Buying a partially built, new construction home: pros and cons?

Question

I'd like to buy a partially-built, new construction house that has a concrete pad, roof, outside walls, windows, and inside framing. No electric meter, wiring, plumbing or inside walls. There is an architectural drawing that comes with the purchase. I've never taken on a project this big, and am wondering what the hidden costs would be, the potential downside, and any costs/time delays I wouldn't think about.

Scott Krone · Answer

@Renee Yarbrough  To answer your question, what are the pros and cons.

Pros - at the stage you are describing there is lower risk for unknown construction.  The largest unknown is the underground plumbing.  You have an approved set of plans, and a permit.  The entitlement process is complete.  You can bid most of the trades from a new perspective.

Cons - one needs to confirm the following:  1.  Permit status.  Are there any permit violations or stop work orders that need to be corrected.  2. Liens.  Are there any unpaid subcontractors that have place liens on the property.  3.  Scope the underground to insure it has not been tampered with.  4.  Inspections.  Has it passed any inspections (rough framing, underground, concrete, site work) - get copies of inspection reports.   Plumbing, Framing, and concrete may be your only partially completed subs.  Need to confirm if the roof is 100% done (any saddles, flashing, terminations, etc)

Renee Yarbrough · Answer

Account Closed Your comments are good to ponder. Thank you!

Renee Yarbrough · Answer

Account Closed Thank you for the reply. Your points are exactly what nag me about this deal. I appreciate you laying it out so clearly.

Account Closed · Answer

Why would someone want to be your partner? Maybe, because he' no good at what he does and he doesn't have his own money to keep busy enough with his own projects. He certainly doesn't need your construction experience. Don't go looking for trouble with people who can't manage their own business.

Send me your money and I will manage it for you. I promise, with a contract, to pay you back 100% of your money with a 30% annual return. You will find that this contract and promise is valid only until it is time to pay you.

Never let someone else manage or control your money. Never invest based upon trust and faith.

Account Closed · Answer

Sorry! With your lack of construction experience and dealing with contractors you should stay and look for properties that are already built. Even experienced contractors do every calculation possible based on their years of experience and they fail on many projects. There are very few projects that get finished without exceeding the projected budget. I've been in the construction business for 55 years and I still get burned by general contractors and sub contractors. There are too many codes you don't know about and there are too many things you don't about like whether or not your contractors are doing a good job.

Renee Yarbrough · Answer

@Scott Krone Thank you for the great information! I decided to pass on the house, but am putting your information in my pocket for another day. Great info.

Renee Yarbrough · Answer

@Rory Compton I think you are right, this deal calls for a partner who knows construction costs, timelines, subs, and codes. While I have experience with rehab projects, I'm a novice in the new-build arena.

Rory Compton · Answer

@Renee Yarbrough sounds like you may have a great opportunity if you can buy right.  If there is not drywall up there SHOULD be no surprises.  If you are unsure you can always partner with someone.  Rehab is not my forte either, but I have some skills in underwriting and some access to capital, so that is where I position myself in a team.  Looks like you are the deal finder in this one.

Buying a partially built, new construction home: pros and cons?

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