Costs of building a House

Hello, im not sure if this is in the right thread as i didnt see a thread for Home building. Anyways, i am looking at dropping to a part time on an as needed basis at my current job and go into building spec houses. Im looking at building 1000-1200sf ranch homes with poured wall basements. The homes will be 2 bedroom, 1 bath on the main, and possibly 2 bath if i decide to do a master bathroom. I ve got some prices figured out and know what i can sell the houses for, but what i dont know is how much it will cost to have the plumbing, electrical, concrete and hvac done. Im figuring that i can get all my material minus the above trades and material for around $35,000. Ideally I would have it built for 60-65k without my and a couple helpers labor. The houses would then list for 120k, sell for 115k and come out with around 108k leaving about $45k to pay for my time and the laborers. Does this sound to out of line here? Like i said, i dont know what those other trades are going to charge, so its hard to get a good figure here.

 

How about land? I assume you wil be building on someone else's land.

If you don't have an idea about how many hours it REALLY will take, you should not go ahead. You could end up paying your buddies and be left with the responsibilities and nothing else.

Dick

 

hour wise i dont know how many hours i will have into it, but i will be doing 90% of the work myselft. I will have somebody help me with the framing and exterior work when needed. I may have $7,000-10,000 paid out in labor but probably not that much. I will be doing all the interior work myself except for situations where you may need 2 people. The land i would be building on is less than $10,000. Right now the idea is between a dream and reality. Ive wanted to do this for a couple of years and just need to balls to pull the trigger.

 

If you pull the trigger from what you have stated, you will not have any balls, much less any money, and you will be way in over your head. I have built over 3000 houses, so I will give you the reality check. Cost to build is right at $120.00 per square foot. That is if your lucky. That is everything.
This includes a 15% profit for the builder. However, things do not go as planned, so if your a good builder you might make 12%. Most only make 8%.
Now the problem with a spec house is that, that is just what it is. "A speculation house." Now you must wait for a buyer. Then you must wait for the buyers loan. When building a spec house you need to figure about 4 months after you are done before you see any money. If you want to now how must the plumber, electrictian, concrete guy and others will charge, you will have to give them a set of plans and let them study them and let you know. There is no other way. When you get your plans it will take 7 sets of plans. Plans are not cheap. One more thing. If your going to have a basement under them, the finished upstairs will be $125 per sq ft, but the unfinished basement will only be about $50.00 a sq. ft. So this is how it is.
It is not a job for the weak at heart. If your going to build a spec house, it would be better for you to look at a 1250 sq ft Taft Plan. 3 bedroom, 2 bath, no basement, 2 stall garage. Because of the layout and design, they sell very quickly. Also, get yourself a Realtor. Get one that is engergetic and has not been in the business very long. One that is hungry. Get the sign out there when you break ground. A good Realtor will have it sold before it is completed.. Good Luck

 

I'd like to make a follow up point:

In this case, your time is money - if you are doing 90% of the work (as you state), and working another part time job, you will be working at this for probably a year or more before it's built.

Is a year of your hard labor worth $45k to you? What if it takes 2 years - is a year of your labor worth $22.5k? I know for me, my time is worth quite a bit more...

I'm NOT trying to tell you not to do it - I think everyone should follow their dream...I'm just telling you to do your homework, get it on paper, and look at all the ways it can go wrong, and answer the question "if x goes wrong, what will I do to make it right?" before you start. This is called planning ahead and is also called writing a business plan.

You may find some other solutions, such as hiring a contractor to do the work for you - so you become the developer - would make you more money...remember, Donald Trump is a developer, not a builder...

my two cents anyway...

 

Good advise from everyone, and remember it is a business- there's a lot to think about with construction-building houses that sell-not too mention the market place-

Not only are you thinking about doing most of the work yourself, but the work you don't know much about is also part of the business-let's say you went to a bank for a small loan to get started, how much involvement do you think the bank would want if you didn't know some of the answers to this equation? I'm not trying to talk you out of following your dream, nor am I saying you don't know the business but double check every and I do mean every number/costs/expense.

I talk from experience and I even knew a lot about the business I got into-20 years experience-but even then I didn't have enough business savy/direction to keep it a float. Poor timing, family involvement, trying to do a lot of the work myself-well let's say I saw the end in sight but at the same time I was winning bigger and bigger proposals-thinking about bigger paychecks but that also means bigger losses if profits weren't there.

The dollars add up really quickly if something goes wrong and it usually does with small businesses- labor costs, insurance, workmens comp (different states) licensing fees, supplies keep going thru the roof, metal costs, down time, weather...

take a class on business-get a business plan together-look for a mentor-most people don't do this but someone usually has done what you want to do and it's a lot easier to learn from other's mistakes-get involved in associations-talk to everyone in the trades-and get a very good ACCOUNTANT-with esperience in building/developing/contracting-plan everything with them before you go part time-they are number crunchers-
I'm all for free enterprise, just as long as you can profit from it-learning the hard way sometimes isn't the smartest way-good luck

 

Somewhat related - we did a DIY building project to turn into a business. It wasn't a home, we started with a solid shell, and doesn't have a lick of plumbing. Hubby got laid off and spent 125% of the first 5-6 months building this thing, and we sometimes had help. After that it was as we could get to it, and we put nearly every hour of every day working or researching. All other hobbies and passtimes went out the window (my poor snowshoes feel so neglected.) We paid cash for everything, then went into a great deal of debt until we finally sold an investment property.

Three and a half years later, we finished (but it's not totally finished, we still have stuff to do...). Four years after we started, I can finally look at starting to pay ourselves. We both work full time, then do this on top of it. Hubby is now starting to take off one day a week from his full time job so he can have a day off, during which, you guessed it, he is working on the business. I was shocked when he actually asked me to plan a half day of visiting with friends next weekend. We haven't done that in 7 months, since we had our grand opening party, which was all work!

My point is be very aware that any business venture has it's ups and downs. When they say you need to have enough savings to live for 6-12 years with no income, plus your retirement savings, they are not kidding. You will spend much more time and energy in the venture than you can imagine, if you want to do it right. Most start up business owners look like they just came off a 80-hour work shift because they did, and they will do it all again tomorrow...

Don't let me discourage you. We are happy as clams, although our current home remodel is suffering from neglect. One hint - folks ask us where we find the time. Answer - We don't have TV :-)