Build New in NoVA for $1M?

Question

Hi everyone. First time SFH prospective buyer in NoVA - not as an investor, but to live in.

Question 1: Is it reasonable to expect that for $1.0-1.1M, I can build a 3000-4000 sq ft home in the area? I've read that a builder's gross margin for new homes is around 19-20%, and many are 5000+ sq ft and 1.4M+, which is too much size and cost for us, so wondering if buying a lot, deconstructing/donating, and then building new on it is feasible for $1.0-1.1M.

Question 2: Our purchasing timeline is some time around Fall / end of year 2020. I understand some think that this is about the time we'll start seeing any foreclosures (from the economic impacts of the pandemic) kick in - how should this factor in to my thinking?

Background: Driving around neighborhoods (Vienna, Pimmit Hills, Dunn Loring area so far) and looking at online listings, it seems like new construction is always 5000+ sq ft. and $1.3-1.6M. It seems like lots (with or without existing home) go for $450-650K. Leaning towards new construction, aiming at 3000-4000 sq ft. Existing SFH seem to go for $700-900K, so it seems worth it to try build new if possible, but I'm seeking your thoughts as I'm a newbie - not to the area, but to buying in the area. If building new on a lot with existing home, would plan to try for deconstruction/donation of existing home materials for tax benefits.

Thanks so much for your thoughts, and Happy Memorial Day Weekend!

Eric Teran · Answer

I bought a vacant lot in 2015 in the city of alexandria for around $215k and then built a 3,000 square foot home for $400k. Plus permit and engineers the total was around $650k when we moved in during the summer of 2017.

I am an architect and drew everything myself. I acted as the GC of record and did a lot of the work myself. IKEA kitchen! I had a few GC to provide a bid and they were around $525k just for construction. A big savings doing it yourself but I am in the industry so I have some knowledge.

I saved a lot of money and time by using Superior Walls for the basement and a custom modular house for the two floors above grade. I wrote a daily blog during construction that I can share with you if you PM me. BP doesn’t let me give it out in the forum because it goes to my architecture website.

You have two routes; 1) Find a vacant lot which is hard to do in the beltway. Easier as you get further out. You will pay a lot for all the utilities to get to your house. 2) buy a dump of a house, tear down, and build new. You will still pay a lot for a tear down.

Using a GC, Architect, engineers, etc. Will cost around $200 SF. I think you can make $1.1 million work but you need to stay under 4,000 SF or choose incredible cheap finishes and get a good price on the land.

Let me know if you have any questions about the process. It is fun but lots of work.

Doug W. · Answer

@Chris Vee There is no way any reputable or decent builder is going to build a customer a 3,000+ sqft home for between $450k -$550k. The cost of material and labor will be more than that.

Cheap/poor quality builders will build at $100/sqft for their costs. Expect bad to mediocre work and builder grade items that won't last.

Custom builders are going to be $200 - $300/sqft if you want just that... a custom home with good materials (7.5+ on a scale of 1 to 10).

Roshan T. · Answer

Hi @Chris Vee,

It really depends where in NOVA you are considering. Land values inside the beltway are much higher then outside.

The going rate for a custom build in the Arlington/Mclean/Falls Church area is around $250/sqft. I have not seen land available for <$500K in these areas.

If you're willing to consider outside the beltway, you may be able to procure land and build for around 1M.

Chris Seveney · Answer

The reason why builders are building 5000sf homes is because the cost of land is so expensive and to make the numbers work that is the sizing. The incremental cost to build of a 3,000sf home to a 5,000sf is not linear. You already have similar number of beds and baths along with kitchen etc but from a selling point it is more linear.

What we did is we bought a smaller home where we loved the lot (1 acre inside beltway in Annandale by TJ) - lived in it for a year while we designed the house (which also allowed us conventional financing during this time), then knocked it down and built.

Did we pay little more for the property - yes - but we GC’d it ourselves as I am in real estate and had instant 30% equity.

Jasmine Hu · Answer

Just my 2 cents. you can get builder about $125/sf yet it is very  hard to build 5000 SF below 1.5 mil in vienna or similar areas. Lot will cost you 700-900K alone. you may not even get a good lot.

Russell Brazil · Answer

You wont be able to get it done at the same cost as a builder. A builder has employees and set contractors, and purchases materials at bulk prices. So while they have a profit margin built in, its not as simple as eliminating that profit margin to arrive at a build price because they will get it done substantially cheaper than you will achieve.

Josi Colley · Answer

Chris Vee, I built my house in Loudoun County. From my experience you're not going to get the answer you're looking for without more detail. Specifically, site costs and actual house plans. The tricky question is which comes first, the house plan or identifying the lot. We chose to find the lot first then design our house around our views.

Mike Kinder · Answer

I'd consider a modular build. Today, they look like modern craftsman homes, and as a builder with 180 homes under my belt, I'm never building another home ground up again. They're built to spec and come pre-inspected. You still need to add your costs for lot prep, and get those rough in inspections, but they can come 85% move in ready. Also, depending on the location, most GC's will try to take advantage of location comps when making their bids. McLean to inside the beltway are often $200 sf. Be careful of builders who want you to pull your own permits.

Any questions, feel free to get a hold of me.

Mike

Cassidy Burns · Answer

@Chris Vee I'd say this is going to be a great question for multiple GCs, it wouldn't hurt to get a bid or three.  The cost to build for builders is obviously going to be much cheaper due to scale, so those margins will be much less for you building a primary.

Eric Teran · Answer

@Chris Vee so my $175 SQ FT does not include soft cost. Those are all the plans and permit fees. The soft cost can add between $20k to $50k for a new build or major remodel. I also got a lower price since I'm an Architect. I'm always surprised when my clients get their bids and how much the price is in the DMV market. The biggest factor is labor. Rough materials are more or less the same. The finishes are a big difference. You can find nice wood floor for $2 SF or pay $10 a SF for wood from Brazil. In a 3,000 SF house, the difference is $24k. Those finishes start to add up. As you mentioned labor is the biggest factor. When I built my house I went looking for a day laborer to help me for a day to install a silt fence prior to construction. I couldn't find anyone to do it for less than $20 an hour. I did the job myself.

Build New in NoVA for $1M?

Most Popular Reply