Week 19: The Financials Are In!

by Parm Gill

Final Post-Construction Report: Joshua Tree

Project Overview: This report summarizes the completion of a new single-family residence constructed by Tofino in Joshua Tree, California. The project was funded entirely with cash, spanned five months, and was executed with the sole purpose of selling the completed property. The property is located at 6689 Torres Avenue in the Lower Friendly Hills area of Joshua Tree.  

Financial Summary:

  • Total Project Cost (All Cash): $552,637
  • Final Listing Price: $799,000
  • Approximate Return on Investment over 5 months: 44.58%
  • Estimated Annualized Internal Rate of Return (IRR): 107.7%

Cost Breakdown:

The total project cost of $552,637 includes the following categories:

  1. Land & Utilities: $126,617 (includes preliminary and construction drawings)
  2. Design and Permitting: $1,200 (Heat loss calculations, duct design, energy efficiency design summary, and P.Eng certification)
  3. Foundation and Site work: $62,720 (insulated slab-on-grade with polished finish, frost-protected foundation walls and footings, steel trowel finish)
  4. Swimming Pool: $57,500 (Pentair Easy Touch Control Systems, Pump and Filtration System)
  5. Exterior Wall Assembly: $20,000 (including strapping, water and air barriers, 2x6 external and 2x4 internal framing, and OSB sheathing with vapor barrier)
  6. Windows & Doors: $11,300 (PVC slider windows with double-glazed glass and brushed stainless steel hardware)
  7. Other: Includes interior partitions, deep eave framing, gaskets & tapes, and guaranteed air changes per hour (ACH) of 0.6 or lower.
  8. Roof Assembly: $28,000 (plywood sheathing with ice & water shield, 2x4 roof frame for steel roofing and overhangs, water and air barriers, and parallel chord roof trusses with OSB sheathing and vapor barrier)
  9. Fascia & Soffit: $5,000 (aluminum)
  10. Exterior Siding & Trim: $16,700 (stucco, engineered wood siding, and concrete block accent)
  11. Insulation: $6,000 (R-21 walls, R-38 roof)
  12. Plumbing: $28,100 (ABS, Pex pipe & fittings, 2 exterior hose taps, rough & finish plumbing, and fixtures)
  13. Electrical: $13,850 (200 amp service, wiring to plugs, switches & mechanicals, 2 exterior plugs, telephone/data/cable wiring, recessed LED lighting, exterior ceiling and wall sconces, and Lutron Caseta WiFi dimmers in key areas)
  14. HVAC: $6,000 (heating, air-conditioning, and Energy Recovery Ventilation (ERV))
  15. Drywall and Finishing: $21,000 (drywall and painting for all walls and ceilings)
  16. Millwork: $53,400 (closet casework and hardware, baseboards and window/door trims)
  17. Bathroom: $20,750 (tiles, fixtures, and toiletries)
  18. Landscaping: $23,500
  19. Final Clean & Punch list: $6,000
  20. Management Fees: $45,000

Real Estate Investment Statistics:

  • Gross Profit Margin: Calculated as (Sale Price - Total Project Cost) / Sale Price. In this case, ($799,000 - $552,637) / $799,000 = approximately 30.83%.
  • Internal Rate of Return (IRR): Considering the all-cash investment of $552,637 and a return of $799,000 after 5 months, the estimated annualized Internal Rate of Return (IRR) is approximately 107.7%. This significant IRR underscores the profitability of the project over its short duration.

Property Features:
The newly constructed home at 6689 Torres Avenue offers the following features:   

  • Type: Single Family Residence    
  • Size: Approximately 1,100 sq ft of living space on a large 18,500 sq ft lot.
  • Layout: Features 2 bedrooms and 2 bathrooms with a modern open floorplan including a great room and dining area.   
  • Kitchen: Boasts an island with quartz countertops and is equipped with a dishwasher, electric oven, and microwave oven.   
  • Interior: Includes high ceilings (9 ft+), recessed lighting, and vaulted ceilings.   
  • Flooring: Concrete throughout.   
  • Heating & Cooling: Equipped with Mitsubishi air conditioning and a propane gas heating system with zoned control.   
  • Laundry: Conveniently located in the kitchen.   
  • Outdoor Space: Features a private in-ground pool, a carport with 2 spaces, a driveway, and a yard. The lot is level with paved street access and underground utilities.   
  • View: Offers desert and mountain views.  
  • Additional Features: Includes a fireplace and sliding doors. The property is suitable for short-term rentals.  

Construction Details:

  • The foundation is an insulated slab-on-grade.
  • Exterior walls are constructed with 2x6 studs.
  • The roof has a modern design with varying slopes.
  • Exterior finishes include stucco and Goodfellow engineered wood siding.
  • The plans indicate compliance with the 2019 California Building Code and relevant local ordinances.
  • Structural engineering details ensure the building's integrity.
  • A Energy Recovery Ventilation (ERV) unit is included for energy efficiency.
  • Energy efficiency is further enhanced by R-21 wall and R-38 roof insulation, as well as double-pane windows. 

This final post-construction report confirms the successful and highly profitable completion of Tofino's test home in Joshua Tree. The project, executed with an all-cash investment and a clear build-to-sell strategy, achieved a substantial return within a five-month timeframe, evidenced by the approximate 44.58% ROI and an estimated annualized IRR of 107.7%. The updated financial figures, combined with the comprehensive property details from the MLS listing, further highlight the success of this venture and Tofino's capability in developing desirable real estate assets.

 

 

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