Building Price Per SQFT

[Ezra Henderson]

I have been doing some new construction stuff in Ohio, and I'm curious to see how our costs compare to others. For those of you who are building new construction homes in the midwest (say 200k-600k sale price) what are your costs to build per sqft? I know it varies a lot depending on a variety of factors, but what are you seeing on average? I don't care if you include the lot in the cost or not, but specify if you do. 

[Robert Ellis]

Quote from @Ezra Henderson:

I have been doing some new construction stuff in Ohio, and I'm curious to see how our costs compare to others. For those of you who are building new construction homes in the midwest (say 200k-600k sale price) what are your costs to build per sqft? I know it varies a lot depending on a variety of factors, but what are you seeing on average? I don't care if you include the lot in the cost or not, but specify if you do. 

We use a national supply house for everything and do mostly builder grade with upgrades where they need to be at. We build at cost around $120 per sq without a margin. with margin we get about $145 to $150 and the resale prices we build a home that is the right square feet in our market in Columbus Ohio. I did an exponential regression model and plotted 500 data points for new builds between $300k and $400k which is where we like to be for spec and found that the optimal size is 1400-1600. our floorplan is 1730 sq ft because we wanted to have 4 bedrooms and 3 bath. If you average permit filed price per square foot its about $135-$140 traditionally for the builders because they are adding basements. That's based on hundreds of permits I track on a trailing 90 day period. We found that for every 100 sq ft you build over 1600 you lose about $10 per sq ft off of the resale so our underwriting has $200 a sq ft resale or about $340k. I attached the linear regression model we use and the rendering of what we build. We sell to investors and make about $50k per house at 25% margin. Mostly going after JV and selling to funds to take up all of our capacity. We only build one floorplan. I also have 3 builders I bid against that we are ready to ramp up capacity if the numbers work.