Anyone really interested in construction??
Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
Anyone really interested in construction??
Most Popular Reply
Contractor · Denver, CO · Member since 2009 · 399 posts · 166 votes
14yI think this thread has done a great job outlining the basic steps needed to build a house. It has also shown great examples of the potential profits available in spec home building. I would caution anyone who is considering building their first spec home to do your homework. Unless you are a GC, you probably don't want to start two new businesses at the same time. One business being spec home building and the other being General Contracting.
Here is a more detailed list of construction items you will have to consider when building a new home. I believe somewhere in this thread, absorption rate was mentioned and that could be the most important statistic to know. Just like a flip, you need to have multiple exit strategies for a spec home.
This list was poached from contractortalk.com
House/with attached Garage
General Conditions
Finalize plans and develop estimate with owner, architect
Sign contract and notice to proceed
Apply for Permits
Secure foundation permit
Secure framing permit
Secure electrical permit
Secure plumbing permit
Secure HVAC permit
Secure miscellaneous permits
Site Work
Clear and grub lot
Excavator estimated houly
Skid steer estimated hourly
Trucking estimated hourly
Topsoil stripping
Skid steer estimated hourly
Trucking estimated hourly
Pavement and sidewalk removal
Skid steer estimated hourly
Trucking estimated hourly
Rough grading
Skid steer estimated hourly
Relocation of existing natural drainage
Excavator estimated houly
Skid steer estimated hourly
Removal of unsuitable soil
Skid steer estimated hourly
Trucking estimated hourly
Access roads
Skid steer estimated hourly
Trucking estimated hourly
Detours
Protection of existing structures and utilities
Environmental considerations
Install temporary power service
Install underground utilities
Foundation
Locate building
Survey
Install batter boards
Excavate for foundations
Excavator estimated houly
Drilling for garage piles
Skid steer estimated hourly
Trucking estimated hourly
Forming
Footings
Total lineal feet of footing
Total width of footing
Total thickness of footings
Total cubic meters of footings
Foundations walls
Total lineal feet of walls
Total width of walls
Total height of walls
Total cubic meters of walls
Grade beams
Total lineal feet of beam
Total width of beam
Total height of beam
Total number of 12"x12' concrete pile
Total cubic meters of beams and piles
Cure basement walls for 7 days
Strip basement wall forms
Waterproof/insulate basement walls
Perform foundation inspection
Backfill foundation
Skid steer estimated hourly
Framing house and attached garge
Install 1st floor joists
Mud sill achor bolts
Sill gasket
2x6 Treated mud sill
2x10 Spruce 4 ply beam
3" Adjustable steel telepost
2x10 Spruce joisting
2x10 Spruce rim joists
2x2 bridging
Single joist hangers/nails
Double joist hangers/nails
3 1/4" coated nails
Lay 1st floor decking
3/4" T&G Fir sheating
1 1/2" flooring screws
Sub-floor adhesive
Frame 1st floor walls
Exterior walls
Top, bottom and cap plates 2x6 spruce
2x6 spruce studs 92 5/8"
3/8" spruce sheathing
2x10 spruce 2 ply header with 2x6 backer
2x6 garge door rough frame and Brick moulding
3 1/4" coated nails
1 1/2" sheathing staple
House wrap (Tyvek) and tape
3/8" house wrap staples
Interior walls
Top, bottom and cap plates 2x4 spruce
2x4 spruce studs 92 5/8"
2x4 spruce single plate door header
Plumbing wall
Top, bottom and cap plates 2x6 spruce
2x6 spruce studs 92 5/8"
3 1/4" coated nails
Cap plate and exterior wall backing poly flashing
2x10 Spruce 4 ply beam
2x6 drywall backing
Install 2nd floor joists
2x10 Spruce joisting
2x10 Spruce rim joists
2x2 bridging
Single joist hangers/nails
Double joist hangers/nails
3 1/4" coated nails
Lay 2nd floor decking
3/4" T&G Fir sheating
1 1/2" flooring screws
Sub-floor adhesive
Frame 2nd floor walls
Exterior walls
Top, bottom and cap plates 2x6 spruce
2x6 spruce studs 92 5/8"
3/8" spruce sheathing
2x10 spruce 2 ply header with 2x6 backer
3 1/4" coated nails
1 1/2" sheathing staple
House wrap (Tyvek) and tape
3/8" house wrap staples
Interior walls
Top, bottom and cap plates 2x4 spruce
2x4 spruce studs 92 5/8"
2x4 spruce single plate door header
Plumbing wall
Top, bottom and cap plates 2x6 spruce
2x6 spruce studs 92 5/8"
3 1/4" coated nails
Cap plate and exterior wall backing poly flashing
2x10 Spruce 4 ply beam
2x6 drywall backing
Interior stairs and landings
Complete roof framing
Manufactured Roof trusses and gables 24" o.c.
2x6 gable ladders and fascia
2x6 fasica
Cardboard insulation baffels
2x4 truss bracing and strapping
2x4 ridge blocking
1/2 roof sheathing
1/2 sheathing clips
3 1/4" coated nails
2" sheathing staples
3/8" insulation baffle staples
Conduct framing inspection
Dry In
Shingles
210 Asphalt shingles
Ice and water shield
Asphalt ridged cap
1 1/4" shingle nails
Aluminum gable flashing
Roof vents
1st floor exterior doors
Front door 36/80 6 panel with side lite
Weiser brush nickel passage and deadbolt
Back door 36/80 6 Panel
Weiser brush nickel passage and deadbolt
Garage man door to house 36/80 6 panel with closer
Weiser brush nickel passage and deadbolt
Garage doors 9x7 Barcol inusulated with Genie opener
1st floor windows
2nd floor windows
Exterior Finishes
Eaves
Aluminum vented soffit (white)
Aluminum fascia
5" Gutter and down spouts
Stucco
Scaffolding
1 1/2" styrofoam insulation
Stucco base coat
Stucco finish coat
Parging
Stone work
Shingle gables
Exterior Decks and Stairs
Utility Rough-Ins and Complete Concrete
Rough-in plumbing
Conduct rough-in plumbing inspection
Place concrete for basement floor
Rough-in electrical
Conduct rough-in electrical inspection
Rough-in HVAC
Conduct rough-in HVAC inspection
Rough-in communication - phone, cable, computer, alarm
Interior Finishes
Insulation
Wall insulation - 1st floor
R20 fiberglass batt 6ml vapor barrier
Wall insulation - 2nd floor
R20 fiberglass batt 6ml vapor barrier
Ceiling insulation - 2nd floor
R40 Blown in cellulose 6ml vapor barrier
Conduct insulation inspection
3/8" vapor barrier Staples
Tuck tape
Acostical chalking
Drywall
Install drywall - 1st floor walls
Install drywall - 1st floor overhead
Install drywall 2nd floor walls
Install drywall 2nd floor overhead
Tape and float 1st floor drywall
Tape and float 2nd floor drywall
Paint
Texture all except entry and kitchen - 1st floor
Paint all except entry and kitchen - 1st floor
Hang wallpaper entry and kitchen - 1st floor
Texture all - 2nd floor
Paint all - 2nd floor
Paint exterior siding & trim work
Cabinets
Install 1st floor - kitchen cabinets
Install 1st floor - master bath and guest cabinets
Install 2nd floor - hall bath and private bath cabinets
Install chair rails, crown moldings, trim
Finish Plumbing
Complete 1st floor - kitchen plumbing
Complete 1st floor - master bath and guest plumbing
Complete 2nd floor - hall bath and private bath plumbing
Conduct finish plumbing inspection
Finish Electrical
Complete 1st floor circuits to service panel
Complete 2nd floor circuits to service panel
Conduct finish electrical inspection
Complete communications wiring - phone, cable, computer, alarm
Finish HVAC
Complete 1st floor - zone 1 HVAC
Complete 2nd floor - zone 2 HVAC
Conduct HVAC inspection
Carpet, Tile and Appliances
Tile entry, kitchen and baths
Carpet 1st floor
Carpet 2nd floor
Install appliances
Landscaping and Grounds Work
Pour concrete driveway and sidewalks
Install backyard fence
Sod and complete plantings - front yard
Sod and complete plantings - backyard
Final Acceptance
Complete final inspection for certificate of occupancy
Cleanup for occupancy
Perform final walk-through inspection
Complete punch list items
116 Replies
- 14yJohnson H.Pro MemberInvestor · San Francisco, CA · Member since 2010 · 910 posts · 889 votes
Rich, I would be very interested to read regular reports on the progress!!!
- Lexington, KY · Member since 2009 · 2k+ posts · 1k+ votes14y
Count me in Rich. Construction is another goal of mine, although a longer term goal.
- Investor · San Ramon, CA · Member since 2011 · 1k+ posts · 569 votes14y
Rich, are you still seeing good enough margins in construction to warrant build versus buy? The home I'm buying is getting replacement costs 2 to 2.5x what I'm paying for it.
- Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes14y
Nathan- different strokes for different folks. It is kinda like comparing apples and oranes. They both have a nice taste- just like different types of real estate.
Now, specificcaly. I actually borrowed 100K to build most recent home in so TX. I owned the lot (paid $12, 100 for it.) The const costs were 95K. Total of 107K, of which 7K was my money. Interest and costs for const period was 6K. I'm in it 13K and sold for 157K. Quick anaylsis yields a dollar return of 63K or 4-5 times my total investment. I did this quick, but return I calculated is pretty close, I think. Rich
- Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes14y
I would love to hear about your construction experiences. I have done many remodels over the years and worked in construction, but there is a lot to learn. Building a home start to finish is something I would love to learn more about.
It would be great to get your perspective on these aspect of real estate investing.
- Property Management · Memphis, TN · Member since 2009 · 668 posts · 362 votes14y
I've done heavy renovations for a long time, but have yet to get into spec building. I would be interested to read regular reports on your progress. Thanks!
- Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes14y
Danny- I have a subdivision in the Rio Grande Valley and build there, as well as existing sfr rentals I own in many of the Valley cities. I have homes in San Antonio and Apts in Dallas. Rich
- Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes14y
Seven out of 70,000 on BP interested in info on building new houses for fun and profit. Ouch! I've really lost my standing here. oh well, I still may post the first step in process in a day or two and see how it goes. Rich
- 14yMark UpdegraffBusiness MemberReal Estate Broker · Rochester, NY · Member since 2010 · 1k+ posts · 703 votes
Hey Rich,
Glad to read the post. We're planning on building a couple of homes on a 8.74 acre plot I acquired via sheriff sale. Needless to say, I'm VERY interested in hearing how to do it. This will be our first construction project!Mark in ROC
Updegraff Group Realty4.746 Reviews - Contractor · Denver, CO · Member since 2009 · 399 posts · 166 votes14y
Rich - i'd be very interested hearing about your project. Can you post proforma numbers? Regular reports would be great.
- Investor · Hampton Bays, NY · Member since 2009 · 907 posts · 258 votes14y
Rich, you are right building my own home wasn't rocket science but as a financial guy not a builder it consumed 2 years of my time. I love the home but it was not a great investment for me. Having said that, I would be interested in following your progress.
Its hard to separate real estate investing from construction. One way or another it has impact on our investments.
- Carpenter · NY · Member since 2010 · 10 posts · 0 votes14y
I am a residential contractor and trying to get into the real estate development/new home construction end of things in the upstate NY area. I have done many additions from the ground up and would be more than interested in your progress.
- Wholesaler · Dallas, TX · Member since 2011 · 294 posts · 152 votes14y
Very interested over here... I'm always open to a free education n
Rich, any wisdom you share would be greatly appreciated. Our company does single family development (not home construction) and has hit a wall in the past three years. Values have hit hard, even here in Texas despite what our guv claims! We are starting to see new construction again but at lower price points. We were selling lots for upto $1million homes. Now that same neighborhood has maximum of $800K homes under construction with most being in the $500K-$600K range.
With all that being said, I personally own a couple of lots in my own neighborhood that I'll eventually sell or would consider building then selling.
Look forward to more this!
- Commercial Real Estate Lender / Syndicator · Dallas, TX · Member since 2011 · 888 posts · 309 votes14y
Rich - add me to the list.
- Real Estate Broker · Indianapolis, IN · Member since 2008 · 455 posts · 16 votes14y
Rich - please add me to your list. Thanks,
Stacy
- Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes14y
Hi, I'm going to start tomorrow with a couple really basic items as background. Here are some quick replies to those that left questions.
Emilio- I always post real results and regular reports.
Michael- I built 1 "spec" home in 7 weeks. I've never built in a super cold area and I'm sure NY has its' challenges and very beauacratic from top to bottom. Most of my homes are 3-5 months depending on size and upgrades.
Tod- Don't try to swim upstream. If the market is chasing prices down, tough to win. Be patient. You will actually be able to see it changing if you read permit reports in your area, check invenory decreases, and pick a safe price range to start. In your high price range, you have no second exit atrategy if it doesn't sell. No possibility to rent and cover your costs.Today was a LONG day in the const arena for me. Had to solve a couple medium problems. Till tomorrow. Rich
- Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes14y
I missed by a couple days getting started. First a reply to the open question.
Jeff- your kind comments are always appreciated. As to the GC,I'd reccommend a different one in different areas. And some areas none! Here we go.
I've "speculated" with new single family construction in CA, OR, AZ, TX,and UT.I had a lot of replies from NY and I'm not familiar with the area. Sorry.
Different States have different regulations as well as counties and even cities, so you'll need to make sure you know the correct process.This is NOT rocket science.
This really is something ANYONE can do. You do NOT need to be a General contractor in any of the States listed above. (at least when I built in each, it was not required)Remember to check thoroughly your individual area requirements.
I've never been a licensed General Contractor, yet have built nearly 100 homes and have 2 under const currently and 2 more on the drawing board and 2 just completed.There are several ways to do this.
1. Hire your own GC and negotiate a completed home price, including his Fee.
2.Hire GC on a "cost plus" arrangement, with your involvement on all the costs and GC recives a % above the costs upon completion, where completion is defined by receiving the approved Certificate of Occupancy by the entity that provided your original Permit to construct. This % might range from 8-20% depending on the difficulty of const and availability of the GC.
3. Build the home as an "owner builder". Some locales limit the # of these you may build per year. Again, you'll want to check this out.Like most Real Estate , the majority of your profit is made going in. This means the lot/land needs to be bought correctly. This is the first area where you have a chance to make more than the next guy, if you select your lot to build on with built in value. This value is obtained by:
1. Simply stealing a lot at rock bottom price.
2. Buy multiple lots to receive a reduction on all.
3. Convert a group of lots from standard lots to Gated Community
4. Obtain owner financing or subordinated financing .
5. Have the seller of lot do your const financing.
All of these items and others will lock in additional profit.The other area to lock in value is in who builds the home and how much is the fee. Take a 100K project. The fee could range from 0 (owner builder) to as much as 20% or higher.
Looking at this 100K project, your total add-on cost could be 20K, raising your price to 120K. Now add the lot. Did you build value into the lot or not? I've doubled the value of my lot by doing 1 of the 5 options listed above.
With the two variables listed above and using a 20K lot (lot cost and Fee) the completed 100K project could end up as follows:
A. 100K costs plus 0 Fee plus 10K lot= total 110K
B. 100K costs plus 20% fee(20K) plus 20K lot =140K
Selling price of 150K. Which one do you choose, A or B? Remember, we built an extra 10K into the lot value and that is a difference in the calculation.
You will also determine your further profit by finding good competitive sub contractors. If you are doing the owner builder, any of those reduced prices go into your profit pocket. Cutting out the builder or finding a builder with a reduced fee is valuable to your financial health.With the economy in many places, fees are VERY negotiable. I've found GC's before that have signed the permit for the City in exchange for a week stay in Cancun($1500 value). I've had to satisfy the GC I knew what I was doing, would only hire licensed subs etc.
Less expensive is not always the best. Just as you could "repair" walls that have 100 Gigantic holes by placing cheap paneling over the holes, you could also repair it correctly with taped, textured and painted drywall/sheetrock. There is a point of diminishing returns with cheapening the product-DON"T DO IT!! Your reputation for future sales is very important if you want to keep doing this.
Feel free to ask/post any questions on material presented and I'll try to answer prior to next installment. We won't start building in the next entry. We're going to have a short discussion on why you might want to do this and what benefits you might derive from it. Then we'll start building. Till then Rich.
p.s. See you at the Denver get together in March. Rich - it may be good for new people to hear about fees/entitlements/approvals. Everything from schools fees to buying water meters and fire hydrants. In my experience many people forget to think about these things when buying a lot. The fees alone can make a $40K lot a better value than a $10K lot. I have paid $18K for a water meter, $8K for a fire hydrant, $20K for school+Developer+mit fees for a single home. Some areas even have $80K+ in "in lieu" fees for future improvements as was the case with a lot I looked at in Moreno Valley CA.
Just a thought because you mentioned looking at the value of a lot.
Rich, I just spotted this thread now and building is something I am very interested in learning, too.
I am now getting my feet wet having just completed a guest house and nearing completion on an extreme rehab. The rehab is more than doubling the existing square footage. The neighborhood has good potential for spec builds, so I'm interested in building from scratch there.
I'm also thinking about building a new (big) home for our family, so I will be following closely.
Thanks for sharing.
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