Confused About Construction Costs
I am located in Northen New Jersey (Bergen county), and I am entering into a deal with a builder, where I put the land and he puts up luxury town houses. He claims that his hard cost will be in the range of $110 to $130 per square foot. So far so good.
I was talking to another builder about building two family homes in a blue collar area, and he is charging me about $35 per square foot!!!
Is there such a big difference in price between blue collar and luxury????
The way I figure it, if you go from good floors to better floors, you are adding tops $2 per square foot. For a 3000 square foot home, an extra 20 grand for the kitchen and an extra 50 grand for the bathrooms adds another $25 per square foot. Let's round things up to an extra $30 per square foot.
So now, according to my calculations, the builder's cost for the luxury homes should be right around $65 per square foot.
Am I missing something here? 
If you are partnering with this guy your prices are WAY too high. Normally you pay around $100-$110 per sf at RETAIL when purchasing or building a luxury home.
For example, Here in Ohio I could build a home that would sell for $180k for about half that cost. (Nice home, 3bd 2 ba in a nice area). If you add in the cost of land, etc you are probably looking at about a 40% return overall.
FYI Contractors usually make around 30% of the entire build costs as their fee for being contractors.
I would look around, this guy sounds like he wants to charge you retail building costs, which means he is not a partner, he is just a builder, and if thats the case, go with someone who will partner with you.
Goodluck!
Building costs are more than just the sticks and bricks. What about water and sewer taps or well and septic are they included, carrying costs, points, closing costs, get a total picture and a breakdown of the costs item by item. This will help you. You are right there sounds like a big gap there. We built our custon 2 story Victorian total including land, well points all for $75/sqft. I was the builder and received no profit. The land payoff was only $30,000 of the total $300,000
Hope this helps some
Ted Jr
WAY TO HIGH.....I don't know what the cost are exactly in the Jersey area but those numbers sound way to high for a construction cost. And I don't know what types of finishes your putting on (must be marble everything imported from Italy) but whatever it is it sound like you need to be shopping around.
The practice here at the firm I work at is we
1)draw the plans
2) send them out to several contracts to bid on. Attached to the drawing we make sure they now the final date we will be accepting bids, so this gives them enough time to look at the drawings , shop around for other subcontractors, and give us a hard number they can afford to build what we've specified and still make a profit.
3) recieve bid
4) select and notify the winning bidder. And it's not always the guy who comes in the lowest who get the winning bid. We weight our options and select a medium low bid to assure quality work.
This process keeps the contractor honest about there prices because they know it's competive and they know if the come in 2 high they won't get the jobs. They all get there labor and materials for about the same price so they have to decide how much of a bit am I willing to take out my profit to get this job. Whoever is willing to meet the standards of the contract and make his desired profit will win. I think they usually end up making about 10% profit on the job, but I'm just assuming that based on what I hear since I'm working on the other side of the playing field. "I think" 10 is fair.
I would suggest you follow the process above and bid your contracts out to multiple builder and let each one know that your doing this so they are aware that they best not try and take advantage of an inexperience builder/client.
Good Luck
AA
Contact a LOCAL appraiser, banker and / or the building department where you are looking at doing the project.
State to state cost vary and depending on how each construction company deals with various aspect of the construction will account for the wide range of prices you may get..........in essence you need to compare apples to apples.
They should be able to give you a ball park figure....but then again, you need to have some plans and construction specs to go by.
Im a builder and can tell you that 10% is rediculous when taking into consideration overhead expenses (yes it does cost to run a business) as well as other expenses.
Many construction businesses often fail for the pure simple reason of the owner not knowing the difference between
1)actual construction cost,
2)overhead expenses and
3)profit.
Speak with the contractor about how he charges.......cost plus percentage, cost plus set fee, etc........ I personally do the set fee....this way I know what I will make off the deal and yet any monies that can be saved goes back into the owners / investors pockets. There are numerous variations that can be worked out where all parties are happy.
Also make sure whoever the builders you talk with are familiar with additional fees that may be assessed in your area.
I use to pull permits for a sfr in my county for around $500.00........now they average $5000.00.....neighboring counties vary greatly (this list goes on)............again compare apples to apples......in your local area....and dont just go with what appears to be the cheapest.
Good luck.
NC_Yank
So you think making a 10% is ridiculous? If that's the case what would you consider a fair rate of profit? After talking with alot of investor around here they seem to be happy if they make 15% (although most of the time that is the minimum they want). Architecture firms make about 7-10% (and we do have overhead expenses as well). I mean even realtors charge around 6%, which they then have to split with there broker and pay for whatever overhead they have out of that, which is usaully 3%.
I'm well aware of the overhead and risk of a construction project, cause many things can go wrong and probably will which eats into some of the profit, but to mark up prices 25-50% higher seems kind of steep to me, but hey if that's the type of market your in where you can set your prices at whatever you want and still get business I say more power to you, but at the same time the buyers must know that there are eager people will to do the same types of job for less and still deliver quality work.
2 CENTS:
A job is only worth what a person is willing to pay for it. -
Living in A Buyer's Market
AA
Everything i have ever seen as budget in NJ is 75$ square. Just remeber NJ is like on other place in country constuction cost can be as much as double as in other states. The closer you get to manhattan the higher the cost. As far as luxury homes goes need to be more specific as to what types of options you are putting into them. Luxury is too broad a term now days. Iv seen townhomes in central NJ with Luxury titles that are no more than a builder home with nice plumbing fixtures and cabinets. Then iv seen in the same town Luxury homes that have elevators door men and three story celings for 1 mil+. Your pretty lucky Iv been looking for a partner with land that will let me build and split profits. Take advantage of this oppurtunity you may be come a RICH MAN!!!!!
[quote]
On 2003-11-21 10:12, ambitious_architect wrote:
<<NC_Yank
So you think making a 10% is ridiculous? If that's the case what would you consider a fair rate of profit? >>
*********************************
Hi AA,
My experience with most "Investors" is that they want to pay as little as possible to those that are making them a nice size profit.
You can tell by some of the advice given by some of these construction expert and "investors".
When they do a fixer upper they are not much better than the slum lords that I come across......throw paint and caulk onto the problem and turn around the flip it as fast as possible.
I see this when I do home inspections.
They give investors a bad name......I put them in the same boat with politicians and used car salesmen.
Yes, you can say that the investors are risking their money......but you and I know that realisticly the risk is minimal if the contract is structured right AND the investor is picking his clintel based upon good sound principals.
I have built homes in Ohio, Indiana, Ky, Va, NC.....and most of the contractors I see (and they are usually the paper contractors) are constantly switching subs and trying to keep ahead of the customers complaints and lawsuits.
My neighbor got his license 3 rs ago and is now out of business, his house is up for sale and currently has the IRS and the lawyers chasing him.....why because he ran his business like most builders.
********************
<<After talking with alot of investor around here they seem to be happy if they make 15% (although most of the time that is the minimum they want). Architecture firms make about 7-10% (and we do have overhead expenses as well).>>
****************************
Sure architects have expenses...but its the contractor that makes it work and his expenses and overhead is quite a bit higher and therefore his percentage / fee should be higher.
Not only do I require my sub to carry insurance I carry it as well in case theirs lapse.....
Ask any roofer what his workers compensation cost are........for those that carry it is .25 cents on the dollar.
25% of his labor cost is insurance, than of course Uncle Sam gets his cut for the stupid social programs that he promises to the parasites to keep him in office................whoops...I better stop before I get my blood pressure up on that one......at anyrate it does cost to run a Legitmate business......some businesses cost more......and if a person is going to run a good construction business with regards to taking care of his subs, employees, equipment......well......I am all ears for learning how 10% is sufficient.
Yes, I know how some investors will find alternatives .........like finding some cheap handyman (who does not have workers comp. or gl, to do the job.
And then there are the "investors" that will try to put together their own team of subcontractors (which I have no problem with....Im all for people going into business for themselves....the they would kick out the tax and spend politicians) but unfortunately they are often getting the subs that us contractors dont use...........and it doesnt take a genius to figure out why we dont use them. lol
In regards to architects and their percentage.......if I had a dollar for everytime I had to fix an architects miscaluation (number / measurements dont add up, point loads not accounted for.....) I would be a little richer.
And lets not forget the silly phrases (pass the buck) they put on their blueprints.......about the "contractor being responsible for checking measurements and details on the plans".......blah, blah, blah....
Give me a break!,,,,,
If I am going to be responsible for someone elses drawings then that 7 - 10% the architect is getting needs to go into MY pocket.
Yes I do check plans but it burns me up when I have to sit down for several hours doing his/her work.
I now do my own blueprints and for a few select customers I will design their project, at least I have no one to blame but myself.
Yes there are a few good architect but its like anything else........they cost money.
Have you noticed that "Home Designers" are popping up left and right......I wonder why?
***************************
<< I mean even realtors charge around 6%, which they then have to split with there broker and pay for whatever overhead they have out of that, which is usaully 3%.>>
*******************************
that 3% is not overhead....it called a commission.....realtors have very little overhead.
Realtors....not to slam them but since you brought them into the equation, lets be realistic, they put a house in the MLS and pick up $7000.00 - $12000.00 for doing what....typing up a listing and waiting for phone calls.....give me a break....agents are a dime a dozen.
A good contractor that has actual working knowlege (not most of these wannabe paper contractor you see) is hard to find.
And yes I do use real estate agents from time to time.....do I like it......NO, but then again time is money and I dont have time to waste with people that are not serious or dont even qaulify to buy a used mobil home.
*****************************
<<I'm well aware of the overhead and risk of a construction project, cause many things can go wrong and probably will which eats into some of the profit, but to mark up prices 25-50% higher seems kind of steep to me, but hey if that's the type of market your in where you can set your prices at whatever you want and still get business I say more power to you, but at the same time the buyers must know that there are eager people will to do the same types of job for less and still deliver quality work.>>
*****************************
Eager people are usually hungry and desperate. When people get hungry and desperate they will tell you what you want to hear.......not what you need to hear.
I try to point people to the small knowledgeable builder....one that has years of experience in the fields that he has to oversee.
That type of builder has paid his dues and is worth his fee.
I have worked in 30 below zero (Ohio),
105 degree with high humidity (Va), got the scars and a few puncture wounds along the way...... so when it comes time for me to figure out my fee......I have no problem in justifying it to anyone that ask nor do I have a problem selling myself.
I have yet to find a contractor in my neck of the woods that has the wide range of experience I have, delivers the quality and still can offer my clients instant equity.
Again I dont play the percentage game that most builders play......I do actual construction cost plus my a set fee.
If I can make 30k - 50k off of a project and yet give you a nice size amount of equity......whats the problem.
You cant find track builders that can offer a high quality home with instant equity to the homebuyer at closing......but yet their profits range between 40 - 50%...and thats coming from one of their accountants....at least with a certain national track builder.......who has been putting up very lovely "junk" homes and selling them to ignorant buyers all day long.
(not being derogatory but using the word in its real form.....a person without knowledge)
My mission has been to expose these builders for what they are as well as educating the public....and so far I have been making a living off of it while still keeping a clear conscience.
**********************************
<<2 CENTS:
A job is only worth what a person is willing to pay for it. -
Living in A Buyer's Market>>
***********************
Thats what the world teaches but my bible says (and Im paraphrasing) that a laborer is worth a fair wage...one that he can support his family...not as little as I can get away with.
Its more important to invest into relationships and follow Christian principals and not what the market or the world dictates.
NC
NC
I overstand what your saying. You seem to be an established builder who is probably well worth the fee's you charge for your services, ... for those who can afford them....But I think our original poster, like many others on here, is coming from a stand point of someone who is just trying to get started in this development business. Your obviously, well seasoned in this game and of course you know the benefit/worth of experience, but when your just getting started you have a different prespective (and budget) of this development game.
A person on a strict budget definitely needs to shop around. This is why I recommned the Competive Bidding Process. (and as I mentioned earlier, this doesn't always mean picking the lowest bidder). Competive Bidding is the essence of finding a great deal. If you don't shop around how can you make sure your getting the max out of your dollars?
Now when your well established and have more experience with builders then you may be able to pick and chose who you like based on past preformance and relationships. Like getting into most relationships now a days sometimes you have to kiss alot of "frogs" before you can find your "prince, realtor, architect, and builder"...and we all know there are more "toads" out there than any thing else.
I only state this last part here to defend the honor the architects out there Know granted your experience lapses mine many times. I have around 15 structures built (2 being built now), 1 out to bid, and have colloborated on about 50 other projects with fellow architects and engineers in only 2 states (LA and TX) both being in the South. My experience so far with contractors has been, 1)they do not lesson, follow instructions, or read very well. Most only think there is one way to do build, and it's that "their" way, when the reality is there are many ways to construct a building. Ego's are definitely a problem here. Many will just build the way they want to do things and wonder why they are getting in so much trouble. Don't forget that the blueprints they are diregarding are Contract Documents, that the must build by, the Architect carries alot of the liability on this projects. I've seem them send RFI's (Risk For Information) on drawing that were right in there face and I'm sure you know the one's who try and distract the owners and others willing walking through the final inspections and punch list, to hide their unfinished work or mess ups. Contractors have generally mistrusted by the public, this is a reputation they earned, not one that was given.
As far as justification by more overhead cost, I think architet's have a little more overhead and liability than you realize. Yes you have your sub's to hire out and screen for quality, well we also have our Consultants (civil engineer, mechanical, electrical, plumbing, structural engineers...etc..) to also manage. If we pass our calculations on a faulty calculation give to us, of course the whole project will stink of it, but we need to but the blame in the right place. Another thing no matter how much we plan there are things that happen in the field and conditions no one was aware of that can arise. These need to be addressed to all parties envolved in the project in a cooperative way by the contractor, not in by taking things into yoru own hands and recalcuating them yourself ..know your making yourself liable. We can both agree there are some bad architects out there as well as builders/contractors. I believe the solution is more communication and less contempt and resentment for members on the project team, cool down on the ego's and lesson to one another. Many contractors and architects as well hate the forced marriages between the two, but we have to get along. Competiveness is good for bidding but sucks when it comes to team work.
Design/build is definitely the wave of the future. One stop shopping, and awhole lot less beckering.
The Walmart World is Coming
AA
Interesting series of posts. I enjoy reading the different perspectives Reminds me of the scene from Fiddler on the Roof.
" You're right" and
"Your right"
" Hey they can't both be right"
"That's right too"
If we asked for opinions on this matter ( margins) from:
Developer
Architect
Civil Engineer
Structural Engineer
Sub Contractor
Builder
Real estate agent
etc.
We would get a wide response.
The truth is in there somehere.
Isn't it interesting that we are now asking for the price per square foot for a luxury home. To me that's like asking the price per gram of a designer pice of gold jewelry. It's done all the time but the designers are insulted by it.
A price per square foot is a helpful guide but should be taken for what it is. Thereare so many variables that can alter the nubers drastically - it should only be used for comparing the same products.
In the same house I can put carpet at $1.00 a square foot or marble at $10.00
The same goes for margins. We cannot compare the margin on a $130,000 condo with a $1,300,000 house.
Gregg
[addsig]
You are right in saying that flooring can range from $1/sf (carpet, very cheap!) to $10/sf (marble). In this part of NJ, the basic house (not the cheapest bottom of the bottom, but your basic house) will have hardwood floors, sheet rock walls, even a Jacuzzi.
I am just trying to figure out a REASONABLE range here. I know that the basic house will cost me, as an investor and not as a builder, around $40/sf. Assuming a 20% profit for the contractor, that puts his cost at around $34/sf.
Now remember that the deal being proposed to me is that the builder will build the houses at his cost, I put in the land, and we split the profits. Now lets go from "basic" to luxury. There will not be elevators in the town houses. The size of the finished townhouse will probably be around 3000 sf.
So what can change here?
Add a nice gas fireplace $2000 ($0.66/sf).
For the three bathrooms spend an extra $10,000 a piece. That's $30,000 all together ($10/sf).
Upgrade the hardwood floors in the kitchen, dining and living rooms, to marble. Let's assume that these 3 rooms occupy half of the living area, that is 1500 sf. Now we are going from $2/sf to $10/sf that's an additional $12,000 ($4/sf).
Change the exterior from siding to brick, for an additional $8000 ($2.67/sf).
Soup up the kitchen and throw into it an extra $30,000 ($10/sf).
Add nice banisters and moldings for an extra $10,000 ($3.33/sf).
Do the math, and this comes out to about an extra $30/sf. Let's say that I missed something and adjust it to $40/sf.
Now, the cost of the builder went from $34/sf to $74/sf. Where is he coming from with a range of $100 to $120??
Am I missing something here?
Gregg-
Your the most right in here
With me coming in a close 2nd
Seriously though, I do also feel it is a matter of prespectives as well as, philosophies and ideologies , that you bring into this arena and come to your conclusions.
I can't correct all the typo's in my message up there put I do want to correct one that jsut stick out like a sore thumb to me and so others won't be mislead/informed - RFI stands for Request For Information, not Risk as I typed earlier, My mind said one thing and my fingers type another.
jic-
It seems like you've done most of your homework and now the cost of the materials, the only factor I see you leaving out is the cost of Labor to install these materrials. If your really getting into this I'd suggest picking up a copy of RS Means Cost Calculator 2003 it's a great resource to use as a reference to get construction cost of different project types in different regions as well as different states. I think it cost around $99 though, so you may just want to go to the book store and thumb through it at first to see if it will be benefical to you. I would like to look it up myself to give you the numbers it comes up with but someone has taken the copy we have in the office home
Another thing present your info to the contractor and let him tell you what he thinks. There may be a simple answer to all your questions , all you have to do is maybe ask him directly. This guy is suppose to be your business partner, so you guys need to communicate and be able to trust one another. If not I'd dissolve this relationship before it even begins.
AA
After Thought:
Tthe big question I'm wondering is can you still make a decent (or your desired)profit off of this deal even if building at the high cost the contractor/partner is suggesting. What are the Comps in the Area going for?
Time to go Back to Good Ole Capitalism 101- Bottom Lines
Cost of labor???
That's in there ealready. Well, almost. In the original calculation, you still have to pay to have that wood floor installed. So now instead of paying for wood installation you pay for marble installation.
Whether you put in high end faucets or cheapy ones, the cost of installation is the same. Same goes for an extra fancy kitchen, etc. That is why I added an extra $10/sf at the end of my calculations.
So back to my question. Am I missing something in the conversion from plain vanilla to luxury?
[ Edited by jic on Date 11/25/2003 ]
My suggestion is to go to your builder and ask for a complete breakdown of price. He owes that to you, afterall you have brought the potential project together and have the land. If they refuse then move on. If he does give it to you review it with someone who is knowledgeable on building costs in that area. Even if you have to pay an architect or inspector or someone $200 to give you an hour of their time. If you think he is way off still then ask him to further explain the costs because you are not confortable with the pricing based on your review with a partner. It may be to late but put yourself in a middle position. It gives you more room to not be the bad guy. Say your partners are questioning the cost. If after this exercise you can't get comfortable with his pricing then tell him you have to bid it out and go out to three more bidders, and again get a complete breakdown by discipline.
I think you said you are partnering with the builder. If he has to fund the cost of building and wait till you sell to collect on those costs and his part of the split of profits then he probably has a right to be somewhat high but not double high. If you learn this is the case then he is trying to make alot of profit off the deal because he thinks he is in a position that no one else can do amongst his competitors.
No matter what the case you have to somehow perform due diligence and determine whether or not he is trying to take you to the cleaners.
Believe me I am not solely on your side. I have been on the other side many many times as a project manager with a 10-15mill project load for all private clients. Most of this work is negotiated due to the type of high tech work I do. I have been told I am crazy thousands of times when I provided pricing to clients. Sometimes they just don't know the real cost of doing business. Sometimes I covered my ass because I knew the drawings were a disaster and they did not plan on performing more design. In this business you can't assume the owner/client will just shell out more money when something changes. You have to wiegh the risks and decide on how much reward you should be allowed to take for taking that risk. In many cases I build in 30% profit. You know what happens on half of those jobs. I don't make nearly that much becuase of the variables that occur that you can't always control. Keep this in mind when evaluating your builders pricing. If he has worries try to solve them and then negotiate a lower price. If he tells you he is afraid materials pricing will go up then tell him you will pay the difference only if he provide you with a list of potential items and there quoted cost at time you award to him. If he thinks the drawings suck then figure out if $1,000 more in design will save $5,000 in risk cost that te builder built in.
Good luck
TBARBER
Hi AA,
I agree the contractor and arch is a forced marriage at best. I suspect many problems would be resolved if the client (home owner) were more realistic with their budget.
It amazes me how many of these people will spend $2500.00 or more for their dream home design only to have their bubble burst when they find out they are trying to make a VW into a Mercedes.
In regards to the builders reputation.
I agree with you and wish more states, including my own, would be more stringent about who gets a license.
Again, most of this could be avoided if Harriet Homeowner would take off the rose color glasses they wear and be more cautious when dealing with people.
With each passing decade I seriously believe that our society is being taught to be stupid.....there is no other way to account for it.........its just not natural how stupid people are...........we are graduating people left and right without any common sense or ability to think rationally.
NC, I agree with everything you say. Most people that don't have actual hands on experience, seem to have all the answers. Mostly wrong ones! Architects-no offense! are a pain in my arse....I spend way too much time reviewing plans, making common sense changes to avoid a financial disaster! But then, I'm not a track builder either. I am hands on.
It seems nobody cares about a quailty build house anymore! These frickin track builders come in here and build temporary houses with problems down the road that they won't warranty because they made the money, they don't live here anyway, they kill my prices becuse they pile on the illegals!!! Pisses me off! Totally unfair business practices! Anyway, sorry about the spelling, when I gett on a rant-fingers are a flyin...lol...
I just finished pricing a custom home in two different locations. The permit costs varied from $17,000 to $62,000. The two local municipalities are only twelve miles apart. It is impossible to generalize about square foot costs, much more info is needed.
If you can make decent money on the project, don't get overly concerned with the construction costs.
Ok.
No-one is building any type of new stick built construction for $32 sf. Materials alone on the 1200-1400 "very basic models" we have been involved in have been around $35. The price goes way up once you move out of poor man's housing. My associate who is not a contractor like I am subs his out and builds them for $55 a foot plus land and that is rock bottom.
Moving into the nicer appointments such as eral wood cabinets, wood trim, nice lights, moen and Delta faucets, nicer flooring, architectural shingles, etc. can double and triple the materials costs. Not to mention sewer hook up fees to the city, permits, etc. run 12-20K in our area.
Generally your lucky to clear 10K on the low end ($55sf) homes after paying to get it built!
Now, I have read some of the posts and they are talking about retail vs "good deal" As a builder, why would I put out the good deal cost on a home? where is my incentive? I am certainly going to do it for more than my materials cost!
I would have to ask a few questions,
1. how much is the land worth that you are putting up?
2. What is the ratio of return for both our investments?
Generally I can find people with land willing to "subordinate" the property to me until I sell the house. Over here the land is less than 20% of value. At my parents it is 30-40%.
Here is the real issue and questions that should be raised.
" How much money are you putting into it and how much do you stand to make?
If the numbers pencil out who cares what the builder charges?
Also, if your new to the game I wouldn't go with the low bidder...
What would be the average profit margin for a developer building residential subdivisions? What about retail developers?
NC Yank, sorry to tell you but any good Realtor just doesn't stick a listing in the MLS and wait for it to sell and set back and make $7,000 to $12,000 for nothing. You do have to know how to market to prospective buyers and other agents as well. And there is overhead like mailings, ads, insurance, gas, etc... Which account for about 28% to 35% of my business. Not to mention the split with your broker, MLS fees, taxes, etc...If you get a check for $10,000, your lucky to walk away with $3,000 to $4,000. And thats not including all the deals that never close, and all that wasted time. Agents are a dime a dozen, only because most people are under the same impression you are, that RE agents make a lot of money for doing nothing. This same mentality is why only 3% make it past their 1st year.
Yes I know there are a few, emphasis on few, good RE's.....but lets face it....10k is quite a bit of money. Now what the RE's do with it among themselves is no concern to me.....bottom line is that its 10k out of my pocket for doing what.......mailing out flyers (which is a waste in my opinion), putting an add in the local RE magazine and of course putting the listing in the MLS...which Im sure by far accounts for the majority of sells.
My electrician only profits about 1.5k on wiring the house and yet he is required to know the code inside and out as well as being liable (as well as I) for any mishaps that may occur.
I had a "millon dollar a year agent"...(I guess some award she got for selling houses)that sold one of my houses and wanted my future business ....but after the sale when I asked her to help me find some land......she blew me off and said the best thing to do is drive around myself.
If I am going to pay someone or a company 10k on one house.......then I expect some service.
If I ask her to drive around for a few hours or get on the MLS and look for property then she / he better be beating a path to please me if they want to make another 10k from me in the future.
That ticked me off.......needless to say I dont use her anymore.
Most of the ones I come across have that same attitude....they act like they are interested in every word you say as long as their is a commission involved....once the commission is paid then thats the last you hear from them until another home is going up.
To put it bluntly, I could get more respect, sincerity and service going into a brothel than dealing with most RE companies.......at least the former knows what repeat business is all about.
NC
How do most builders obtain funds to financing their construction or building projects?
Hello seekingwriter,
Most builders obtain their financing through banks or by using their own money if they are fortunate enough to have the cash to do so. For a begining builder it is not easy to obtain financing to build a spec. I have built 4 homes, 2 for myself and 2 for friends. I have attempted to get a spec loan but have been unsuccessful as I can't meet the lenders terms. They generally require a great deal of money down, which is funny in a way as a homeowner that knows nothing can typically get a construction/land loan for zero down. My next avenue is to try to find a private investor that would be willing to loan on the spec. If you are thinking of building and are new that is probably your best bet, unless you have a good deal of money to put into the deal and even at that most lenders want to see that you have a track record of some sort. Maybe someone else knows something I don't as this has just been my experience. Good Luck!
JIC great question everyone got to vent and gripe..
There are several ways to figure const costs and as you can tell by now,building costs are so high because of the other trade.Pass the buck and blame seem to be most replies.
Being a carpenter and according to some members not being able to read etc, We can do the math instead,In this area, we use the 3.0 to 4.0 multiplier.
Take the cost of the lot with improvements and building permit.As a starting point. So a really cheap cheap single family home on a $20,000 lot should retail for about $60,000 divide by the unit sqft and that is the low low end. it takes a little practice but it works nicer homes in N California run 3.25 to 3.3 and true customs generally hit 3.45 to 3.5
So to make this make sense of this a small stater home is not going to have transom windows and granite counters.And the luxury unit will have Andersen or Marvin windows.Just work the numbers back and forth a few times.
For anyone that has an argument to this, keep it to yourself I'm too busy to listen to grouchy.
The old fashioned way is to look in the yellow pages for const estimating.
And not to forget Marshall and Swifts Construction cost estimating 2004
Let me know if I can help
Mike
P.S.I can read and someone needs to learn to spell!
Quote:
On 2004-01-04 14:18, TomC_MI wrote:
Hello seekingwriter,
I have attempted to get a spec loan but have been unsuccessful as I can't meet the lenders terms. They generally require a great deal of money down, which is funny in a way as a homeowner that knows nothing can typically get a construction/land loan for zero down.
Hi Tom,
You stated that you did two houses for yourself as well as friends..........as far as Im concerned that is a track record.
I would get a letter of reference from your friends lending company as to you completing their job in a timely and professional manner as well as keeping to your financial requirements.
You may want to also look at contacting some of the local suppliers that may offer construction loans.
I have been fortunate in that I have both a great bank to work with as well as a local supplier that offers construction loans for me.
I have yet to have to have any up front money as well as closing money.
Good luck.
NC
Quote:
On 2004-01-05 15:20, NC_Yank wrote:
Hi Tom,
You stated that you did two houses for yourself as well as friends..........as far as Im concerned that is a track record.
I would get a letter of reference from your friends lending company as to you completing their job in a timely and professional manner as well as keeping to your financial requirements.
You may want to also look at contacting some of the local suppliers that may offer construction loans.
I have been fortunate in that I have both a great bank to work with as well as a local supplier that offers construction loans for me.
I have yet to have to have any up front money as well as closing money.
Good luck.
NC
I guess what I should have said is the income from my company isn't there and my personal income is rather low due to being self employed as a rough framer and having a great accountant, however it is counter productive when I go to get loans. I attempted to get a spec loan last year but had no luck as they wanted about $30K down. If my house ever sells I will have enough cash to satisfy the banks and my credit will be paid off which will help matters. Until then I will keep looking for a private lender and bite my tongue everyday I work with my dad, who I frame homes with for people that should have never been able to get a builders license Sounds like you have a good deal going there, perhaps I am building in the wrong state