options were to build a spec home or do a flip. Flips have been nearly non-existent in the last several years, so I asked one of the founders of Property Revival and he offered a partnership in a spec without a blink of the eye.
That opportunity was multi-faceted. It was an opportunity to learn the ins and outs of new builds; the contract side of them, what things cost and how to figure out margins, it satisfied a dream I always had of building my own home (until I had to hand it over, haha!), it was an opportunity to market myself, build my portfolio, meet people, make connections and learn about our design center: Artisol, and so on. It also provided an opportunity to make some extra money.
The day that I sat in a room with a draftsman and began redrawing the floor plan of our future spec home, was one of the best days ever. It cost us about $2400 to purchase the plan because by the time I was done with it, he considered it a complete redraw.
Well worth it. We have already built two fantastic homes with that plan and they both had accepted offers before the drywall phase was finished. I just had a walk through with the buyers of our second home and they gave us so many compliments on our plan. I told them the reason it felt different is because so much thought went into the design of the floor plan. I was designing my dream home! For someone else! ;)
This step is not something you have to do to build a spec home though. You can hire a builder to build a home he has built several times. He will recommend a house where he has his numbers so dialed in, you know (more closely) what to expect for profit assuming you sell the home for the projected list price.
The other reason you will make more than I will if you build a spec home, is that most investors do not make the selections for the home. I am a hybrid between buyers and investors. You see, most investors in our company rely on the expertise of our on staff interior designer. THEY are so smart! She has excellent taste and you can rest assured that while you are out doing your thang, she is creating a beautiful sellable home for you to make some money on.
Not me! I want to make ALL of the selections and guess what, I’m never on budget. So, we make less and I spend a LOT more time. And time is money, folks. Especially in real estate! The why behind my spec home investments is bigger than most.
But that’s just me! Building a spec home just to make money is totally justifiable and the reason most (ALL, except for me. Wink wink) investors do it. It’s a great option if you have cash to leverage. It requires a down payment just like any other loan, but you can (in a good market! Nothing is guaranteed!!) make more money in less time than other investment options.
Whether you are thinking of building a speculative home as an investment or you are looking for someone to help you build YOUR dream home, I can help!! Designing and redesigning spaces is my favorite thing to do. Buy, sell, build, remodel, redecorate…I’m your Home Girl!
To see more photos of our spec home goto the portfolio section of my blog.