House #43: Final Analysis

January 5, 2014 · 8 comments

We closed on the sale of The Tear-Down House today…

This was our first new construction project with another good friend/investor in Atlanta, and was a learning experience for both of us (more for me than him :). While I wasn’t in town for much of this project, my partner did an awesome job keeping the build on schedule and well under budget. The total timeline was just over a year, but most of that time was learning the permitting process in Atlanta (and getting through it); the actual construction time was under 4 months, and that included about a month of rain delay.

Total build cost was right about $60/sf, which was better than I would have ever imagined — we were “hoping” to keep it below $70/sf from the beginning.

Here is how the financials break down:

House #43 Financials

8 responses to “House #43: Final Analysis”

  1. Ezra Udoff says:


  2. Luis says:

    Long time no chat my friend 🙂

    Very glad to see you finally got this one put to rest.

    One quick question. Only $18k in materials? I assume then that contractors must have provided a lot of the materials?

    Also, I don’t know if it’s the same where you are at now but here in Atlanta, new constructions is where it’s at. Have seen more new construction in last 2 months than in last two years.

    Should you be considering new construction more than flipping right now?

  3. Tom Kilburn says:

    Hi J! I am a newbie investor and am a big fan if yours! I purchased your book on flipping and it is great!

    Quick question for you regarding your first construction build: labor is listed at $142,xxx and the materials are listed at $18,xxx. Is that a typo? Just curious?

    Thanks! I cannot tell you how grateful I am that you would share your knowledge with everyone( speaking for myself, ha!).

    Keep up the good work!

    Tom Kilburn

  4. J Scott says:

    Hey Tom,

    Not a typo, but also not completely accurate/indicative of our expenses. The issue here is that much of our foundation, framing, siding, roofing, doors and windows work was done turn-key, so all the material costs were rolled into the bids. I allocated all those costs to labor, as I didn’t have a specific labor/materials breakdown in the bids. So, that’s why those numbers are so skewed.

    If you want to see a complete breakdown of the budget (I plan to post it in a few days), see here:

  5. J Scott says:

    Hey Luis,

    Yup, see my response to Tom above…here’s a full breakdown of the final budget:

    We are definitely going to focus a lot more on new construction this year, especially given that we can’t seem to find many good rehab deals! 🙂

  6. Cooper says:

    Hi J,

    Over the past few days I have read over the project diary on the BP site as well as your posts here about this house. I have been considering trying a spec build so I was really interested to see such detailed account of your experience.

    At the end, there is one more thing I would really like to know. Was it worth it? Can you compare the overall amount of work/time/risk/capital involved and the final profit with what you believe you could have earned with the same investment of work/time/risk/capital doing fix and flips?

    On a related note, can you comment on how enjoyable this project was vs. working rehabbing a home? I realize that this is a business and to that end the enjoyment isn’t always the most important thing, but on the other hand the reason I started doing this was because I could earn money while ALSO doing something that I take some satisfaction in. Similarly, that is the reason I don’t want to flip $8k houses in war zones…regardless of profit I simply don’t enjoy it.

    As always, thanks for sharing so freely for the rest of us!

  7. J Scott says:

    Hey Cooper,

    I loved the new construction project. And moving forward, I hope to do a LOT more of them. This first project took a lot more time/effort than my rehabs, but that’s just because it was a learning experience for me. I imagine the first half-dozen or so new construction projects will be very hands on, just like my first half-dozen rehabs were. As I learn more, I’ll be able to systematize things, create processes and find a team that can get the work done with relatively small time investment from me.

    As far as the returns, they were about the same as our rehabs — about 25% annualized returns. But, this was one big project instead of the 2-3 projects we would have done in the same amount of time with the same amount of money. I certainly prefer one project versus 2-3 projects if the returns are equivalent.

    The best part about new construction was that there were no surprises. Once we started building, we didn’t have to worry about unexpected rehab expenses.

    Now, if you’re not familiar with rehabbing, I wouldn’t suggest jumping right into building. There is no way I would have been nearly as successful with this project without my partner (who had more experience than I did at building) and without doing 50+ rehabs prior to starting this project. There were a lot of places where things could have gone wrong if I didn’t know as much as I did, and there are still a lot of things I don’t know and will learn on upcoming projects. But, I don’t think I would have ever tried this kind of project without doing a lot of big rehabs first to get prepared.

  8. Cooper says:

    Hi J,
    Thanks for the response! As always I’m glad to get your opinion on the matter. I’m in agreement that it is far more enjoyable to do 1 bigger project than a number of smaller ones, which is what appeals to me about new construction. Thanks again!

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