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!
Real Estate Lender · Pt Hueneme, CA · Member since 2012 · 110 posts · 47 votes
13y
I have been thinking about your drawing , instead of having the driveway extend all the way to the back of the property why not build an ell at the master bedroom, make port couchette and have a mid house entrance, move the laundry to the basement and the master bath where the laundry is. Then have a hallway that extends from the midpoint of the kitchen are to the back deck.
Probably have to move something's around, and incur some more costs but you will gain 8 feet of width and add an egress to the back.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
DAY 10: FINDING AN ARCHITECT
We've spent the past week or so finding and interviewing a few potential architects to help us with our design and to create plans. We got bids from $2500-10,000. We finally settled on a guy who used to design for one of the biggest and most well known builders in Atlanta (and coincidentally, it very possible he may have designed the house that is my primary residence).
He agreed to do all drawings and submit the plans for us for $2500 (I guess that puts us $1500 under budget so far :). The architect said that we’ll need to complete demo before he can get final measurements of the existing foundation and complete the drawings. Once the drawings are done, he said permits should take between 2-6 weeks, depending on how finicky the particular building inspector was that we end up with.
So, we need to finish demo prior to getting final drawings and then it will still be up to two months to get permits. And since we need a demo permit before we can begin demo, that puts us at least three months out for starting construction. I guess we can use that time to get our bids and nail down our sub-contractor list.
DAY 12: MEETING WITH THE ARCHITECT
We spent about an hour at the property today with the architect, reviewing our proposed drawings, discussing what we wanted to build and getting his feedback. We talked a bit about the framing design and how we can build most cost efficiently.
Ultimately, while he can lay out the design for the structure, it will be an engineer and the lumber company who can best tell us the most cost efficient method for framing, floor design and roof construction. So, we'll have to give the first draft of the plans to the lumber company, let them do "take offs" (figure out exactly how much we need of every piece of lumber and material), and ultimately let them recommend the most cost-efficient method to design and build the structure.
Supposedly, the big lumber companies all have in-house engineering, so I guess the architect and the engineer will iterate on the drawings until we have the layout we want with the most cost-efficient design.
We expect to have our first draft of the drawings in the next 10 days.
Investor · Orlando, FL · Member since 2012 · 431 posts · 106 votes
13y
That architectural number is a lot more reasonable.
What's the huge delay with demo / permits? Sounds like a 1-2 day demo job. Are demo permits a lengthy process in Atlanta?
All of the big lumber companies will provide engineering for trusses since they're custom made. Truss design is a great place to find some cost savings as well as add in some cheap architectural options.
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
13y
I have the same question as Steve on demo. Why wait? Have you applied for demo permit? Even in Austin, when building permits we're taking 4 months to come back, demo permits were being issued in a week.
One thing I underestimated on demo was how many dumpsters I'd need.
Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes
13y
I'm curious on the demo if you have any asbestos or lead paint issues? When was this house built?
One of my friends built two houses a couple years ago. He used a guy for lumber who was basically a broker. He took the order and shopped it for the best deal from all the local lumber companies and made some sort of commission on the deal. My friend was very happy with the price and quality and used the same guy for another project after. Not sure if there's guys like that in Atlanta, but might be worth looking into.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
Hey Steve, Jon,
A little bit of foreshadowing here (I didn't know this at the time), but the permitting process here in Atlanta is ridiculous, even for demo. To knock down a house, you need a boundary/site survey, a survey that indicates the proposed new structure, a tree survey, an asbestos survey, a pest letter, etc. And then you need the permits. The surveys take several days (and the "proposed structure" survey can't be done until you have a preliminary drawings of the new house, the permit can take a week or two, then any asbestos remediation, and then finally you can knock the house down. The whole process -- if there is asbestos -- can take two to four weeks.
It's not an overly complicated process, but it's time consuming...
My next post will discuss our demo bid and will go into this a bit more...
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
Originally posted by Rob K:
I'm curious on the demo if you have any asbestos or lead paint issues? When was this house built?
The house was built in the 1930s, so that's definitely a concern (from an extra cost standpoint)...
One of my friends built two houses a couple years ago. He used a guy for lumber who was basically a broker. He took the order and shopped it for the best deal from all the local lumber companies and made some sort of commission on the deal. My friend was very happy with the price and quality and used the same guy for another project after. Not sure if there's guys like that in Atlanta, but might be worth looking into.
We're going that same route, but are planning to play the broker role ourselves. There are three big lumber companies in the area, and we plan to work directly with all three of them. In the future, you're right that working through a broker may be worth the extra cost, but on the first one, we want to understand each part of the process as much as possible...so, we'll be doing this ourselves.
Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
13y
J Scott Sounds like you found the right guy to do the design for you. He will have the experience to do the layout so that it not only fits the check list of features, but that they work for everyday living. I'd strongly suggest that once you have the layout done you show them to your wife and let her look at them. Often men design homes and don't think about where things like the laundry is in relation to bedrooms, what side a dishwasher should be in, placement of furniture, etc.
In one of the earlier posts from Denver regarding costs, I think a major thing that drives up costs in areas such as Denver, California, New York, etc., is that we have much higher permit fees, and additional fees others don't have.
As far as so many of you buying in the same neighborhood, was that by design or coincidence? It's unbelievable that you can buy that cheap and sell for such a high amount. WOW.. we'd better come to your neck of the woods and get out of California!
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
Originally posted by Karen Margrave:
I'd strongly suggest that once you have the layout done you show them to your wife and let her look at them. Often men design homes and don't think about where things like the laundry is in relation to bedrooms, what side a dishwasher should be in, placement of furniture, etc.
My wife does most of the design, and at very least, approves everything. I learned that lesson long, long ago... :)
As far as so many of you buying in the same neighborhood, was that by design or coincidence?
Dallas, TX · Member since 2011 · 308 posts · 59 votes
13y
This is a really cool thread. Thanks for doing this. Can you talk about some of the market forces that are going on in the area that are making new builds profitable? From the pics, it looks like a very run down area and possibly former warzone. What is causing the gentrification? Why are people willing to buy new and pay a premium as opposed to getting something that fits their needs farther away (presumably for cheaper)?
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
Originally posted by Bryce Y.:
Can you talk about some of the market forces that are going on in the area that are making new builds profitable? From the pics, it looks like a very run down area and possibly former warzone.
The area is not a bad area at all -- the homes are certainly older and many of them are in disrepair, but crime is low and the neighborhoods are well established and nice enough. The condition of the houses isn't so much a factor of how it's treated (what I would expect in a "warzone"), it's more a factor of age and lack of upkeep.
Many of the homes on this street are in better condition, though they are all 80+ years old and many of them it just makes more sense to knock down than to renovate.
Real Estate Investor · Lagrange, GA · Member since 2012 · 18 posts · 6 votes
13y
Re: Market forces: Yes, this was definitely former war zone. If you want some interesting reading on the area you can look into efforts, spearheaded by local developer Tom Cousins, focused on the revitalization of East Lake Golf Course and the surrounding community. Oddly enough the Wikipedia on East Lake does not mention a word of any of this, so here is a link to some statistics that will give you an idea of what the area was like in the mid nineties: http://www.eastlakefoundation.org/sites/courses/view.asp?id=346&page=8936
East Lake is now the site of the PGA Tour Championship and proceeds from the event go to the Foundation which continues to support parts of the community to this day.
To be clear, this is not the only force at play, there are several others, but I can say without reservation the area would not be where it is today without the efforts of Mr. Cousins and the community to turn things around at East Lake Gardens.
Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
13y
J Scott My vote button doesn't work, and I just wanted you to know how much I'm enjoying your journey. Thanks Gabe Larkin for the additional info. I love seeing what's happening in other areas of the country, and what types of projects people are working on.
I'm hoping that the asbestos and lead paint issues don't cause you additional costs to tent the house, etc.
That's so crazy that there's so many of you BPers together like that, how fun!
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
DAY 14: DEMO BIDS
While we’re waiting for initial drawings from the architect, we’re interviewing a bunch of potential demo companies who can take down the old house. Bids are coming in between $5000-10,000.
We’ve started to realize that the experienced companies are the ones that discuss getting an asbestos survey prior to knock-down (the house was built in the 1930s), disconnecting utilities, getting surveys, etc. This is stuff that’s pretty obvious, but I just haven’t ever thought about it before.
DAY 16: OUR DEMO BID
Looks like we’ve settled on a demo company for this job. Here is a link to their proposal (for security reasons, I've redacted any information that might identify the actual property address for now):
Their proposal includes $450 for the asbestos survey, $6500 for the actual demo, $1280 for the demo permits, $1100 for the surveys and $75 for the rodent letter. They’d be outsourcing everything but the demo. They say the work would be done in 1-2 days and it sounds like they can fit the entire house in about five 30-yard dumpsters.
DAY 17: SURVEY BID
Because the demo company is outsourcing all the non-demo work, they are fine if we use our own contractors for that stuff. The one item that stuck out on the Demo Bid that I we thought we could get cheaper was the site survey (demo company wants $1100).
I called the Surveyor I've used in the past and asked if he could give me a better price on the survey. He says he can do it for $650 and he’ll have the job done in less than a week.
Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes
13y
Why is a demo permit $1,280? That just seems crazy. I tore down a large two car garage once and the permit was $65 and took about eight minutes to get. The garage came down the next day. Are fees in Atlanta out of control? How much money will the city make off of YOUR hard work when this project is all said and done?
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
Originally posted by Steve K:
I'm sure it's some goofy city requirement, but what exactly does a rodent letter certify?
The city basically wants to be sure there's not 1000 rats or 100,000 roaches tucked away in the house and when the demo happens, they don't all go running into the streets and into the neighbor's houses... :)
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
Originally posted by Rob K:
Why is a demo permit $1,280? That just seems crazy. I tore down a large two car garage once and the permit was $65 and took about eight minutes to get. The garage came down the next day. Are fees in Atlanta out of control? How much money will the city make off of YOUR hard work when this project is all said and done?
City of Atlanta building department and permit is -- from what I hear -- one of the most ridiculously stringent and costly in the country. It's a long and expensive process to get anything building-related done in Atlanta...