Building or Flipping homes for profit - Page 2

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Building or Flipping homes for profit - Page 2


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  #11 (permalink)  
Old 22nd August 2018, 06:55 PM
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My thought would be to contact a contractor in the area of interest and pose these questions. Might be able to find a contractor through a realtor.

Also from what I have read on these forums - sitting on a vacant property, you may find someone sitting in it when you return.
Good point, Stevenjb. If one buys a home in Mexico and then leaves it vacant for some variable period of time, one may find squatters living there upon one´s return and evicting squatters may be more problematic in Mexico than one might anticipate if one is used to dealing in properties in the U.S. for instance. We thought of buying a retirement home in France when the market was good for buyers years before our proposed retirement but here we were living in the U.S. with a vacant house in France where evicting squatters from uninhabited properties can be, shall we say, an uncertain legal process. Much of Mexican law traditions mimic Franch law traditions. Do your careful reasearch and know your plans before making any commitments .

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Old 22nd August 2018, 08:37 PM
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I don't know anything about buying "distressed" houses and renovating them to sell, so I will not make any comments about that. But, my wife (Mexican) and I have built some houses here on land we purchased. Perhaps I can help you with some of the particulars.

You absolutely need to work with an architect, and an engineer; but the engineer will most likely be contracted by the architect. Again, I am speaking specifically about building on vacant land. Anything else and this may not apply.

The "big name" architectural companies will quote you a turnkey price per square meter. Basically, they are going to charge you "retail" for the construction meaning that, once you're done, you have paid the same as if you just came in off the street and bought an existing house. You won't make any money. You need to find an individual architect that you can work with to make sure you, the one putting up the money and taking the risk, not the architect, makes the profit.

We paid ours a flat fee, around $12,000 for the blue prints and "calculos" (the part done by the engineer), but then had to pay a little extra for some changes we wanted to make. All told, between the design, blue prints, calculations and permits; we spent about $20,000 MXN.

The architect is also the one that supervises construction; hires the workers, purchases materials, schedules other contractors like the electrician and plumber, etc. You need to get estimates up front. There are phases of construction, obra negra, obra gris and obra blanca. We asked our guy for an estimate of just the obra negra phase with the understanding if he completed this phase within the estimated time and cost, we would continue using him and his crew for the next phase.

Actually, since we are building a two story house, we got an estimate for just the first floor obra negra. But, the work was completed on time and under budget so we got the estimate for the next phase and continued.

Every Friday afternoon we get an invoice from the architect listing the work accomplished that week, the materials purchased and delivered, and showing the total cost to us for that week. We pay that money to the architect on Saturday, in cash, and he uses that to pay the workers. However, for major material purchases, we either pre-pay to a supplier or pay via wire transfer at the time of ordering.

The obra negra phase uses lots of materials; stone, gravel, sand, bricks, cement, mortar, rebar, etc. But, obra gris (when the final roof is on, obra negra ends and obra gris begins) is more labor than materials. This is the phase where the brick walls are covered and made ready to paint, the ceiling is made ready and the concrete portion of the floors goes in.

The fun part is obra blanca. This is when the walls are painted, the tile goes in, the fixtures are installed and all the carpentry happens. Once this phase is complete, the house is ready for final inspection and then occupancy.

Depending on where in Mexico you are building and how fancy you want to make the house, if you have a good architect that will work with you, you can complete construction for as little as $5,000 a square meter (this does NOT include the cost of the land). We will probably spend a little more than that on our current project because we are going to put a little more into the kitchen, the closet, the floors and the fixtures. But, when the "retail" price is $8,000 - $10,000 a meter, that still leaves room for some profit.

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Old 23rd August 2018, 11:41 PM
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no, thatt's not negativity, just the facts. i own property in Mexico already so i do know it can be complicated. Liquidity is not a problem either. in the area i am relocating to, Valladolid there are tons of bargain properties. land is dirt cheap, pun intended..jaja. And broken down old houses can be had super cheap too. However, the sales prices of houses are pretty good. so it's all the stuff in between i am interested in. My question more pertains to the cost of architects and building and if there can be a profitable or even break even outcome. sitting on a property is not a problem either.
My father is in the middle of a construction project for his retirement house in Jalisco. I have many familiy members who have sold / built homes recently.
  • Labor can be very cheap - but typically the skill level is low and work quality varies tremendously
  • Properly trained architects are expensive - I contacted various when we were designing my dads house. you get the best results by working with an architect
  • Typically, people will just work with a general contractor who can design simple houses and has a team of workers.
  • Materials for houses are still expensive
  • Land prices in Jalisco are crazy expensive, and anything that appears "dirt cheap" is likely dirt cheap for a reason

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Old 24th August 2018, 10:28 PM
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I always find these 'flipping' TV shows amusing. Nice to watch the dramatic process - but then comes time to sell - crickets chirping. If there is no market for one to turn a profit - forget about it!

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Old 24th August 2018, 11:01 PM
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And do not forget since it would not be your principle residence SAT will be looking for 30+% capitol gains taxes.
citlali likes this.

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