Lender · Lake City, MI · Member since 2019 · 118 posts · 42 votes
1mo
This is a great question! My initial reaction is, "You need to pay attention to all those numbers"
I think the combo of construction budget and holding costs can quickly get away on you if you are not super dialed in with hitting the timelines correctly.
Contractor · Pensacola, FL · Member since 2017 · 313 posts · 156 votes
1h
I'll say if I had to pick 1 its land cost. But there is a lot that is wrapped up in that. Does the land have a sewer lateral on it already? Is there a power transformer on the property already? Is it cleared? Sloped or flat? You make your money when you buy.
I think in most markets construction cost is going to be comparable unless you are doing a lot of volume like 10 starts or more per month. The rest of us are going to build the house for +- 10 pct within each other. So construction budget isn't AS important imo.
Just as important as land cost is As Built Value. You can't invest a million dollars in a house that sits in a neighborhood of 100k houses. Don't get cute. Find out what people are buying and build in that range. Spec building is about fairways and greens. But I suppose that's all relative to your risk tolerance. I know guys building million dollar specs in a market that averages like 380k. But Ive been through one housing crash and it damn near ruined me. Not putting myself in that spot again.