NEW CONSTRUCTION SINGLE FAMILY BREWERYTOWN PHILADELPHIA

[Troy Sheets]

Let's not be coy, we overpaid for this lot, but we knew it going in this time...which is a refreshing change for us. We bought this lot as a marginal deal thinking that if all went well we'd be lucky to make $30k and, if it went poorly, we'd break even. If it goes really poorly we'll be paying for our education.  We have a couple other reasons we intentionally overpaid for a vacant lot: 

- We own a 3100 sq ft (increasing to 3600 sq ft) building across the street that we're keeping as a higher end 3-unit rental (rehab kicks off in a month or so, budget of around $250k-$300k) 

- We wanted to learn the new construction process on a smaller project before we kick off a couple 6-unit new construction rental buildings we have lined up. We've been busy assembling land :) 

The kicker is we may have been overly cautious on our comps and could potentially do pretty well on the sale. We paid $85k for the lot and will spend ~$215k on construction. We're expecting to sell around $385k or so as some new construction on a nearby block, in a slightly less desirable location, sold in the $370k range. We're seeing comps creep up in the area and are getting feedback from a couple local developers that we should easily break $400k and possibly get near $450k. I have my doubts but we'll see what happens. As I said, we didn't go into this one looking to make much, it was to improve the area and learn the new construction process for ourselves. If we make some money while we're at it, great! It's also a case of a rising tide lifting all boats; the market has only gotten better in our little pocket of Philly and we may see a decent profit because of that and not our amazing financial/real estate prowess, believe me! 

This house will be 1650 sq ft above ground, 2200 including finished basement, and have 4 beds, 3 baths and a roof deck. Below are renderings my awesome partner @David Ross did. Tagging my other amazing partner @Jeremy T. because he never gets any love on the forums but he's truly the backbone of our little tribe. 

There's all the fun stuff, pictures and numbers, follow along to see how we do! 

Facade rendering: 

Basement rendering:

First floor:

2nd floor:

3rd floor:

Roof deck:

[Troy Sheets]

Originally posted by @Mark Redmann:

looks great guys! who is the GC? @Troy Sheets @David Ross 

We're doing a hybrid approach to GC'ing on this one. We'll be licensed and insured GC's in the next month or so and will GC all of our smaller projects ourselves in the future. The first 6-unit building we'll hire out to a GC with larger multifamily experience for a variety of reasons, the main one being that banks don't want to lend to GC's/developers with no track record on a large project. On our rehabs and SFH new construction we've had no problem getting financing but when you get anywhere near a $1m dollar total cost project, banks get funny!

For this project we're paying a local GC a flat fee to oversee the project and pull permits. He's giving us all the subs contact info and bids at pass through pricing (no markup) so we're seeing what he'd normally pay (we're paying subs directly) and will have that as a benchmark for future projects. This approach also helps us build a list of subs to start using, along with others we've picked up along the way, for future projects. 

I have to say, so far, this arrangement is working out really well. The GC has saved us some heartache already with a few things he's caught and the bids we're getting from his subs are all coming in below our estimates. 

A few things he's caught for us:

• The sump pit in the basement was almost 1' out into the finished living area. The foundation sub was supposed to put an indentation into the footer (which is 2' wide) so the 2' wide sump would fit under the 36" wide stairs. He didn't and, if it wasn't caught, the sump would be sitting 1' into the finished living space instead of tucking neatly under the stairs. 
• Power lines needed covering. The top set of lines are high voltage and can arc 10' under the right conditions. We should have called the utility company to cover them weeks before digging started as their lead time to come out is 2-3 weeks. Luckily the lines were high enough that the excavator could still get in safely and dig the foundation but, if it weren't caught on day one and the framers were ready to start on the 2nd floor, we'd be at a standstill. 
• First floor height above ground. We had no idea there was a max allowed height for the first floor to be out of the ground. I'm sure the foundation sub knows this but we sure didn't! The GC made sure the basement (9' ceiling height in basement) was deep enough that we didn't come out of the ground too far. Apparently the magic number is around 42" for the first floor. I'll have to look a bit more into this as I want to know the specifics for future reference. 

Lots more lessons to be learned!!!