BiggerPockets Founder · HI · Member since 2008 · 16k+ posts · 5k+ votes
Back in March 2013, BiggerPockets and J Scott collaborated to release two books -- The Book on Flipping Houses and The Book on Estimating Rehab Costs (check them out here if you haven't already). As part of the book package, J was planning to do a detailed case study of one of his renovations (even more detailed than he does for most of his projects on his blog). We decided that instead of doing a case study only for those who purchased the books, he'd instead do one publicly here on BiggerPockets.
In this thread, J is going to provide a practically day-by-day diary of his first new construction project, from acquisition through sale -- including pictures, spreadsheets, invoices, bids, etc.
We hope you find this valuable! I know that I'm planning on following it closely so I can pick up a thing or two.
1/5/14 Update: The project is complete . . . read on!
2/19/14 Update: We've taken all the content of this thread and converted it into a free ebook for everyone who may be interested. Get your copy here: Diary of a New Construction Project Ebook
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
INTRODUCTION
I'm currently working on my first new construction project in downtown Atlanta (with a partner). While we both have a lot of residential rehab experience under our belts (over 100 projects between us), we have absolutely no new construction experience. The purpose of this thread is to chronicle in as much detail as I can, the process of acquiring an existing house, tearing it down, designing a new house, getting permits, construction of the new residence and finally the staging/listing/sale of the house.
My hope is that this thread will end up being part case study, part diary and (if I don't screw up too badly), part textbook. I plan to provide links to everything that might be useful throughout the process -- pictures, videos, budgets, schedules, plans/drawings, contractor bids, invoices, etc. And if there's anything I don't provide that you want to see, just let me know.
As of this writing, I'm currently about 4 months into this project, but we haven't even started to build yet (you'll see why as we move through the thread). I'm planning to start at the beginning (I've been keeping copious notes), and over the next couple months, I'll try to post updates at least several days per week, and hopefully catch up to real time by the end of the project.
Lastly, I hope this thread will be interactive. There are a lot of BP contributors with new construction experience (Rich Weese, @Karen Margrave, Aaron McGinnis and many others). I hope they'll jump in and provide insight, and I hope others with less experience will ask questions and help us all learn from one another. And again, if there's anything you want me to provide in this thread that I'm not already providing, feel free to ask!
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
DAY 253: CREEPING TOWARDS THE FINISH LINE
Wow, we've been a week away from finishing for two weeks now! Ugh...
Anyway, hardwoods are installed. Final plumbing is finishing this afternoon. Hardwoods will be sanded and stained/finished Thursday and Friday. Next Monday, we'll start interior punch work and we'll tear out the existing driveway and pour a new concrete driveway. And then later next week we'll complete the exterior landscaping.
Do you have a bid summary for the demolition work? Showing the figures that went into 6500 dollars.
The $6500 was a bulk figure that included the demo and haul-away -- it wasn't broken down any further. They demo company used their own dump trucks for haul-away, so there were no separate dumpster fees.
Here is a breakdown I posted on Page 4 of this thread:
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
DAY 263: UPDATE FROM PAST 10 DAYS
Been a crazy couple weeks with other projects, so I haven't had much of a chance to update here...sorry about that!
We spent the past week mostly finishing up a lot of the interior and exterior work, and getting the house ready for the final touches. Landscaping is done, the new driveway is poured, the fireplace is in, the appliances are in, the tiling (shower, backsplash, floors) are done, etc.
Over the next week or so, we'll be finishing staining the front/back porch and deck, completing the fireplace surround and hearth, putting the final coat on the hardwoods, doing paint touch-ups, and working through the punch list. We hope to clean and stage at the end of next week and have the house on the market next weekend.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
DAY 263: SCHEDULE/BUDGET UPDATE
Along with the update above, I wanted to provide an update on the schedule and the budget as well...
From a scheduling standpoint, this project seems to be taking forever. The actual rehab isn't too bad -- we started construction on June 21 and we expect to have it staged and ready to be listed next Friday (September 27). That would put us at 98 days for the actual construction, and if you take into account that we lost a solid 10 days at the beginning of the project to rain, that puts us at about 12-13 weeks of actual construction. I don't think that's too bad for our first new construction project.
Now, when you add in the 6 months it took to get permits, our schedule doesn't look nearly as good. I'll chalk part of that up to the fact that City of Atlanta is extremely difficult to work with and their timelines are extremely long, but it's also our fault that we waited so long to find someone to help us (an expeditor). That lesson alone should save us a couple months on future projects.
As for budget, I'm thrilled where that's coming in. We originally budgeted $155,000 for 2000 square feet of living space -- or about $77.50 per square foot. During final design, the house ballooned in size to 2672 square feet, which -- if are per-square-foot number stayed the same -- would have put us at about $207,000 for our construction costs.
As of today, we're tracking towards just over $165,000 in construction costs, or about $61-62 per square foot. These are the numbers we've been hearing from the larger and more experienced builders in our area ($58-63/sf), so we're definitely doing something right on the budget front. In fact, if we were to do this exact build over again, I think we could save a few thousand more dollars as well.
Who knows, there may still be some expenses I'm not factoring, but we're pretty close to the end, and most of our invoices have been received/paid. The best part is that the company that did the bulk of our dry-in (framing, roofing, siding, doors/windows, etc) doesn't invoice until work is complete, and then the invoice is Net-30. We just received their invoices and still have a month to pay them -- so about $50,000 of our $165,000 budget isn't due until about a month after the house is completed. Who knows, it could be sold by the time we have to pay for it... :-)
Here is where the budget currently stands in more detail and compared to our original estimates (Click to enlarge):
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
13y
I noticed a sidewalk on the neighboring property that stops abruptly at yours. Did you consider putting in a sidewalk to continue what is already at the neighbor's house? Foot traffic will take a toll on the grass eventually IMO.
Your last post raises this other concern - lien waivers. Not having to pay until you've been paid is great, but how will you handle the title company questions about unpaid contractors?
I noticed a sidewalk on the neighboring property that stops abruptly at yours. Did you consider putting in a sidewalk to continue what is already at the neighbor's house? Foot traffic will take a toll on the grass eventually IMO.
Your last post raises this other concern - lien waivers. Not having to pay until you've been paid is great, but how will you handle the title company questions about unpaid contractors?
There has never been a connecting sidewalk, and the city isn't requiring it, so we're not volunteering to add it. I do agree it's a nice-to-have, but I don't imagine it will be a deal-breaker for a buyer.
As for lien waivers, it won't ever come to that. We'll pay the invoices quickly (we're not looking to take advantage of their generosity). Worst-case, if it went to the closing table quickly, we'd just pay the invoices immediately.
Do you know when you'll list? What you will price it at? Average DOM for new construction in the area?
I haven't synced with my partner on the details, but I imagine we'll list next weekend for around $300,000 (that's where it's pre-listed).
I actually have no idea what DOM is for new construction in this area. Between the fact that this is our first new construction, our first project in this area and we've been out of town for 2 months, we are really out of the loop right now... :-)
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
DAY 268: Hopefully Only 24 Hours Left
We were hoping to be finished with the rehab by today, but -- of course -- there are always the little hiccups at the end of the project. Just got a call from my partner, who relayed two issues we just found:
- The hardwood guys came back yesterday to do the final coat of poly on the wood, but used the wrong sheen (matte instead of high-gloss). He and I are both big fans of the shiny hardwood, so the contractors will be coming back today to put another coat on.
- Once we got the power back on after the temp pole was removed, he turned on the lights and noticed a decent amount of sheetrock and paint issues that weren't discovered earlier.
We're hoping the hardwoods are dry by tomorrow and we can get the painters back in at the same time they are unloading the staging furniture. Assuming no issues with wet hardwoods, we're shooting to have the house staged and listed by Saturday.
Major credit to my partner that these are the biggest issues we've faced coming down to the end of the project...
@J Scott - Congrats on this new construction venture. What marketing activities do you do leading up to listing and the two weeks after?
Hey Rick -
Other than putting our houses on the MLS (my wife, my partner and I are all licensed) and sending emails to all the agents we've worked with in the past, we've never found it necessary to do any marketing.
Hopefully that's the case here as well, as I wouldn't have any ideas on where else to start... :)
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
DAY 269: FINISHING UP
As usual, my partner is working his butt off while I'm 1000 miles away sitting in front of a computer not being at all helpful with our project (he certainly deserves better than me :)...
But, according to my discussion with him earlier today, the hardwoods are finished (correctly, this time) and we're still hopefully the painters will make it back by the end of today and finish their touch-ups.
Staging furniture is getting moved in today, and we'll be taking some half-staged photos and listing the property on the MLS this evening in the hopes we can get a few showings over the weekend.
I'll post the final pictures once we have them, but here are a couple teasers of some of the tiling work we completed the past couple days:
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
DAY 270: REHAB COMPLETE!
Painters stood us up yesterday, but were out there today to finish the repairs and touch-ups. The MLS listing went live yesterday, but without any pictures.
We expect to have final pictures in the next 24-48 hours...
I'm impressed, you did a complete build during the same time it took us to complete a full bathroom and kitchen renovation {actually moved the kitchen and bathroom within the unit} and two "back to the studs" rehabs ... we actually finished two weeks ago (though we were a disappointing 10-days late on the last rehab - post mortem is underway), but for a while there I thought you were going to finish first. :-)
I'm impressed, you did a complete build during the same time it took us to complete a full bathroom and kitchen renovation {actually moved the kitchen and bathroom within the unit} and two "back to the studs" rehabs ... we actually finished two weeks ago (though we were a disappointing 10-days late on the last rehab - post mortem is underway), but for a while there I thought you were going to finish first. :-)
Roy,
The biggest thing I learned from this project is that -- once you get into the construction portion of the project -- building is much easier than rehabbing. The reason being that you don't typically run into "surprises" and you don't have to deal with the mistakes made by others before you (or old codes that are no longer applicable).
Our new build completed faster than several out-of-state rehabs that started around the same time...so I'm in the exact same boat as you... :-)
Investor · Kingwood, TX · Member since 2013 · 28 posts · 7 votes
13y
Great read and very interesting. Thanks a lot for doing this and I look forward to more posts. On another note, curious what motivates you to move to MD?
Great read and very interesting. Thanks a lot for doing this and I look forward to more posts. On another note, curious what motivates you to move to MD?
Hey Justin -
The two big reasons are the great schools (we have a 2 and 4 year old) and the fact that I grew up in that area, so I still have a bunch of family/friends there.
Dallas, TX · Member since 2011 · 308 posts · 59 votes
13y
In the 6th pic down (bathroom), what made you go with that flooring? It's hard to tell since the pics are so small, but it looks like really small tiles. It seems a bit dated to me. I have a similar design in an old rental.
In the 6th pic down (bathroom), what made you go with that flooring? It's hard to tell since the pics are so small, but it looks like really small tiles. It seems a bit dated to me. I have a similar design in an old rental.
My partner choose that...it's in the guest bathroom...
Not sure what his rationale was, but I really like that retro look -- we see that a lot in the houses we work on in Milwaukee that were built in the 40s and 50s...
J Scott, I'm very curious what your final square foot building cost was for the project if you don't mind sharing.
Jingle
We haven't received all the final invoices as of yet, but if you take a look at the previous page of posts, you'll see a relatively current budget breakdown that I posted last week.
It looks like we're tracking right around $61 per square foot, which is what we hear some of the bigger builders in the area are building for ($58-63 per square foot).