Transcription
In this video, the good thing about being a real estate investor is I get to hang out with other real estate guys, movers, and shakers in my area. And today, I get the chance to hang out with Kareem and Julius, aka the good guys. They are investors, builders, entrepreneurs, as well as developers. So, I tracked them down here, right here in Norfolk, Virginia, Hampton Roads area. They're doing a new construction, and I want them to share with you what's their secret sauce, how do they get in the game, where do they buy this, this piece of real estate here that we're going to, what they pay for, what they're going to sell it for, how much did they build it, and further, what can they do, do to give you to get started on your first possibly deal or new construction flip? Let's do it.
Okay, class is Chris Haskins with the realestateroundup.com. My mission and ministry is to raise your financial literacy through real estate investing and entrepreneurship. So today, I get to hang out with some true movers and shakers. I want to introduce you to you to introduce them to you, Julius and Kareem. What's going on, gentlemen? What's up? It is good to see y'all. Good to be here with you, brother. Absolutely. It's always good to meet progressive black men doing the thing, not posers. How many posers do I make? People that want to get in the game, no disrespect, but people that are seasoned, been been around, and are doing this business just like they say they're doing it. Not only they understand the ups and downs and how hard it is to maintain. Julius, what brings us here today? Why would you even want to do something in it? First, first, let's talk about the neighborhood. Tell me about your gut feeling about the neighborhood.
Sure. Well, we're in Chesapeake. We're actually on the border of Chesapeake and Norfolk, right off of Campostella. Give him a pan too. Uh, yeah. So, yeah, take a look. That's, uh, right there. What you're looking at right now is Campostella Boulevard. And just to the left, if you went over the bridge, you'd be deeper into Chesapeake. If you went to the right, we're heading towards Norfolk. Um, you know, as you look around, as you can see, the neighborhood consists of a lot of commercial development. Um, just right outside of this street where the neighborhood is on the other side is a large library and aqua fitness center. So, you again, you've got commercial just on the opposite end of the street. So, unfortunately, these, these neighbors of ours are sandwiched in between all this commercial property. You know, what does that mean? I love, I love to say, arrow up or arrow down? Which one is it? Well, Julius, in this particular situation, it's an arrow down, right? But the, uh, but the neighborhood is changing. Um, just a short while ago, we, we talked to, uh, some people that informed us that the landfill that's on the opposite side of the street is being taken out, and they're going to bring in some solar panels. Wow. Which is going to provide a more energy-efficient electrical grid for the neighborhood, which is great. Um, so these things are changing. You know, we look forward to, yeah, we look forward to all of these changes and, and advancements and, uh, you know, energy efficiency. And that's one of the things that we love to provide to our projects when we build new construction homes.
Okay. All right. Um, what, what, what brought you here? I mean, I'm looking at these properties. These are not, aren't necessarily from, from my background, uh, necessarily. Let's just say desirable. Somebody, somebody somewhere where I'm saying, I want to live here. This is where I want to be. What makes you come here? Uh, well, did you want to take that one up? Yeah, okay. Well, this one, this one, uh, this particular neighborhood, a lot of what we find is based off of value, right? So, we have to look at how much we're purchasing a property for before we can really assess if it's the right project for us to jump into. Okay. So, uh, you know, we were fortunate enough to be able to get this particular property that we're going to show you in a few minutes, okay, for a really good price. Got it. Um, and then also, it's essential to us as, uh, developers to go into neighborhoods like this where the values are low and build houses to start bringing those values up. You know, if we don't do it, then the houses in the neighborhood and the values stay the same. So, uh, so that was one of the driving factors in deciding on this particular piece of property.
So, let's start as running numbers. Your purchase price is what? So, we purchased this particular lot for $40,000. All right. So, with a lot of wizard of the house owners? Well, actually, there was a house on it. And if you just take a look at some of the neighboring houses, they're all one story, uh, yeah, all, yeah, cookie-cutter properties that, um, yeah. So, there was a house on this particular lot. Okay. So, $40 purchase price. Demo was how much? Uh, we paid about $8,000 for demolition. So, you have $48. Let's say $10. Well, you got closer closing costs to buy and demo. So, unit for $50. Sure. That's what a clean slate, nothing there. That's right. How about infrastructure, which no one likes to talk about? Water, sewer, and, uh, what's the gas? Oh, yeah, yeah. So, uh, this particular property doesn't have gas, but, uh, water, sewer tap fees that we have to pay to the city. Generally, in Chesapeake, they're a little bit higher than some of the other cities. So, here we went on the pan, I think it was $3,500, uh, for our water and sewer taps. We, as opposed in Norfolk, that would have probably been about $450 or $500. So, if you look down, y'all, you can see they got the ground marked here. You can always tell when some new construction is coming in. They marked them around. Absolutely. Yeah, we got it. It's not always right. Go ahead. I'm sorry. No, I'm not. It's a requirement. You know, we have to have it done. Uh, so make sure we don't hit any, you know, lines underneath the ground, gas lines, water lines, yeah, Verizon, all that stuff. So, yep. So, we get all the markets done before we start any, any digging at all. Got you.
All right. So, you're in this thing for $50 on the buy. Yeah. Tell me about why do you decide what product do you decide to put here when there's no, obviously, there's no comparisons on the street? So, generally, we have a product that we use, um, uh, repeatedly because one of the things that helps us with those numbers is knowing what we have. If we did a new house every time we built a house, we would never nail down our pricing, right? We would always be guessing at how much the house is going to cost to actually build, right? Yeah, exactly. Yeah, yeah. We get a feel for what people are generally looking for and what they like, you know? So, um, you narrowed it down to this particular model here. Narrow it down to a particular model that we can use successfully in any city, you know? So, we built this house, Norfolk, Portsmouth, Newport News, and, uh, you know, wow. Yeah. So, Kareem can speak to that as well. I know he, he's a numbers guy, right? So, okay, great. Okay. Yeah. So, he likes. Tell us about the numbers. What is it going to cost to build this thing?
Kareem, typically between something like this is going to run around $250,000, depending on all the other things. There's other things that factor in fixtures, always exterior, unforeseen things you might run into, or shed in the back you got to tear down. Gotcha. Run into some lines under here or anything that you might hit along the road? Yes, you got it. You always factor in those unforeseen things. That's obviously right. But, um, let's just say $250. So, you're in the $250. What's the square footage on this one, Kareem? Square footage of this house is 2,400 square feet. What is that including garage or excluding garage? That is excluding your garage. So, okay. So, we get 2,400 square feet. That's all heated, heated, heated living space. Plus, plus the garage is another, uh, 200 square feet. So, for my Roundup homies that think that you're building based on the square footage of living space, educate them real quick regarding the cost because you got to still pay for the garage too. Oh, yeah, absolutely. So, there used to be this huge misconception that, you know, the garage space doesn't count. I don't know where that came from. I mean, I, I guess, yeah, maybe maybe because, probably so. I mean, but generally, their idea was that, okay, well, it doesn't have, uh, plumbing in it, it doesn't have heat in it, so it shouldn't count. Well, that's not true because it has a whole bunch of other stuff. Yeah, you know, so, so it matters. You know, you have to count that and factor that in. So, 2,400 plus 200, that's 2,600. Exactly. So, we had 2,600 square feet. And then, um, again, based off of the model that you're building, you have to kind of price your, uh, your build according to that, you know? So, you could be anywhere from, and these are, these are honest numbers. I mean, you could be anywhere from $85 to $95 a square foot. That's right. Right. As opposed to five years ago, just give, I got to say, ask this. Square footage cost to build in 2018 versus 2023? Oh, man. Huge difference, isn't it? Weird how it changed so quick. Yeah, yeah. I mean, absolutely. It, you know, one of the big factors also was when COVID hit, right? So, when COVID happened, uh, you know, prices of lumber shot through the roof. All these numbers went up. And the suppliers saw that the demand didn't, didn't stop. I mean, yeah, it still needed to produce these products. People were still buying them left and right. And so, um, after COVID, the numbers went back down slowly, slightly, but they kept them at a nice price point where they were still making more of a profit than they were before COVID, right? Okay. So, all these things playing the playing to, uh, you know, I mean, the price of copper goes up continuously, electrical, all the metals go up, all these plumbing materials have gone up, heating and AC equipment has gone up. It used to be 14 SEER equipment, now it's 15 SEER equipment, you know? So, these numbers don't stop going up. So, these are things that you have to pay attention to. And the reason why we like to kind of use the same model that we are used to.
[Music] Yeah, as they watch us numbers go a little bit higher because the price of homes did increase. That's everybody's watching and everybody just said, okay, so you guys are making more money. We need to make more money. Yeah. All right, guys, this is cool. Would you mind taking me inside and walking me around the property? And I'd like to know some details about this floor plan. Absolutely. Yeah, yeah. Let's take a look at it, man. Let's go check it out. So, good. We got a nice, uh, four-bedroom, two-and-a-half-bath home here in Chesapeake, Virginia. Um, the address is 728 Velines Avenue in Chesapeake. Uh, it's a, it's a really beautiful home. Like I said, we got 2,400 square feet of livable space, about 200 square feet for the garage. Um, how big is your garage door? Uh, this garage door is a 12-foot garage door. Okay. So, you got a nice easy access for all you people that can drive, right? You know, you'll be able to get in fairly easily. And, um, yeah, there's a little bit of construction going on, so I'm good with that. Everybody be careful. Uh, this is a work in progress, but it's something about the exterior. Why do you, what these colors? This is the scheme y'all came up with. You always use it. Tell me about the colors and why did you use siding? Okay. Well, um, we use vinyl siding primarily because of the price point, right? Uh, in some neighborhoods, you'll have to use, uh, you know, a more, uh, expensive product like Hardie Plank or, um, you know, what we do use what's called a Dutch lap. Um, a Dutch lap siding, so it gives the siding a little bit of dimension as opposed to like the old siding that was just street and it didn't, it wasn't, yeah, yeah, that's the old stuff right there. There you go. Yeah, see the difference? We got a nice product right here. And then, of course, up in the gables, we'll use what's called a board and batten. So, up there in those A's, you'll see a different type of siding, which is, uh, vertical siding. Yeah, which is really sexy stuff, man. That's right, man. It looks good. Yeah, that's what I got in my house. Yeah, it gives, gives the exterior a different look, so it's just not one thing all the way across the front. Um, yeah. Put my Roundup homies that don't, don't understand building materials. I want to make sure I, you guys are the experts. My stomach hurts whenever I see three-tab. Explain the difference in what builders are putting this stuff down. I see you're not doing it, but just kind of give them an overview, something for newbies. Roofing materials, right? On this particular house, we use what's called architectural shingles. These architectural shingles give the roof a whole different dimension as opposed to the older style shingles, which were three-tab shingles. And you'll be able to take a look across the street as you look at those roofs. And if you can zoom in a little bit there, you see how flat they are? They really don't have any dimension to them at all, right? Extremely worn out. Yeah. It takes just have a 75-year span, usually. I mean, it's just a whole different product versus what they used to use back in the days. So, all your builders out there, stop three-tabs on the house. It only costs, what is it, $4 more on a bag? How much more is it? You got it. It's not that much more. Yeah, exactly. It depends on how much everything you buy, but overall, it's worth it. Please, please get architectural. They do get away. Yeah, I'm seeing some stuff in the last 20 years. Kareem, they pull up those, um, right now. Oh, okay. Okay, man. I, yeah, yeah. Let's do this. It's a major difference. You know, so let's take a look inside. You all right? Coming up here, Taylor. We're gonna show you what we got going on here. Be careful. Watch your step up there now. Once we get done with the outside, well, as we come inside, you'll see we got a nice open floor plan. What is this here? This would be the living area. This would be a living room, great room. Um, you know, we, we obviously outfit every house with, uh, cable. We give them a nice huge open space, so you have a lot of different options as to what you can do with your furniture and how you want to lay the house out. So, this is for, this is kind of like TV, living room set. Yeah, couch, love seat. Absolutely. Yeah, watch the TV in here. Okay, cool. Yeah. Um, as you leave from the living area, you enter into the kitchen. And the kitchen, we like the way that this is set up because if you're in the kitchen, we'll have an island right here that'll allow you to be able to interact with all your guests, your family, as they're in the living room. Yeah, or if they're in the dining room, you can see you have a great vantage point here from your island, right? This is bar top, right? It'll be about, uh, eight-foot, nine-foot island. That's sweet. Big. Oh, yeah, absolutely. I got a 10-foot, so that's gonna be huge. Yeah, nice big island, pantry, kitchen. Yep. And it's the kitchen. The kitchen layout is as follows: your refrigerator will be here, you got some countertops and cabinets, your stove, which will have a microwave above it, and then, of course, a lazy Susan in the corner. As you come back around this way, your sink is right here by the window because, of course, you want to be looking out the window while you're washing dishes, right? So, you'll be standing here at your sink, and you got your dishwasher to the right. And then your whole island is just open space for you to be able to sit and enjoy and have sex, you know, have dinner and, and just, uh, have a great time with your family.
I'm walking on cement here, guys. Explain it to me. What's the difference between, oh, and oh? Well, why do you pick as opposed to doing a full crawl, a full slab? You're using what this is, and then you explain it to people that may not know, right? Well, uh, as you stated, this is on a slab. Um, we chose to do slabs for a couple of different reasons. One, for me, I like to be able to have a space where I don't have to worry about what's going on in the crawl space. Crawl spaces are notorious for moisture damage, termite damage, uh, you know, if you have a heating and AC system and your ductwork is in the crawl space, in five years, yeah, you're going to be replacing, you're going to be replacing that ductwork. Um, and it's just an area where, you know, a lot of rodents can get in and cause a lot of damage in your crawl space. So, we, we prefer to use slabs because the slab, you don't have any of those issues. But this is a raised slab though, as opposed to just doing them? Because your garage is still about two feet down. Sure. Well, sure. So, it has a raised slab. And, um, yeah, a cost, cost-effectiveness regarding raised slab versus a crawl. Cost-wise, it's almost about the same. It was a lot worse during COVID when the prices of lumber went up. Yeah, it was just more effective, more cost-effective to use the slab anyway. Um, but, you know, uh, we just kept with that same mindset and continued doing slabs. And I've become to understand that it's just more beneficial overall to use a slab than it is at crawl space. You know, way faster. Yeah.
What's this over here? So, this would be the dining area. Uh, if you got a really big dining area. Now, if you're like me, I don't use my dining room. The table is generally there for my papers and work and all that stuff. But we do offer a formal area for, uh, for dining, for those that, that actually use it for something, you know? So, I got to go out here from the kitchen. Am I getting a deck or porch? So, what are you putting out here? So, what we got going on out here is, um, I normally don't do wood decks unless the project calls for that type of thing. Here, what we'll do, because this is a spec home and we're building it to sell, um, you know, it's more cost-effective and faster for us to do a slab. So, we'll do a concrete slab. What we'll have when you exit out this door is brick steps that'll lead down to a 14 by 14 concrete pad. Three, you know, so people still have an outdoor space where they can sit down, enjoy, put the grills, and which is not required. You could just put steps to the ground, right? Exactly. You're not, absolutely. You know, beholden to putting a deck or a porch outside, you know, you can. I just have to say, what's this here? Half bath here. You got your toilet and, uh, and just so you know, in these houses, we do provide granite. So, okay. You'll have granite countertops throughout the entire house in the bathrooms as well. So, this half bath will have a nice little cool cabinet with granite countertop.
All right, here we go. Let's go upstairs, check out the second floor, show you what we're working with. These are temporary stairs. Yeah. So, we'll start over here to the left and one of the, uh, smaller bedrooms. Spacious here, man. Oh, yeah. Bump nothing when I'm bringing my furniture up. Exactly. A nice big open hallway, so that, like you said, you know, get your furniture up easily. Uh, this is one of the smaller bedrooms, but obviously, as you can see, it's probably not that small, is it? 14 feet. Yeah. This is one of this, is one of the kids' bedrooms. Let's see. Yeah, yeah, that's right. Yeah, that's big. I only, I only got 12 foot in my house. Over here, we got walk-in closets. And generally, in our walk-in closets, uh, just to give them a little added flair, what we do is install, um, automatic switches. So, as soon as you walk in, the lights come on. You know, we'll do that in the walk-in closets and the bathrooms. I like that. Yeah, it just gives them a nice little cool feature that they won't find in most places. Don't be stealing my ideas either. What's this here? Uh, right here, you got your laundry room, which, um, you know, I know Kareem agrees, you know, the, the laundry rooms are better on the second floor. Yeah. So, you don't have to be lugging your clothes up and down the stairs and all that stuff. And they got a nice big space to work in and, uh, you know, put some shelves over here on the side to stock products and things like that. You don't need to see. That's the bedroom's a bedroom. Okay. Okay. Okay. What do we got here? Uh, right here, you got your hall bath, which offers two vanities. So, you don't necessarily have to wait for somebody else to finish brushing your teeth. You can go over to the other one right here. So, you got, I love it. Uh, two sinks here. And then, of course, as you walk through this threshold, you have your toilet here and your tub-shower combination right here. Uh, we usually fill it up with water hoses from the neighbor. So, we, because we have to have pressure on the lines to get inspections done. So, yeah, we'll, uh, generally get water from one of the neighbors. I usually have to pay them a couple bucks. They're fine with it. Yeah. Before we leave this bathroom, guys, get a few dollars. Yeah. What is the, um, on the tub surround? Using the one-piece versus tile, where did y'all's mindset on that? Good question. And what is a one-piece versus tile? So, the people that don't know what it is, let's take a look at. I'll show you this. This, uh, so, a lot of times, some builders will take in this particular bathroom, which is the hall bathroom, and just by the base, it doesn't come with the walls on it, right? You'll just have the base. And what they'll do is tile the walls from the top of the base all the way up. It's an added cost that's not necessary. That's one of the things that we've learned over the years of doing this is that there are certain places where you have to try to cut costs, right? At the end of the day, you're in this to make a profit. So, so you don't want to expend too much financing on things that aren't really necessary. This one-piece tub, which includes the walls as well as the base, is just a, a more cost-effective way of doing this, you know? So, uh, okay. So, yeah, I definitely recommend in the hall bathroom where the kids are at, generally, and they're going to run through this thing like crazy anyway. They could care less, you know? So, yeah, exactly. I think they might be happy to have a shower. Oh, yeah. Yeah, absolutely. Should be happy to have a shower. Another bedroom here. Then you got linen closet in the hallway. Let's go into the master bedroom. Oh, linen closet. Yeah, don't forget that. You've got to have a linen closet. Yeah, yeah. You got to have a linen closet, which is outside there. Now, we're entering the master bedroom. This master bedroom features a vaulted ceiling, as you can see. It gives the room more height and makes you feel like you're in a really big space, which, in this case, is a big space anyway. It's a really nice size. We just start with this, or there's something that adapted over time? No, so we generally, we started with this. Uh, we do different designs of the ceilings. Absolutely. We'll do tray ceilings, as you'll see in this one. And if you want to point the camera up, we actually use a truss system in this house. Uh, we generally stick-build it. Um, but in this particular case, the person that we're building the house for preferred to use trusses. So, that's why there's trusses in this house. Me, I don't necessarily like trusses because it doesn't give you enough storage space in the attic, you know? You're limited as to how you can actually utilize your attic for storage, right? Most of us, I want to put our Christmas trees up there or old clothes or whatever it may be, and it makes it a little harder to do that when you have trusses like this. Wow. I didn't think of that. How about speed though, regarding getting it done faster? Is trust faster? Most guys would rather do the trust versus the stick. Last, less work. Yeah, you don't save that much time, really. Oh, okay. Yeah, at the end of the day, it's not really that much time, you know? So, um, yeah, I've done it more than me. Yeah. Oh, yeah. This is, it feels good, man. Yeah, it looks really good. This, this bedroom's features, obviously, uh, you've got, uh, your cable again here, so you already got set up. And that's his closet. I'm sure, I'm sure he'll get half of that closet. Okay, cool. And then, of course, you have the walk-in closet here. He'll get half. You're right. Yeah, he'll get a spare room closet. You got a nice, nice size walk-in closet there. And then, uh, which will be hers. And then he'll get half of the other one. And then you got the, your master bathroom here, ensuite. And of course, in here, we feature a linen closet for the lady and the gentleman of the house. Lady of the house, right? Nothing. And then, of course, in here, we have, um, a stand-up shower. Uh, we don't generally put a bathtub in the master bathroom because most people don't use them. I don't, you know, um, I have a huge garden tub in my house and nobody's ever sat in it. I mean, yeah, never. So, so we don't generally put tubs in the master bedroom unless we have a buyer who wants to purchase the house prior to us finishing it. Yeah, and then we'll make arrangements with them and, you know, cool, give them the cost difference and they'll. What's that big gap right there over the shower? Shower surround. So, here, this is where we're going to build in a niche. So, you'll be able to put your soap and your shampoos and everything in here. It usually comes with a nice designer tile, which will be, uh, set aside from all the other towels going to be in here. So, it's basically like a feature wall in the shower. Yep. So, that's going to be a nice area. And we can design these differently. We've done them different in different houses just to give it a little bit of flair and lets people see something different than what they're going to see in the other 10 houses that they're going to look at. Yeah, yeah, right. Uh, and of course, when we can, we like to feature a separate toilet area for the master bathroom. You know, that way, you know, you don't have to be worried about what's going on in there while you're out here brushing your teeth, right? There you go. So, yeah, so we were able to do that here successfully and that came out good. I love it. So, great job.
Anybody that's new, what is the one thing? Just give us one thing because we could talk all day, but new people that want to go get into flipping, new constructions, what would you give them? My thing would be, get with the right people. You know, it's more important when you're learning something to get with people. Hold up with. Get with people that are going to actually tell you good information, that are going to give you the words and the wisdom of like what you said in the beginning, the good, the bad, the great, the negative, the positive. They'll give you a little bit pieces of the what you're really going to need to actually be successful. Yeah, that's the biggest and most important thing. So, basically, the environment that you're, that you're in is going to make or break. Yeah. So, I say, fortunately and unfortunately for us, in the same breath, uh, we've had the income with this way. We've had that unfortunate opportunity to be screwed over in this business. I mean, you know, I mean, I can't put it in any more plainly than that, you know? Yeah. Um, yeah, adversity. Yeah, yeah. We went through a lot of growing pains, and unfortunately, it cost us a lot of time and money, but we learned some really valuable lessons in that, right? And, uh, and this is one of the reasons why the good guys was formed. You know, we want to push forward the things that we've learned. And all those pitfalls that we fell into, we can tell you where those are, right? We know exactly where they are. We know how to avoid them. Um, you know, and, uh, you know, we, we didn't get that. We didn't have people around at the time that were willing to actually share that information with us. In fact, it was the opposite at that time. It's almost like people did not want to share this information, man. Just really, we're out for themselves. From other investors to inspectors to city employees. Yeah. Okay. So, the good guys, it worked out. It worked out in our advantage. Now, we've got a, everybody that we deal with is above board and all, you know, understand what we expect. We know what they expect. Uh, so it works, you know, we have, we, it moves our clockwork. I mean, this, this house, in particular, just to give you an example, I mean, we started this house three weeks ago. Totally count. We already roughed it from three weeks with nothing on the ground. I already drive to standing inside over here, you know? Um, you don't get to do that your first time out of the game, right? But, you know, if you are able to associate yourself with with guys like us, we're going to give you the real deal, and you'll be able to do it the way that we do it faster. You know, we want to pass it down so that we're all being a success in this business. You know, we're not greedy guys. I mean, we've, you know, we've attained a lot doing what we're doing. Um, you know, we're happy with what we're doing. I love waking up every day doing this job. This is, I mean, you know, it's exciting to me. So, uh, you know, we wanted to be excited for everybody, man. You know what I'm saying? Just get with the right people, please.
All right, so listen, you're going to see a lot, a lot more from the good guys on the channel. So, make sure you're subscribed, like the content, and share with somebody else that's thinking about not only investing in real estate but doing new construction and development. It ain't no joke. It ain't for everybody, man. But if you get the right guys like them, you can plug in and kind of ride along with them and say, hey, hey, what do you think about this? What do you think about that? This, I did this, I saw this came up, this happened, I got these drawings. So much faster. We also do rehabs too, renovations too. Yes. All right. See you later, guys. Thanks, guys.