Investor · Sherbrooke, Québec · Member since 2016 · 77 posts · 19 votes
Hello, i was wondering if you typically save money by buying a vacant residential lot, and then paying to put a house on it, vs buying a similar-valued property and a similar-sized lot together? do you save money by buying the lot separately and the putting the house on it? thanks
If building, would you be the general contractor? A GC would likely charge 15-20% to build for you. Also, make sure you're buying the lot for lot value. If you buy it for lot value and GC the project yourself and do a good job and not overbuild for the neighbourhood, you could likely have some instant equity in it when it is complete. Even if you used a GC, you'll likely come out under what you could sell it for on the market. Just consider if that is worth it because it will take +/- a year before it is complete and will take a lot more effort than buying something you are happy with already complete. Also, I agree with the above on the developed cost per sq-ft estimate. If it's a high end neighbourhood figure on $300/sq-ft to build.
It's going to largely depend on the market. Build costs are going to be in a certain range no matter where you are, but the market value can vary widely. You can easily spend $200-300 per square foot for residential construction. Though, you just have to weigh it up with the lot cost and the market value.
If building, would you be the general contractor? A GC would likely charge 15-20% to build for you. Also, make sure you're buying the lot for lot value. If you buy it for lot value and GC the project yourself and do a good job and not overbuild for the neighbourhood, you could likely have some instant equity in it when it is complete. Even if you used a GC, you'll likely come out under what you could sell it for on the market. Just consider if that is worth it because it will take +/- a year before it is complete and will take a lot more effort than buying something you are happy with already complete. Also, I agree with the above on the developed cost per sq-ft estimate. If it's a high end neighbourhood figure on $300/sq-ft to build.
It really does depend upon the market and depends upon whether it is just a house or a multiplex.
I am currently building two 8 - plex buildings in Halifax with a partner and our cost to build is way less than what we would have to pay to buy one that is already built.
So the response is really to check out the numbers - get quotes and then you will know for sure.
If building, would you be the general contractor? A GC would likely charge 15-20% to build for you. Also, make sure you're buying the lot for lot value. If you buy it for lot value and GC the project yourself and do a good job and not overbuild for the neighbourhood, you could likely have some instant equity in it when it is complete. Even if you used a GC, you'll likely come out under what you could sell it for on the market. Just consider if that is worth it because it will take +/- a year before it is complete and will take a lot more effort than buying something you are happy with already complete. Also, I agree with the above on the developed cost per sq-ft estimate. If it's a high end neighbourhood figure on $300/sq-ft to build.
Hope that helps!
thanks. actually, i was looking at some prefabs like here:
Standard GC upcharge out west here is 20-25%. That said, you’re standard half capable human won’t save nearly that much the first time. There’s a learning curve. And depending on you’re background it may be a steep one.
Building is pretty tough. I have remodeled 20+ places and really done 90% of the work. Not bad.
Building is a big challenge. Lots of sequencing issues, contractor problems, and is not my cup of tea.
I built my personal house for about 110/sf. It was not easy, and there is a big learning curve. Should have started with a spec house. Our house was designed by my wife and lots, lots and lots of change orders...
Usually the more value you add the more money you make. It's hard to add more value than turning a piece of land into a building, so for the same end product building will usually be cheaper than renovating.
Turnkey, you buy it and are making money right after close.
Building it kinda gives you what you want, but consider:
1) Two years to close on land after getting into contract waiting on entitlements
2) Dealing with planners (can take 6 months and they may make you include affordable units). In Portland, heaven help you if a resident (not owner) objects to your plans in the neighborhood.
3) Cost of planners, in Portland SDCs are pushing $25K/unit
4) Dealing with contractors and price of supplies (like limber has tripled in the past six months)
I guess if you have a non-totalitarian local govt, I'd be OK. I wouldn't do it in Portland.