As some of you know the story, I got into real estate development because my father wanted to redevelop a duplex he bought into three PUD style units. It was not going well and the stubbornness in me basically said the hell I’m going to let my dad lose money on this and stepped into correct course. From there we grew to now a $60M+ portfolio and never looked back.
Nowadays I get people coming up to me, including my own cousin recently, asking how can I build my own dream custom home and have someone on my team or me to help find the lot so I figured, hey why not put this out into the universe and help more people.
There’s a lot involved. I will break this up into multiple parts. Be sure to subscribe to the blog to be the first to know when a new section of the series is published. Also, I’m in California and some of what I mentioned might not apply to your area. There might be some unique items special to your city that I didn’t include.
Market study
Before I begin with all the technical stuff I actually like to survey what’s in the neighborhood of the lot that I’m looking to build. Are they mostly single-story homes, 3-story townhomes, apartment and condos, etc. I want to avoid my home to stick out like a sore thumb for one, and also during the public hearing process, if there is one, I don’t want the neighbors to come out, complain, and shooting down my design. There will come a day you need to sell the house because you’re moving or downsizing, you’ll want to consider the resale value of your custom home as well.
The easiest way to do this is to drive or walk around the neighborhood. Are there any new builds in the area? What are the architectural styles? You can also consult your favorite local Realtor to see what they think of the different parts of town. Go to some open houses on your own as well to get a sense of the houses in the area.
The third way is take a look on your favorite real estate app whether it’s Zillow or Redfin. Here I like to glance at how many square foot the houses in the middle cluster recently sold or listed for sale are along with bedroom and bathroom counts. I will also get an idea what kind of interior design choices are popular. These apps have a filter you can choose to see only houses that are recently built. You might not get too many search results depending on where you are, but good to get the creative juices flowing as well.
For example, below is a quick snapshot of houses sold the last 3 months in Arcadia, CA. You got these McMansions to the north of the 210 freeway that’s over $5 million and some of the higher end houses to the south in the $2-3 million range. Toward the edge of town you have much smaller and run down houses for less than $500k. Many Asian buyers in Arcadia also prefer the tile flooring as opposed to hardwood or carpet.
Ultimately, it is going to be your dream home and you can do whatever you want. However, you want to avoid plunking down a $5 million house in a $500k neighborhood or over design and over build your home.
