Post Frame Home Construction

[David Beard]

I was curious if anyone out there has had experience with both the construction and/or economics of building new pole barn homes in rural areas that are within commuting distance of a sizable metro area.

I have been approached with a JV business proposition from a trustworthy and experienced channel. The idea is to build 1500-2000 sf pole barn homes on 2-3 acre parcels. These can be constructed for about $40/sf (including environmentally friendly septic), with the lot purchase/prep running about $20k. So we would be all-in on a 1500sf home for around $85k, with exit price of $125k. This area is within easy commuting range (via interstate) of metro employment areas, while being very appealing to those favoring rural living, and there is very little housing available in this price range in the area.

They tell me that this type of home can be financed conventionally (still need to verify this), and we'd create our own comps after it got rolling. Lot costs could potentially be pushed down if land acquired in larger parcels, with homes constructed on contiguous lots. The homes are built with high energy efficiency (I'm going to look at a model tomorrow) and radiant flooring. The homes can be constructed in 45 days, and buyers pre-qualified preferably, so the turnaround time would be theoretically very swift.

Anyone done this type of thing, or can poke holes in it? The model home will be on the market soon, so I'll hopefully get some proof of concept based on how much demand they get from buyers.

[Jon Klaus]

I think the key here is, will the homes qualify for conventional, FHA, VA, and USDA financing? If so, I see the model working. The competition for your product is mobile homes on small acreages, even though they may be inferior. Most banks still hate lending on mobile homes because so many were financed sub prime 5-10 years ago, and the default rate was very high.

The more you can distance from that kind of product, the better. From the bank's perspective. And the banks really are your customers.

Think about your buyer. $50K household income, 650 FICO, and wants new home in the country on land. Very few good options. If you can get them in for $5K down, you are in business. If it's $25K down, they have other options. FHA, VA, and USDA will be key.

Any lenders want to chime in?

@Joseph Pytcher ?