When to Sell vs. When to Rent: How Smart Real Estate Investors Decide

There's time you build new construction for sale, and there's time you build to actually rent out. Now, I'm gonna break down everything today that if you're gonna build for sale, you better make sure you know exactly how big the house should be, how many square foot, how many bedroom, how many bath, in the right location, versus when you build for rent. Like I said, we always talk about all the time. We're gonna change the game up today because we're gonna talk about building for sale. Now, if you ever gonna build for sale a home this big, 45 square foot, $3 million at least, you're gonna have to be putting down at least 50, 60%, just to break even on the mortgage. And that strategy is gonna get you basically in trouble. So you need to know, when do I build for sale? When do I build for rent? We're gonna break the whole thing down for you guys today. Ready? Let's go. We are at a brand new construction site called Casiopea. This is a development, five luxury new construction, over $3 million for these property. And this is built by my partner, Chris Waltz, from CMAQ, for one of his clients. And my company, that's when real estate, we actually are marketing these properties for this client. So today, if you are an investor, Chris and I, we're gonna actually walk you through. If you're gonna build for sale, you need to know what's going on. And you're gonna build for rent, you need to know what's going on so you don't do the wrong strategy. You ready to do this? Let's do it. Let's go. Let's start off with the obvious. In real estate, everything is location, location, location. Remember, I always talk about this, four type of location, okay? A, B, C, D. A is the affluent, high-end property area. And then D is where the tough rental property is, right? Low income. And B is C in the middle. You ever wanna buy a rental, you wanna buy them in the Bs and the C, because the cash flow better. Today, we are in an A area. This is called Lake Sammamish, Washington. This is a high income earner kind of a area. This is basically not a area for rental. And this area is a top school district. Chris, what makes Sammamish a idea to build for sale versus the stuff we build in Seattle that's for rent? Yeah, this is, like you said, this is an A category real estate location. Very desirable. That's what you look for when you go for sale. You wanna get the high income earners. Sammamish is just next to Redmond, which is where Microsoft is. We got lots of high earning tech jobs there. We got lots of room out here, big lots. We got evergreen trees, it feels spacious. People that wanna pay for a nice estate size home want big lots, and they wanna feel like they're not crammed in. Yeah, and you guys, again, remember I was talking about, if you're ever gonna buy rental, you wanna stay in the Bs and the Cs. It's okay to buy in the A, especially if you're gonna build new construction. Just know, if you're gonna build in the A, you're gonna build for sale, and make sure that you know what you're doing in the A neighborhood. Like these houses, these are over 4,500 square foot homes. Yeah. Right? And these are like starting at $3 million for these property. You just gotta know this in advance when you are actually building real estate for new construction, especially you better know your A, B, C neighborhood. Now let's move on to timeline, permitting, cost. You know, when you are building in the A area, it's a lot different, and a lot different in timing and cost versus what we build in the Bs and the Cs in the in-city. This is what we call the suburb area. Let's talk about all that. Yeah. The in-city stuff that we do, the lots are already there and created. So it's real simple. You go in and you really start right off with a building permit. Out here where you've got the suburbs, we've got a big piece of land. We're gonna take it and we're gonna subdivide it and do a short plat. So when you do a short plat, we've got to bring in all the infrastructure, right? We've got to create a big stormwater concrete vault that sits below the ground for all the stormwater to go into. We've got things like parts and play areas to go in. We've got electrical that we have to bring into the project, and we've got all these curbs, gutters, sidewalks, and the storm system that has to be installed. And the road coming in here, right? Part of building all that stuff, of course, is getting it designed and permitting. That design and permitting and approval process alone can take you about two and a half years and then you can start talking about building the houses. Yeah, and listen, just in the retention, that's over $200,000. When you have that kind of expenses, right? You can't build to rent because you have so much expenses that go along just bringing in the development, the road, all this. This is why you got to understand this because when the owner actually did all this, they know that they built for sale because if you're gonna build for rent, you're already gonna be upside down and all this is just extra work you don't need to do. This is why these areas are not really good to build for rent. Mainly just to make, you know, build for sale so you can make a profit, right? Yeah, the dollars just don't make sense. You can't cash flow if you're gonna try and rent these things Let's start with this, Chris, kitchen. Let's start with, you know, the quartz, 3CM, the expensive cabinet for our Bodian. Shout out to our Bodian cabinets, okay? Let's talk about that. Yeah, so we've got a Bodian cabinet package. We did a double stack on the upper so it goes all the way up to the 10-foot ceiling. We've got full backsplash that goes all the way up to the 10-foot ceiling behind the hood. Let's walk over here and I'll show you, Chris, right? Yep. The whole tire back. All the way up to 10 feet. We've got high-end Wolf appliances. The appliance package in this house is about $40,000. We've got that throughout. Built-in refrigerator, matching dishwasher. We even got the drawer microwave in this. So you gotta know what to put in based on your market. These are things that buyers out here in this price point, that's what they're expecting. Yeah, and I wanna point out this, okay? Again, these are very expensive appliances. You guys see when we're talking about the type of appliance that we use for rental, right? They're a lot different because we're doing it for rental. Now, let me show you the obvious. You know, most of the rental property we put, we put LVP floor. Chris, tell them what type of floor this is, bro, because this is definitely an LVP. Yeah, no, this is a real wood floor here. This is an engineered product, but it's got a real wood surface on it. So it feels nice. It's got a great look to it. It's large plank. Again, this is what you need to do out here in this neighborhood. Yeah, now follow us. Let me show you this, okay? A lot of our rental, we put fireplace in, but we don't go to this extreme. Chris, tell them what that whole thing right there is all about. Yeah, this is, well, obviously too, the volume in the space. We have a 20 foot ceiling in here. 20. So this is a massive open volume. So to accent the fireplace, we've taken that all the way up to the high windows and we've tiled the whole entire thing. We'd never do that in a rental project. Never. And let's talk about the railings. Yeah. And let's talk about steps. Yeah. Right? We've got nice matching wood finished end treads here. And then we've got a custom detail on our railing. And this is not just your standard railing. This is a heavy duty one with a custom cap integrated that returns all the way to the floor. This is a custom detail. You don't just get this off the rack. You don't. Now, lighting. Yeah. Right? This is a big deal, okay? When you are going to rent, you don't pick this type of expensive lighting. Talk about the chandelier, the lighting, Chris, and all this. Yeah, we've got. Very expensive. We've got very modern high-end fixtures. We've got one hanging here. We've got a couple down here in the kitchen, dining room. Throughout the house, we're spending on order of about six times what we would normally spend on a house that we're doing for rental. I'm gonna show you this. This is small, but it's important. If you build it for sale, look at this. Eight feet doors. This makes the house even look a lot more taller. Yeah. Even if you didn't have a 20 feet ceiling, by doing doors at eight feet, it's a big deal. Now we don't go to this extreme when we're building for rent. Right. Right? Now we've got 10 foot ceilings here and then nine foot upstairs. Now some builders are dropping the doors down upstairs. Not us. In this one, we kept the eight foot door throughout. So it even feels good upstairs. Now I'm gonna show you this. Even though we don't spend this kind of money on big, big doors, you know, for rental, but we also pick one panel door for all rental. So it still looks like a nice modern house, one panel, but we don't go to the extreme doing eight feet door in rental because that's just extra money. But we will go the extra expense because this is a luxury house for sale. Right. Okay. Now lastly, I'm gonna show you this. Chris, talk about the island and the extra detail you go through this because this is for sale. Yeah. So we wanted to create something that gave some mass to this island. So normally your 3CM is about an inch and an eighth thick. Right? So we would have been just a thin edge across here. We had our fabricator between the two of us came up with an idea to miter this around and double it up and make it thicker. So we got this nice heavy detail and it returns down to the floor. So you go to the extra length in some of these areas when you're doing high-end homes to make them feel unique, special, and custom. That's right. And typically when we do a rental, we still do a quartz, you guys, but they're typically about 2CM. Yep. 2CM on quartz. Yep. But house for sale, you gotta take it up. But so again, you see a lot of the fittings we do in all rental, we still got the quartz, we got the one panel door, we do floor that look like how it'll flow with the LVP, and we do the wire plank. But, you know, we do all that because it's made for rental. But again, when we turn this around, you're selling a $3.2 million house, like this house, for example, 4,300 square feet home, you gotta change it to finishing because we gotta match it for what's out there for sale. Talk about this, because this is cool. You did this and then also this. Yes. So this is another custom feature we did. So we're calling it the cloud. Yeah. So we created it. We got these panels that match the cabinets from Abodeon, and we created this cool looking cloud that mimics the size and shape of the island. So I think it highlights it and really gives a nice custom detail. Then over here in the dining room, we came and we dropped a soffit around the perimeter, and then we created a cove to put a rope light in. So we got that nice little accent lighting up inside the soffit. These are the little details that you have to do if you're selling a $3 million plus house. However, if you are doing this for rental, you don't need all this stuff. This is where you have to know what to put in for finishing, but you also gotta know if you're gonna buy a property, is it gonna be the ABC neighborhood? Are you gonna do luxury? Are you gonna do rental? What are you gonna do? These are all the little detail. So this is why it's important. You gotta understand your real estate market and the strategy used. So you see in this project, Cassiopeia, this is a great example of a project that was actually designed and thought out to be built and sale down to location, product, and timeline. Speak upon that. This is a final thought for these folks to know. Yeah, so location. That's the cliche in real estate, right? Make sure if you wanna get the high-end dollars that you're in an A luxury market, and that's what this is. This is in an A location. It's very desired. Income levels are great. Comps are great. That's where you wanna be. And a product, right? Finishing. I mean, look at this. You know what I mean? Know your product. We got this accent wall tile going all the way down the one wall and returning. I mean, you would never do this in a rental property, but these are things that make you stand out in a high-end luxury. You might need to do it. So you've gotta factor this into your costs and make sure that the neighborhood and every comp supports it. That's right. And timeline, right? This is a big thing. You gotta know if you're gonna build for sale, there's a different timeline than build for rent. I mean, again, right? Give me the quick update on timeline again. Yeah, timelines are big in these areas. The short plat process, if you've gotta develop the land in Sammamish, bam, two and a half years, maybe three. It's hard to get those through as a short plat. So know what you're getting into. Once the plat's done, you still gotta build the houses and those could take you another year. So you're into these things from three and a half, maybe even four years before you can sell a product. That's right. So the bottom line, everybody, is you need to know your exit strategy. Before you go in, you need to know the strategy. Are you building for sale or are you building for rent? And you need to know all the different things before you actually buy the property. This is why we made this video so y'all can see. Now, if you're going in and you're gonna build for sale, great, go ahead, build it for sale, because not every product is made to build for rent. Go build your product, build it for sale, go make your active income, make your profit. But if you're gonna build for rent and you want that passive income, just know it in advance before you buy the property. Inside Springboard to Wall, my mentorship program, we teach people the one question, that should we build for sale or should we build to rent? So inside the program, we teach people basically, you know, what type of neighborhood you should be buying in if you're gonna build for sale or for rent, what type of design you should do, write the timeline, and most importantly, what is the exit strategy you gotta understand. All this, you gotta know in advance before you can buy a piece of property. So if you've been thinking about, you know, investing in real estate and you wanna build new construction or build townhouses or build ADUs, for example, you need to know all this stuff. This is what we teach inside Springboard to Wall. If you're interested, click the link in the description and we'll be happy to help you guys start investing in real estate and start doing new construction and ADUs in your town. If you are a buyer and you wanna see any of these beautiful property, please hit me up. We'll be happy to show you the property. If you are an investor and you wanna learn how to actually build new construction, either for sale or to keep as investment property, let me know. I'm happy to schedule a time where we can actually work through your, you know, where you're at and see what's the best strategy for you. Okay? Now, if you liked the video, give me a thumbs up. If you haven't subscribed to the channel, hit that subscribe button for us, okay? We wanna hit a million subscribers this year and all the description, right, of Springboard Mentorship and my partner, Chris Wall, is in the description. Hit us up if you have any questions. All right, until then, peace.