Chicken or egg? What do I need first?

Question

Hello everyone I have a process question. I’m currently partnering with a contractor and I am awaiting an estimate on the house that we’ve drawn out. Should I have an architect draw full MEP plans of the house before I have the estimate or do I wait for the estimate and together with the floor plan that we’ve drawn out, take that to the architect?

Jermaine Chad Ingram · Answer

I think there might be some misunderstanding. The contractor I’m planning on working with is also a buy or build and hold investor seeking more cash flow. Since I am new to this particular city and really green in building I thought it would be a good idea to partner with someone who had 14 houses in the area, Was a licensed general contractor, and was willing to partner with me and let me pay for half of the cost of building the house. I figure I would save money because I’m not paying for the entire cost of the house as well as  experiencing delays because I’m not being fully aware of all the building/permitting process.

When the contractor and I drew out the plans, in my head, he should be able to give me the specs for the house before I go over to the architect and have them draw out the final permit set of plans, maybe I’m wrong in this assumption. I also fully intend to bid out the house, to two other contractors, before I put my money in with him so that I understand that his cost projections line up with what is common for the area

If someone could explain how I am going about this incorrectly I would fully appreciate it but so far everyone just seems to be trying to bust up my partnership,  which I was really happy to find.

I don’t know if it’ll end up working out that we actually end up building the house but I wanted to give it an earnest attempt and be honest and upfront with him which is why I was asking the forum about the process by which I should proceed.

Steven Lowe · Answer

The best you can get are "budget numbers" if the GC does not have a set of approved drawings to bid off of.  Meaning, the pricing is subject to change pending the drawings getting final approval from the local building department and after subcontractor bids are accepted.  This is in case, for example, the building department makes any substantial changes to the scope of work during plan review.  It also depends on how the architect and/or engineer draws the project.  I deal with this issue all the time.   Any GC who knows what they are doing will not just give you a blind bid and hope that the final approved plans stay within the budget, unless they bid the job so high that it doesn't matter, and in that case it benefits the owner more to wait for final construction numbers until the plans are approved.

Will Barnard · Answer

How would partnering with the contractor save you money? As the contractor, I am only going to”partner” if my end result makes me more money than if I simply bill for goods and services. That makes no sense to me. Perhaps you need to rethink your strategy. You also stated you have the land, financing for construction, and materials, so why do you need the contractor partnership? Simply hire the best contractor for the best price and go.

Emilio Ramirez · Answer

Jermaine. It seems you're new to this process and the learning curve the first time you do anything is steep. I am not interested in donating to your project.

I understand and appreciate the need for partnerships. I wonder what your contractor partners response was to your original question. If he's done this before then he should be able to answer that question.

As Greg alluded to, the design and pricing progress hand in hand when considering a development. It starts at a high level. If it works then you take a closer look. If it still works you take a more detailed look. You keep looking at the numbers until you are satisfied the project is viable and then you have to manage the budget to those numbers until the municipality gives you occupancy.

The more experienced you become in the process the less and less you'll have to rely on outside professionals to start. In other words you try to spend as little money as possible before you know the viability of a project.

So to answer your original question. Yes you need a plan. Your sketch works for you and your partner. Once you determine it's feasible you could then commit to hiring an architect to create the permit set.

Lastly, the 50k does seem extremely cheap, but I don't know anything about the market you are planning to build in. Maybe it works. I would take a careful look at Gov't fees. Plan review, Permit, impact fees, parking, parks, fire department, grading, roads, schools, water and sewer. In the Metro Denver Area those fees can be anywhere from $10k - $50k for a single family home and it doesn't matter if your house is 800sf or 8000sf.

Amanda Kessler · Answer

You should start with a general idea of what you want, then the architect and builder will discuss the exact dimensions and designs.

Jermaine Chad Ingram · Answer

@Emilio Ramirez thanks for your advice. I’m partnering with him because although I have several vacant lots and financing for construction costs and materials, I need a good contractor on my team and I’d prefer to partner to save upfront costs.

My husband grew up across the street from him. He is licensed and insured. He owns and manages 15 houses in close proximity to my lots. I have seen his work and find that it is of the quality I’m looking for. I live 2 hours away from the build site so I need to trust that someone on my team is there.

The deal, so far, is that I would supply the cost of materials and the land and he would supply the labor and know how, as well as following up with the city and guarantee our certificate of occupancy. Yes he has built a house before. I will manage the residents.

As far as the size of the house is concerned I don’t know what to tell you, I guess we just have different ideas as to what homeless vets need. I think they need a safe secure a place to lay their head. they don’t need a mc mansion.  I’m sure that the cost of building a larger house would undermine my entire program as I would not be able to recoup my costs from the government subsidized program. And the residents would struggle with upkeep.

I would be happy to build larger, if I can find someone like you to partner with who’s going to donate/fund the build of a larger house, HOPING that the government would subsidize that larger rent.

I’m working with what I have. The housing stock in this part of Florida has been demolished due to hurricane damage so there’s not a lot of houses here. but there are a lot of homeless vets and a lot of people who don’t make enough money to afford the housing that is currently in stock

Emilio Ramirez · Answer

I would verify and make sure you know what you're getting yourself into. Why are you partnering with this guy? Is he going to front the build costs? Has he built a house before? Does he own the land? If you're housing the homeless, why such a small house and why not just buy an existing house and rehab it if necessary?

Jason Boritz · Answer

@Jermaine Chad Ingram you always start with the design of the house based on the land.  The architect and contractor work together and work with exacts for plan approval with zoning and permits with the county/city etc but you should design the place first.  You build after you design.

Greg Dickerson · Answer

It’s best to get a ball park idea of costs before you start the design process but you you will not be able to get a detailed thorough estimate without complete plans and specs.

So yes you are on the right track getting rough costs before complete design phase. You want to select your builder so they can aid in design and budget development as to keep the project within your budget expectations as you move through the process.

Jermaine Chad Ingram · Answer

@Steven Lowe that makes sense. Thank you!

Chicken or egg? What do I need first?

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