All Forum Posts by: Sue Hough

@Tom Shallcross is correct.  Obtaining permit inspection from the city of Chicago is never predictable and your GC is not going to be able to predict the outcome any better.  Earlier this year I waited 7 weeks for an HVAC inspection only to be failed for a minor infraction and waited another 5 weeks for re-inspection.  If you are going to work in Chicago you will need to allow for these types of unfortunate events.  There is no way around it.

Also, I am sure you are aware we have a serious labor shortage, the trades are no exception.  As a GC myself in Chicago, this is very problematic at this time, even the best planned GC’s are struggling.  To be four weeks behind with a permit re-inspection is not out of the norm.

Good luck

Residential Builder and Investor from Chicago :)). Love you ladies!!!

There is a great national group hosted by one of our own fellow members Liz Faircloth, The InvestHer Group.  You can find them on MeetUp and Facebook.  They also host a podcast on Bigger Pockets.  They are fantastic and I am proud to be part of their group!  

Good luck ladies!

Chicago market… for the build @David Lee Hall, III mentioned above, for today and only today it would roughly run about $450,000. Tomorrow who knows…lol!

I’ve said this before on bigger pockets and I’ll say it again, I’ve been a builder for 20 years and have never seen anything like this. The amount of time and effort I spend trying to secure materials to keep my budgets down and then trying to find materials which are backordered has really put a damper on my industry. I can’t wait until this is fun again.

Good luck!

@Arielle O.. The bedrooms below grade would definitely decrease the overall value of the home due to the fact it is less desirable.  The same would hold true of the rental value.  But, I believe you may have a bigger concern; not all banks will allow the calculation of bedrooms in the basement, thus rendering the home “0” bedrooms.  Lastly, was this properly approved with the building department or has it been altered post-construction?  The reason I am asking is in the Chicago market most municipalities would require at least one bedroom above grade.  If it has not been altered, you are fine.

It seems the “steal” is based on a deeply reduced price due to the unique situation and the home will always be worth substantially less than the surrounding homes due to the sub-grade bedrooms.  As long as you can obtain financing, understand the real value of the home and do not have building code issues, it sounds like you found just what you were looking for.  

Good luck!

@John Taylor. I have been a builder for 20+ years and the price of $20 per square foot I will assume was a typo.  Here are a few numbers from the Chicago market, keep in mind our prices are some of the highest in the nation due to required copper water lines, all wiring encased in hard pipe and so forth. Therefore, you can assume our pricing is about 40% higher than your location in West Virginia. Since the pandemic we have seen the average overall residential home construction price increase approximately 30%, my prices are based on current numbers.

Mid-level single family home without a finished basement is approximately $220 per sq ft.  Remodeling, which is always more expensive due to the nature of working with existing, is approximately $250 pr sq ft.  A total gut rehab interior would be in the last price range, for your area approximately $150 per sq. I believe the contractor you are dealing with is within a safe range.  

Good luck

@Joshua Zdunich I made myself an employee of my company, taking a reasonable salary.  On top of that, I take shareholder distributions (K-1) disbursements throughout the year.  This has satisfied all lenders except for a home loan.  Traditional home lenders require three years of tax/income returns from the business because I own more than 50% of the company.  There are other loans available which avoid the company financials as mentioned above.  I highly recommend consulting with a good accountant.

Good luck!

@Warren A. In my landlord experience I came up with a few steadfast rules about what I consider acceptable regarding necessary repairs in a building, which coincide with being a builder.  The biggest one, and the one rule I do not bend on, is; if it involves the life safety of any person fix it immediately.  I believe, this is one of those situations.  Although old fuse boxes are still in place, they are in my opinion, a potential fire hazard.  In addition, many economically disadvantaged people use and rely heavily on the use of space heaters to heat their homes in the colder months.  This can wreak havoc on aluminum wires and further intensify the risk of fire.

The fix for this repair would be far less than the damage caused by a fire, or any person injured or worse.  Good luck,

@Beth Tischler. Beth, this is from my recent Blog post on Bigger Pockets and I think you will find if helpful…

1. Zoning Classifications. Land parcels are plotted on zoning maps which are created and managed by local municipalities (city, county, or state) which oversee the construction of development projects. The purpose of these maps is to ensure the municipality’s growth and building development are in alignment with the needs and vision of the community. For example, an area zoned for schools is usually not placed adjacent to an industrial zone. Zoning classifications will help you determine the type of building project that is allowed according to your parcel’s designation.

These are the most common zoning classifications:

• Single Family Residential
• Multi-Family Residential
• Commercial
• Light Industrial
• Industrial
• Agricultural
• School/Church

Be aware that zoning classifications are not uniform between municipalities, therefore it is critical to contact the zoning office for every parcel you want to develop. Among the details you want to make sure you obtain (usually available on the website of the local building and zoning department): size and use of buildings, minimum and maximum lot sizes, building coverage (permeable surface), setbacks, density limitations, parking requirements, and allowable business among other details.

Obtain a zoning map to ensure your project parcel does not sit directly adjacent to a zoning district classification which could adversely affect your project.

Should the current zoning conflict with your intended project, a call to the local Department of Building and Zoning can help you determine if a zoning classification change is possible. Unfortunately, zoning changes are often lengthy processes.

PRO TIP: To protect your cash flow and vision for what you want to develop, make sure your attorney structures your deal to make the purchase contingent upon proper zoning and issuance of permits. This is a common approach that shouldn’t cause any issues.

1. Soil Suitability. Before a problem takes root, make sure to start any land development project with a thorough understanding of the soil composition of the parcel of land you want to build on. Understanding the state of your soil will enable you to construct with the right materials in the right location, providing long-term value and benefit.

To determine if you have strong soil, suitable for building, most local municipalities require the use of a soil engineer. The results of their many tests are usually required to some degree before getting a building permit as well as a certificate defining the source of clean drinking water (potable).

Start with a Percolation Test (aka PERC Test) if you need a septic system. You want to make sure that the soil on your land can properly support a septic system. This means determining if the field is sufficiently permeable to absorb liquid flowing into it. You don’t want waste or sewage seeping back up and pooling on the surface. A soil engineer will use a much deeper hole, often 7 to 10 feet or deeper, as they look for a high-water table and the presence of rock ledges or impermeable soil that could block water absorption. Keep in mind that a failed perc test means you may not be afforded the right to build. Make sure your purchase is contingent on passing this test.

Once your parcel is deemed suitable to support a septic/waste system, the soil engineer can proceed by preparing a topographical survey (known in the biz as a “topo”) to determine the natural flow of water and the potential risk of pollution. The building department is especially concerned with this test as it will provide valuable information regarding the possibility of water run off to neighbors. Should your new development pose negative water distribution issues a solution can usually be achieved with newly placed retaining walls, drainage swales and a variety of other natural and human-made structures. Keep in mind, the solution will add unexpected expenses to your project.

A contaminant test may be required, especially if you are in an area which is know for various toxins. The soil engineer can also verify that there are no toxins or contaminants (like lead, arsenic, or cadmium) in the ground. The local Department of Health and Environmental Control can usually provide guidance relative to which contaminants, if any, are prevalent in your project area.

Ultimately, once safety is accounted for, a good soil composition test will help you determine if you will be able to properly support the weight of the buildings being planned. Unsuitable land areas are usually pretty obvious: swamps, bogs, or parcels that are near nuclear power plants or chemical retention ponds. A good building site has soil that doesn’t shift, expand or shrink drastically. Typically, this tends to be a mix of gravel and sand, which offers great stability and handles the presence of water very well. These tests are important pieces of information that will impact how you build your foundation.

PRO TIP: Here’s a do-it-yourself soil test that can give you an early indication of your soil's suitability for building before you do any professional testing. Simply take a ball of damp soil in your hands from your proposed parcel and see how it crumbles. Soil heavy with clay will most likely retain its shape in your hand, indicating high water concentration which is bad for foundations due to its tendency to shift around as it dries or moistens. If there is too much sand the soil will have trouble retaining its shape, foreshadowing the kinds of problems your foundation is likely to face. Soil that crumbles in bigger chunks tends to indicate the right mix of materials.

Please reach out to me via message or email.  I have a great lender interested in ground up working in the area.  Thank you,

Sue