factor in the cost of losing your life for a year, possibly losing your marriage, and maybe your marbles, and you can't help but find it a bargain.
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House Building Margins
- Thread starter toc
- Start date
I'm currently building a custom home and I found the typical price structure for the area I'm building in as:
Cost = time & materials consumed or used in construction plus consumables, insurance, engineering costs, shipping costs, permits and a few other fees.
Adm Overhead - 4% of cost
Supervision - 4% of cost
Profit - 10% of the sum of above.
Some builders charge a "fee" that runs 10-20% instead of breaking it into the 3 components. I found and am using a builder who builds the house on a combined fixed bid for the foundation and structure plus allowances for things like appliances, flooring, cabinets, etc.
Under the "cost plus" system, the owner gets to review/approve hundreds of pages of invoices, timesheets, etc monthly.
Of course, there is room to negotiate and there are variations of the above theme. The above is for Texas Hill Country area.
The architects fee is in addition and separate from the above.
FWIW-I considered being my own general contractor but rejected it as I felt my inexperience in construction and knowledge of the local market for subcontractors was poor and that I might wind up spending more even if I saved on the builders fees, not all of which go away if you DIY. I talked to a few people who considered DIY in the area, and they told me that most of the best subcontractors high balled their bids as they did not wish to work with amateurs and they had more work than they could handle anyway.
I did not talk to many banks re. DIY, but the ones I did were reluctant to supply financing.
One person I talked to had a real horror story. He went DIY, at first, and luckily for him stopped before he wasted too much money. Turns out, his foundation crew failed to follow the drawings and he wound up with one that had the wrong dimensions and the in slab plumbing was incorrect plus some other flaws. At this point, he turned it over to a established contractor. The lawsuit is now in its second year.
DS
Cost = time & materials consumed or used in construction plus consumables, insurance, engineering costs, shipping costs, permits and a few other fees.
Adm Overhead - 4% of cost
Supervision - 4% of cost
Profit - 10% of the sum of above.
Some builders charge a "fee" that runs 10-20% instead of breaking it into the 3 components. I found and am using a builder who builds the house on a combined fixed bid for the foundation and structure plus allowances for things like appliances, flooring, cabinets, etc.
Under the "cost plus" system, the owner gets to review/approve hundreds of pages of invoices, timesheets, etc monthly.
Of course, there is room to negotiate and there are variations of the above theme. The above is for Texas Hill Country area.
The architects fee is in addition and separate from the above.
FWIW-I considered being my own general contractor but rejected it as I felt my inexperience in construction and knowledge of the local market for subcontractors was poor and that I might wind up spending more even if I saved on the builders fees, not all of which go away if you DIY. I talked to a few people who considered DIY in the area, and they told me that most of the best subcontractors high balled their bids as they did not wish to work with amateurs and they had more work than they could handle anyway.
I did not talk to many banks re. DIY, but the ones I did were reluctant to supply financing.
One person I talked to had a real horror story. He went DIY, at first, and luckily for him stopped before he wasted too much money. Turns out, his foundation crew failed to follow the drawings and he wound up with one that had the wrong dimensions and the in slab plumbing was incorrect plus some other flaws. At this point, he turned it over to a established contractor. The lawsuit is now in its second year.
DS
Quote from Mvic:
I used directbuy.com but i am sure there are others.
Mvic,
I looked into using them for my house but if I recall the fee to join was about $5K give or take a thousand. In addition, after a struggle, I did get a price out of them for the cooktop we wanted and it was about the same as other suppliers were quoting and if I remember correctly they had some "add on" costs that actually made it more expensive.
What did the membership cost you?
Ds
i built my own house. the 30% savings figure is accurate.some may say its not worth it but consider this. if you do this 3 times over a 6 year period you will own a nice house free and clear. and all the gains are tax free. it is free money although it is a lot of work.
If I recall it cost me 2K or 3K and this was in 2001 in the midwest. They let you go in for appointments first before you join and you have access to all their catalogs etc. It took me about 5 minutes to realize that I was going to save way more than the membership fee (buying sub zero and viking products and high end cabinets, toilets, and AC heat and hot water heater). I didn't use them for my second project as I had a plumbing contractor who could get similar prices though I don't know how he did it, also bought a couple of appliances in a BK sale from builder who got in to trouble.
I have done two and would never do another one but then again I don't need to work either so everything is relative. If i was young and hungry and couldn't make more money earning then I would probably do it IF, and this is critical, I knew someone who was an expert in the business and who could come to the job site with me and tell the guys who were trying to put over short cuts on me that they were full of shit. Doing it all via book knowledge i don't think is possible unless you have a majority of really good reliable and ethical contractors and as has been mentioned these guys usually has soo much work that they are not interested in working for an amateur as they know it is going to cost them time and probably money. Also if you are not someone who is organized to the point of being anal then this is not a project for you.
I have done two and would never do another one but then again I don't need to work either so everything is relative. If i was young and hungry and couldn't make more money earning then I would probably do it IF, and this is critical, I knew someone who was an expert in the business and who could come to the job site with me and tell the guys who were trying to put over short cuts on me that they were full of shit. Doing it all via book knowledge i don't think is possible unless you have a majority of really good reliable and ethical contractors and as has been mentioned these guys usually has soo much work that they are not interested in working for an amateur as they know it is going to cost them time and probably money. Also if you are not someone who is organized to the point of being anal then this is not a project for you.
This thread is cool.
I would never want to build my own house after remodeling everything possible in the one i currently own. It is time consuming and will strain all but the most devoted relationships.
Hire a professional firm to oversee the building process at the least. Usually, the law of hiring people with something to lose applies in that, you get what you pay for only if you beat it out of them in court if need be. Most builders are professional asshole finders and will pick off several before they recycle into a different entity or business. Hiring a legitimate builder requires great skill, knowledge, and the ability to motivate. For example, "i will not send you for a car ride in the trunk of a lincoln and then dump you in the east river (EDIT: if you honor your work to the letter)". If you can't back that up stick to realtors and the good times you have left along with your sanity...imho
I would never want to build my own house after remodeling everything possible in the one i currently own. It is time consuming and will strain all but the most devoted relationships.
Hire a professional firm to oversee the building process at the least. Usually, the law of hiring people with something to lose applies in that, you get what you pay for only if you beat it out of them in court if need be. Most builders are professional asshole finders and will pick off several before they recycle into a different entity or business. Hiring a legitimate builder requires great skill, knowledge, and the ability to motivate. For example, "i will not send you for a car ride in the trunk of a lincoln and then dump you in the east river (EDIT: if you honor your work to the letter)". If you can't back that up stick to realtors and the good times you have left along with your sanity...imho
I don't know anything about building houses (though my step-father and his family are contractors) but after going to the races last weekend, my father and I were talking about the fact neither of us had a clue who "Menards" was, though they have a large presence in auto racing.
I went to their website the next day and looked around. I found a link to blueprints for houses. They had a blueprint for a 4-bedroom 2.5-bath 2400 sq ft house and said the building materials were about $80k.
If you figure about $30k for a lot and a market value for a similar house (Pacific Northwest) of $240k, this means the building process costs about $130k.
This seems like an awfully large cost. Is this correct and normal?
I went to their website the next day and looked around. I found a link to blueprints for houses. They had a blueprint for a 4-bedroom 2.5-bath 2400 sq ft house and said the building materials were about $80k.
If you figure about $30k for a lot and a market value for a similar house (Pacific Northwest) of $240k, this means the building process costs about $130k.
This seems like an awfully large cost. Is this correct and normal?
Quote from hanseng1:
I don't know anything about building houses (though my step-father and his family are contractors) but after going to the races last weekend, my father and I were talking about the fact neither of us had a clue who "Menards" was, though they have a large presence in auto racing.
I went to their website the next day and looked around. I found a link to blueprints for houses. They had a blueprint for a 4-bedroom 2.5-bath 2400 sq ft house and said the building materials were about $80k.
If you figure about $30k for a lot and a market value for a similar house (Pacific Northwest) of $240k, this means the building process costs about $130k.
This seems like an awfully large cost. Is this correct and normal?
This website does rough estimates, but in my case, surprisingly close to what my new home is going to cost.
http://www.building-cost.net/CornersType.asp
Attached is a summary spreadsheet of what my friend's house cost in some gory detail. I show it as %'s as dollars tend to vary by market.
DS