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!
Full-Time Investor · Charlotte, NC · Member since 2009 · 2k+ posts · 1k+ votes
13y
Grant P., I have a feeling you're doing a different price point with different buyer expectations as J alluded to. Lately, margins have thinned out quite a bit, so my challenge has been to see where I need to spend the money, and where I can save a few bucks. I just presold a new construction, and the buyers were actually unaware of many upgrades until they did another recent walk through. After walking a few other new builds in the area with a buddy, Dan Inc, it's possible I've overbuilt with upgrades for the pricepoint, and reduced my profit numbers. I'm trying hard right now to find the 'sweet spot' of upgrades, sq footage, etc. It seems that J has a great grasp on that-- I imagine it helps having an in-house all star realtor who can get you in all the comps :)
Denver, CO · Member since 2012 · 218 posts · 48 votes
13y
Bryan A. This is my dilemma. The two windows are 6' x 3' windows that will be new to the front of the house. I have very particular taste, and its hard for me to ignore it.
I wanted Storefront, but after pricing that it wasn't possible. The 1200 per window is for a milgard aluminum frame window.
After reading this thread this week I got a quote on a jeld-wen aluminum clad wood window, price was about $500 per. Does not look as good, however $1400 cheaper sounds great. I might have compromise on this one.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
DAY 101: GETTING AN EXPEDITOR
After struggling with the permitting process for several weeks with the City of Atlanta, we decided to get some help. I assume it's the same in many big cities, but here in Atlanta, with the permitting process so difficult, there are people and companies who specialize in helping get through the permit process.
We've spoken with several expeditors, whose fees range from $600 to $1500 for the service, and landed on working with a woman who spent many year working for the building department -- she knows the process, knows the staff and can hopefully bypass a lot of the bureaucracy. She's charging us $1000, which we believe is well worth it!
She's told us what she needs to keep the process moving -- some of it stuff that we're already working on -- and we're hoping to get her the requested permit package for resubmission in the next few days. She thinks it will take anywhere from 6-10 weeks get our permits once everything is submitted.
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
13y
In Austin, I'm working with an architect who also fills the role of an expediter. She babysits the process until we get our permit, then she bills us. There are also dedicated expediters in Austin. I think using one is a good idea, especially the first build or two in a given city.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
DAY 102: FOUNDATION BIDS
We've been getting foundation bids for the past couple weeks. The big decision we've needed to make is whether we wanted to go with a block (cinderblock) foundation or poured concrete. While we assumed block would be cheaper, it turns out that in Atlanta, code now requires block foundation walls to be filled with concrete anyway, so there isn't much (if any) savings.
Surprisingly (and happily) our foundation bids have all been within a few thousand dollars of each other, and within a few thousand dollars of my estimate. This is good, as we don't know much about the cost of pouring new foundations, and we weren't looking forward to having to sort through the nuances of the bids to determine which direction to go.
Anyway, here are the bids we've considered...we'll likely go with the first one that came in around $9100:
We also realized that we're going to need to do some more significant excavation and grading than we had expected. Our heavy equipment guy has agreed to do all the excavation, dirt moving, grading and installation of the silt fence.
His total price is $3000, and he'll be the first guy on-site once we have permits in place.
Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes
13y
Since you had to scrap the old foundation, could you now put a basement in? Are basements common in your area? It looks like you're installing a crawl space. I know that in my area, everyone wants a basement, but I don't know how common (if at all) they are in Georgia.
I have been following this thread. What date on the calendar is "Day 102"?
Real Estate Investor · Central, TX · Member since 2012 · 479 posts · 165 votes
13y
J Scott, just wondering why you went with this type of foundation instead of a monolithic slab? I think the foundation you are pursuing is better in the long-term, but a slab would be cheaper when you factor in the reduced materials and labor cost.?. At least where I'm at.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
Originally posted by Rob K:
Since you had to scrap the old foundation, could you now put a basement in? Are basements common in your area? It looks like you're installing a crawl space. I know that in my area, everyone wants a basement, but I don't know how common (if at all) they are in Georgia.
I have been following this thread. What date on the calendar is "Day 102"?
Buyers don't expect basements in this area...in fact, I'd say they are pretty rare for in-town Atlanta properties. Crawl spaces and slabs account for about 90% of the properties in this area (in my experience).
The project essentially started on January 1 (we purchased a few days earlier, but I consider January 1 of this year to be Day 1). So, Day 102 is mid-April...about 2 months ago...
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
Originally posted by Ryan Richard:
J Scott, just wondering why you went with this type of foundation instead of a monolithic slab? I think the foundation you are pursuing is better in the long-term, but a slab would be cheaper when you factor in the reduced materials and labor cost.?. At least where I'm at.
Crawl spaces make it MUCH easier to distribute rough mechanicals (plumbing and HVAC, mostly). The majority of houses in this area are built on crawl spaces.
Real Estate Investor · Central, TX · Member since 2012 · 479 posts · 165 votes
13y
Interesting. I understand the ease of future maintenance etc. for the mechanicals. Here our plumbers just trench the pad before the foundation is poured and do the rough-in. They make pretty quick work of it since there is nothing in their way and they can work upright.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
DAY 127: PERMIT UPDATE
It's been almost a month since the expeditor got our permits submitted to the City of Atlanta, and we finally got some feedback.
Zoning Review: Approved
Sewer Capacity Review: Approved
Site Development: Revisions Required. The site development review is requiring one addition:
1. Addition of a "dirt statement" to the plan. This tells them how much dirt we'll remove, how much we'll replace, and what we'll do with anything left over;
2. Additional of an "Erosion and Settlement Control Plan." This should be boilerplate verbiage that can be taken directly from the Building Department's website.
Arborist Review: Revisions Required. The aborist had a few issues:
1. There is a tree on the survey that isn't marked with it's DBH (basically, the tree diameter);
2. There is a retaining wall on the survey that isn't marked with elevations (it is, but they apparently missed it);
3. There is a tree that we noted will be impacted about 35% by construction. Anything over 33% means that that the tree could end up being killed, and we'll need to pay a "recompense" fee. That fee needs to be calculated using the city's formula, and that fee must be included on the drawings;
4. We apparently need a new shade tree in the front yard (no idea why);
5. There's a new requirement for the builder to handle the first 1% of rainwater, through one of several mechanisms. We need to make it clear which mechanism we'll use (we're going with a "rain garden") and draw it to scale on our site plan.
Building Review: Revisions Required. The building review department is requiring several changes:
1. Revise stair section to match proposed floor plan;
2. Revise building section to show insulation for floor, exterior and roof. Specify R-values;
3. Size of rim board is smaller than floor joist and must be revised;
4. Specify size for the proposed TJI's for both floors on the framing plans;
5. We've decided to include a fireplace, so that needs to be drawn as well.
We've decided that I'll try to do all the revisions on the site plan (the stuff needed for Site Development and the Arborist) and we'll have the architect revise the drawings based on the feedback by Building Review.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
DAY 128: EXTRA COSTS
There have been a lot of extra costs that have crept up on us as we work our way through the project, and we haven't even started construction yet!
Here are just a few of the extra costs I didn't factor for:
- Recompense Fees: Any time you lose a tree on site, you're going to pay the city a fee. This will end up being about $300.
- Permit Printing: Printing copies of drawings and permit documents is expensive. We'll likely have about $300 in printing costs.
- Permit Fees: I underestimated the cost of permits. I had assumed we'd pay about $3000 between demo and construction permits, but it's looking to be closer to $4000.
- Expeditor: The expeditor we hired will be about $1000.
- Demo: After the demo fiasco where we had to take the foundation down completely, we spent an extra $825 to have the existing foundation removed (this wasn't part of the demo company's scope of work).
- Staking/Grading: We didn't realize that we'd need to excavate and grade the property as much as we will have to in order to get the correct grade on the foundation. Between this and the silt fence, we'll pay about $3000. Also, we realized that to be safe, we should pay our surveyor to stake the building boundaries before the foundation is poured. Figure another $250 for that.
All-in-all, that's about $7000 in extra costs even before construction begins.
Here is a current budget update...we're about $14,000 over our original projected budget and currently tracking to about $65 per square foot (CLICK TO ENLARGE):
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
13y
If I could build for $65PSF in Austin, I'd be ecstatic. Your diary sounds remarkably similar to Austin, especially dealing with the city. As you know, you should look at your first project as school, and there are some tuition costs. Thanks for doing this diary. I know it's a lot of work, but it is extremely valuable. There is very little like in out there.
Real Estate Investor · Greenback, TN · Member since 2012 · 268 posts · 115 votes
13y
I second Jon Klaus about the tuition. Fortunately you get VERY good information for the cost of your education that you can use over and over. I've found that I have to build the same house plan at least twice to really know what it costs to build it.
In my opinion, the key to success in new construction is using identical floorplans as often as possible especially for the first couple years. I think that most builders that try something new every time eventually give up or fail. Custom builders have to have enormous experience to be successful at one-off builds.
Hopefully you can work out all the kinks and then repeat the same plan on many more lots. I know you're a "systems" guy so I'm sure you've already thought of that. Good luck!
Real Estate Investor · Boston, MA · Member since 2009 · 2k+ posts · 542 votes
13y
I had almost forgotten why I don't like New Construction.
J that's a lot of "mouths at the trough". You're probably funding a whole new City Department.
Mike
PS If you add another tree, will they wash the recompense fee or is there another new tree fee? Are there restrictions on tree Species? and Size?
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
DAY 141: SUBMIT NEW PERMIT INFO
Our architect had some personal family issues, and wasn't able to get to the revisions we needed for nearly a week. It took 14 days to get everything that was requested by the permit department in order and back to our expeditor, and she was able to get everything submitted today to keep the process going.
We're hopeful that this will be the last major round of revisions and that we'll have our permits in the next week or two...or three...or four...
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
DAY 150: ARBORIST SUCCESS!
We've hit the 6 month mark, and we got our first piece of good news from the permit office. The arborist has approved or plans and has posted notice that we have approval to move forward. Now we just need similar approval from the architectural reviewer, and then we'll have our final permits.
Hopefully that will happen in the next couple days...
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
DAY 154: GETTING CLOSER
We found out today that we should be getting our architectural review approval in the next day or two...which should be the last hurdle to getting our permits.
EDIT: IS ANYONE EVEN READING THESE UPDATES ANYMORE???
Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
13y
J Scott I usually come on here when I see you have posted something. Though it does sound like you're getting hit with some unexpected stuff, you were into the lot at a pretty good price, so you should be ok, right? Your process is very similar to here. When we submit all the plans there is a site plan that shows the location of the house, driveways, etc. Then there's a landscape plan that shows the location of the trees, and a grading plan that shows what will be excavated, etc.
As I think I told you before, our son, Michael, draws the floor plans, elevations, and site plan, then we take to the structural engineer to do his thing, after which it goes to an architect to catch anything that was missed (though last go round there was nothing) then he signs off. Doing it that way helps shave quite a bit off in both time and money, as we can make the changes immediately, etc. You might try finding a draftsperson that knows your local codes, etc. that can do the same for you, and compare costs.
Also, the idea of using the same plan is good if the lot is in the same area, lot size is similar, etc., as you know it's already approved.