All Forum Posts by: John Blackman

To further diversify your risk, you can put groups of properties into separate LLCs. This is a bit of extra paperwork and cost, but creates firewalls between properties so in the case of a lawsuit, the plaintiff can only go after what is in one LLC bucket. You can set a max amount of property value per LLC to insulate yourself. Obviously this only works if you have a lot of separate properties.

We received our notification from the Gas company one day after they said it would be complete that it was all clear.  We had some people parking on the lot, so we left signs up for one day and they listened.  It was clear today and we have scraped off the old remains of the foundation and driveway.  We've got a tree in the back that is not protected and will need to come down before we can start the forms for the foundation.

@Ryan R. These costs do move depending on supply and demand, but not a lot.  The subfloor is 1550 sqft.  The interior finished floor area is 1504 sqft after you take the walls out.  The piers are more expensive that usual due to the soils composition of this lot.

Soil Analysis: $1,000

Piers (28): $300 each = $8,400

Subfloors material $3.5/sqft * 1550 SQFT = $5,425

Labor $2.00/sqft = $3,100

Carport $9.00/sqft (slab) = $2,250

Termite pre-treat (chemical) = $600

Total Cost: $20,775

A slab foundation would have been less expensive, but given the tree on this lot, that was not a possibility.

I saw that project and Bryan mentioned it was yours.  Good job grabbing the land over there.  I love Sanchez St, especially the east side of it.

WEEK 5

Windows were delivered, some are installed, and siding has started.  The paint colors should be selected by now and the plumbing started inside.  By next week the house should be fully closed in and we can start paint prep.  The mechanicals (plumbing, electrical, and HVAC) will all be in full swing next week and then we'll be waiting on inspections and doing the back and forth with the city which generally causes the schedule to elongate.

WEEK 4

The framing is complete and the soffits are complete as well.  Even though you can't see it, the roof decking complete, and the wall sheathing is nearly done.  There are a few open areas around the front door on the left and near the ceiling in the front.  Tyvek weather barrier has started to go up as well. 

Only one month in and you've got the core parts of a house.  This is why I love new construction.

WEEK 3

More framing progress.  You can see the roof taking shape and lots of materials about.  The power pole is over there on the left.  At this point the windows should have been ordered ahead of time so you won't be waiting on them to complete the siding.

As you start the foundation, you should be thinking about the materials you will need two or more weeks out depending on your delivery time.  We generally order windows when we start the foundation.  There are many local lumber yards that we will get bids on for the entire set of plans before we start the foundation as well.  If you are using specialty windows this can take longer.  If you are using standard stuff like Plygem (our most common windows provider), most lumber yards can get that product to you in a few weeks.

We always get multiple bids for our lumber from three different providers.  Each time a different provider will have a better price.  Lumber yards are really commodity brokers.  They make most of their money on a good purchase of lumber.  So their prices moved based on how well they do with their purchasing power.  As a consumer you can take advantage of this too.  So don't stick to one supplier.  Chances are you will be buying from all of them at some point.  The key here though it to make sure you have your windows on time.  That will allow you to button up the house and lock it up.  It will also allow you to start siding.  All the windows need to be in to complete that job.

Here we are on Berger with the rough framing up.

This house is pier and beam and several feet off the ground to make sure the finished floor elevation is above the 100 year flood plain.

That isn't typically a requirement, and if you are pouring a slab in a non flood zone you still want to make sure you have at least 6 inches of clearance from the ground to the top of the foundation.  Any earth that is up against the edge of the foundation provides a vector for water to enter the house.  Water is very bad inside a home obviously.

In Austin we have to balance being able to build inside the virtual ceiling height of a building and keeping the foundation high enough so that earth isn't at the seem of the foundation and framing.

You can also add drains around the foundation to help move water away from it faster.  These add some extra cost but is well worth it if there is the possibility of water accumulation at the edge of a foundation.  Water damage can cost tens of thousands to repair.  Make sure your foundation is well clear of the earth.

The rough framing is always a great psychological victory.  It goes up pretty quick and all of the sudden you can see a house.  Things to consider in this stage:

1) Make sure there is enough space for your HVAC (actually this should be done in the design phase)

2) Make sure you have space for all of the HVAC conduit.  Sometimes you may need to build furr-downs to house extra HVAC conduit if you have tight design constraints.

3) If you are building a duplex, this is where you want to ensure you can build a proper firewall and sound proofing between units.

4) Check your window heights and kitchen cabinet elevations that you are going to be able to hit the plan.

5) If you have big open ceilings, make sure you have enough support to hold them up.  Architects aren't engineers and often do not spec the right materials to provide proper support.  Your engineering plans should have this detail, but not all areas require engineered drawings for a permit.

6) Make sure you have access to all HVAC and mechanical equipment in the attic space.  Most areas require a minimum amount of working space around your mechanicals to service them.

7) Double check your stairs.  A bad framer can leave your stairs uneven which will not pass code.  They should all have the same rise to run ratio meaning the height and depth of each stair should meet code.  If they aren't right at framing time, it will be a bear to fix later.

8) Leave a path to vent your kitchen hood.  Some builders put vent hoods that don't really vent anywhere but instead just recycle the air through a filter.  Check your code to see what is required.

Sometimes architects do some hand waiving on these areas and the builder is left to interpret or 'fix' the architectural designs. Not all architects have a builder background and do not know all of the construction codes and variances that your builder does. This can create some conflict, so be ready to be the decision maker where design and implementation bump heads. Assuming this is a spec home and not a custom, avoid designing your dream home. Do what has the best ROI, is functional, and appropriate for homes in that market.

Thanks Steve, I admit that I lazily use the two terms interchangeably.  All of my lien releases have a dollar amount that adds up to the contract price. In Texas I use a standardized form that has an amount on it.

43 acres is really two sets of development projects.  The first is the infrastructure, the second is the vertical.  There are plenty of developers who just do the first half and sell the build ready space to a home builder.  You can also do both. They are completely separate skill sets and usually have completely separate legal hurdles to jump.

Setting up the phases for financing and your exit strategy will be paramount.  Schedule delays also cost a lot more on big projects than small ones.  Bad scheduling can bring a big project to an untenable halt which is less likely for small projects.

For your first project I would just hire someone else to do it with a good track record.  You would act simply as an investor and promoter.  Rely heavily on the experienced developer / builder.  You will learn a ton by watching the books and schedule.  You'll take away most of the risk by using a professional with a long track record.  You'll also give up more of the equity because its your first one.  That's ok.  With the knowledge you get, the next project you will know what areas you can take over confidently to carve out more equity.

Mis-steps in development can turn a project into something you have to complete just to break even.  Tread carefully, and I agree with the sentiment above, try a smaller project first.  Mistakes will be less expensive.

Good luck,