Diary of a New Construction Project

525 Replies

Thank you so much on the info and the detail read all the question and your family at BP did not give you any soft question on this project and you did answer all of them. I did learn a lot from this and its nice to see it was something new to me as well as alot of people on BP keep up the good work! keep us posted with the next one.

Just spent every down minute of my past three days reading through this post. I cannot believe how much I've learned in such a short amount of time. @J Scott, I cannot thank you enough for being so dedicated, open, and sharing with your project with a level of transparency that makes this so educational and understanding for even the amateurs!

Congratulations on a job well done!

I am also curious of your thought and views of rehab vs new construction at this point.

Your considerations of the advantages and disadvantages, considering this recent venture, and how this has possibly changed your real estate investing plans for the future.

Thanks again for being transparent and allowing us in on the journey.

.

Hi Scott,
I have been reading your thread for a few months now. Just can't thank you enough for taking the time to share and educate us. The posts were engaging and I personally felt that I was part of the journey. Hands down the most informative thread I have ever read on building a new home. It does take a special person to not hoard the information. Also commend your ability to tell the story with just right amount of detail and clarity. Lastly, it's nice to see someone that has expertise, answer just about every single question without making others feel that they have to earn it (especially in real estate). A big congrats for closing on the house!! Just wanted to let you know I was cheering for you all the way.
I have a full time job that I enjoy immensely but have been dabbling in the real estate as a secondary business for the last ten years. I have slowly built up a small portfolio of commercial and rental properties. Real estate has been good to me over the years.
What have I learned from this experience? First, we are all busy but it's important to take the time to organize and share with others. Second, I have been thinking about building a new personal residence. This post has inspired me to diligently work on finding the right opportunity to make this a reality. This is my new year’s resolution for 2014. I can tell you my wife is going to be ecstatic about my resolution.
Thanks again and wish you the best of luck on your future projects.

J,

Thanks for taking the time to document everything, it's been EXTREMELY educational. It looks like your first spec build was a huge success. That home is in my neck of the woods (Reynoldstown resident) and is most definitely a welcome addition! Congrats!

A couple questions:

Had you not had a GC on your team and personally managed the subs, how do you feel that would have affected the outcome from a cost standpoint? i.e. hiring a GC or builder w/o aligned interests in the project.

Did your partner have new construction experience? or just rehabbing?

Again, congrats. Looks like you guys did a hell of a job.

- Ian

Originally posted by @Ian S. :

Had you not had a GC on your team and personally managed the subs, how do you feel that would have affected the outcome from a cost standpoint? i.e. hiring a GC or builder w/o aligned interests in the project.

Did your partner have new construction experience? or just rehabbing?


Hey Ian,

I really can't answer the question about what it would have cost had we had a builder. I'm guessing (just a guess) that a builder would have charged 15-20% premium to be the GC, but there's also a great chance that his subs would have been more expensive as well -- we got great sub prices because we give these guys lots of work.

My partner on this project was in the middle of his first few new construction projects, so he didn't have much experience prior to this. That said, he comes from a family of developers, so it's pretty much in his blood... :-)

J,

Thanks for the answer. I figured that might be hard to estimate. It looks like your $/sf for the quality of work is incredible. I'll keep an eye out for your next project!

-Ian

J, Just wanted to say THANK YOU for spending your time and energy documenting and providing all this information. I can't even imagine how much money your saving existing and future investors. Thanks again.

J, Thank you so much for sharing your valuable experience with us!

Although I am nowhere near to build a new house, but I am sure this thread will help many BPers.

You are the man!

Congratulations J Scott !! Thanks so much for sharing this journey. I'm sure it was time consuming to keep the posts going in addition to managing your daily projects.

This is what makes BP the best real estate investor site in the world - fellow investors like you who are generous with their time, expertise and guidance and not afraid to show a peek behind the curtain of successful deals. Bravo!

Originally posted by @J Scott:
[b]DAY 44: 10 EXTRA DAYS BEFORE DEMO[/b]
The demo permit application was submitted about two weeks ago and we’re still waiting for permit approval to move forward with the demo. I found out today (my partner apparently knew this, but I didn’t)

Communication between partners....how did this factor out in the build? Did you both learn new ways to communicate? Or did this strain the relationship?

Originally posted by @Ben F:
Originally posted by @J Scott:
[b]DAY 44: 10 EXTRA DAYS BEFORE DEMO[/b]
The demo permit application was submitted about two weeks ago and we’re still waiting for permit approval to move forward with the demo. I found out today (my partner apparently knew this, but I didn’t)

Communication between partners....how did this factor out in the build? Did you both learn new ways to communicate? Or did this strain the relationship?

My partner on this project and I get along absolutely perfectly, so it was never an issue. We did a good job of breaking the project into components, where he was responsible for certain things and I was responsible for certain things. He stayed on top of his stuff and I stayed on top of mine, and while there was certainly stuff that we each didn't know about going on, we always knew the stuff that pertained to our role.

Congratulations and thank you for all of the time you took to provide detailed information.

@J Scott,
I read the book that Josh published recently - that was a really cool document. It's convenient to digest a year long experience in one day. I was recently considering building a house and the book was really helpful for me to understand the budget and timeline. I was wondering about hookups - that an area that I still don't know how to guess in terms of budget. In your situation there was a previous house on the lot so you probably already had a water meter, gas and sewer line, correct? Any idea how to estimate those costs when you are building on a new lot, assuming it's on a street that has power, gas, water and sewer at the street or alley?

Scott,

Wow what an educational thread! I had learned a lot, just by reading posts!
I am a "buy and hold" and "buy fix-up and hold" guy out of Annapolis but have rental units around Ft Meade area. I saw you had moved here recently. May be one o these days if you have time we could meet-up, grab lunch or cafee? Regards
Val

Originally posted by @Val Csontos :
Scott,
Wow what an educational thread! I had learned a lot, just by reading posts! I am a "buy and hold" and "buy fix-up and hold" guy out of Annapolis but have rental units around Ft Meade area. I saw you had moved here recently. May be one o these days if you have time we could meet-up, grab lunch or cafee? Regards Val

Absolutely! Shoot me an email...

Long read but worth every minute, thank you not only to J Scott but everyone that chimed in with words of wisdom and nuggets of advice. Big thanks to everyone that put in their time for this thread.

@J Scott @Joshua Dorkin  What an amazing thread! Thanks for going through all the trouble to make this content accessible to newbie's like me.  This is PHD level stuff and I am blown away by your willingness to help others.  Keep it up!

Originally posted by @James Perez:

@J Scott @Joshua Dorkin  What an amazing thread! Thanks for going through all the trouble to make this content accessible to newbie's like me.  This is PHD level stuff and I am blown away by your willingness to help others.  Keep it up!

 Hey James - You may be interested in this thread as well:

http://www.biggerpockets.com/forums/517/topics/132...

@J Scott this was a great read probably one of the most thorough educational pieces I have seen in the industry by far! It helped reinforce my confidences as I could pick out several issues you would encounter before you seen them coming. And brought awareness to a few things I would have over looked. It has persuade me to purchase the Book on Flipping Houses. I look forward to completing it and I look forward to see what you do in the future.

Great Work!

Wow, this is great been looking for details on how a whole project would look like and be from start to finish. Thank you BP!

I sat and read this entire thread. All I can say is WOW. I think  will just try to acquire some rentals that need moderate repairs for the time being. It was very informative, and it shows an amazing amount of humility to just lay it all out there....even the not so good. Thank you so much for the time & attention you put into this post. 

I have to ask though...the crooked tree in the pictures on CD0 construction day zero) in the neighbors yard, does that not bother anyone else, or am I the only one who noticed it? :D

Originally posted by @J Scott :

FINAL ANALYSIS

Next, here is the final budget breakdown -- we were about $5300 over our original estimate, but given that we added nearly 700 square feet to the design after that budget was created, I'm thrilled about our final budget numbers. Ultimately, our costs for demo and construction were right about $60/square foot (CLICK TO ENLARGE):

Finally, here is our final overall analysis, with our total profit, split between my partner and myself -- this represents about 32% ROI, and given that it took almost exactly a year to complete, that would be an annualized 32% ROI as well:

@J Scott - First thanks for posting this diary! I was trying to find a link to your final budget, which appears to have been removed in your "FINAL ANALYSIS" post. Do you mind providing that link? Thanks again!

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