Biggest Challenges in New Construction? How Are You Overcoming Them?

Question

For those actively building new homes, what’s been your biggest hurdle lately? Rising costs, permitting delays, financing, labor shortages?

In markets like Columbus and other growing cities, new construction can be incredibly profitable, but managing risk is key. Some investors are using:

• Fixed-cost contracts to control expenses
• Pre-designed floor plans to streamline builds
• Creative financing strategies to keep projects moving

Fixed-cost contracts to control expenses

Pre-designed floor plans to streamline builds

Creative financing strategies to keep projects moving

What’s been your experience? Are you shifting strategies to keep margins strong? Let’s talk shop!

Jeremy England · Answer

Biggest hurdles are finding the land suitable for my intended projects.  Building duplexes and triplexes.  And I don't want them next to trailer parks.  Has to be the right zoning.  Price of land is always an issue.

Wetland mitigation is what Im researching now.  I really don't know much about building on wetlands.  I mean I know the permitting process.  But i mean the actual methods and techniques to reduce the impact.  Do they want me to build on helical piles instead of a slab?  Does it cost me mitigation credits for just the footprint of the house or the house, driveway and yard?

Matthew Becker · Answer

Labor and I have almost 40 guys.  Banking is slow but still pretty good.  Commercial loans just take a while.  Running your own crew is the way to go.  I know no one does this, but you can save 30% on a build.  Also, buy materials in bulk.  I bought a semi truckload of siding,g and it saved me 40%.  I buy nails, screws, and little stuff like that.  In Bulk, it saves me 50%. Framing materials buy in the off-season save 25%.  Trim 40%. Pretty much everything in bulk is cheaper because the retailer does not have to handle it.  Materials savings 35% and labor 40%.  It is hard to buy land in bulk.  You also have to have enough work to keep it moving.

Matthew Becker · Answer

Yes but not that big.  I have an old green house that is 30 x 40 that came with some land I bought.   I have 10 con boxes and a little shop that my guys mostly use for fixing their trucks.  Lumber is just wrapped and stacked outside. My all in cost for storage is probably 100k. That include a gravel parking lot and hoop attached to con boxes for heavy equipment.

Jeremy England · Answer

Do you just have warehouses you keep it all in?

Matthew Becker · Answer

I buy semi-truck loads from a local lumber yard, and I spend several million a year at.  He charges me a small margin, and the mills drop it directly to me.  I have other direct supplies I have set up for cabinets,  flooring, and other stuff where I buy from the same people that the store buys from.   I also buy semi-truck loads of cabinets, siding, and trim.   I have yet to be able to save a ton on drywall.  I think it is just a low margin.  My goal in the next 2 years is to have direct for everything it just takes a ton of time.

Mike H. · Answer

Very interested in how you're able to buy framing material in bulk to save 25%.  Are you buying direct from the mills? How much bulk are you needing to buy?