Spec Home Investment
In 2011, we felt the housing market was starting to turn after 3 years in the doldrums and raised money from private investors to buy land and houses in Old Greenwich and Riverside. Over the next several years we either renovated or built 8 homes which were sold with varying degrees of success. The key risks we identified at the time were interest rates and weather but not even we could have predicted Hurricane Sandy and what was described as a 100-year storm. While our homes suffered little physical damage many were down by the water and buyers were spooked and started looking en masse for higher ground.
Our houses ended up selling for between $1.5 million and $5.45 million and over that period we not only adapted to new building regs but were instrumental in helping shape some of them. One of the worst after-effects from Sandy was the backlog created at Greenwich Planning and Zoning with one project taking nearly 12 months before approval was granted.
In Bethel, Ct. we currently have 3 houses under construction. By doing 3 at the same time we can expedite the building process and save money. Land there is cheap (under $100,000 per acre) and proximity to Danbury means an increasing number of families are relocating to the area. The end product will be approximately 2500 square feet with 4 beds and we aim to build them inside 4 months from start to finish.
The net result of the last 4 years is that we have now resolved to construct spec homes in areas where planning permission is an 8-week process, where property taxes are low, labor in good supply and the price point is under $600,000. We will still look at houses in Lower Fairfield on a case by case basis but they will be one-offs.
Finance & Investing
At present, we are using a mix of our own capital and bank financing but are interested in talking to investors as we look to expand in the region.