All Forum Posts by: Jay M.

At my age it's no longer possible for me to underestimate the gullibility of the general population.....  

It won't meet code on at least 3 requirement.  Egress, 8% of floor area must be glass and 4% of floor area must be vented glass.  

I design for a local builder and they refer their customers to Peter Defusco at Envision in Westport, MA .  I also used Peter when I purchased my existing home 7 years ago.  This builder I mentioned builds about 52 homes a year so they refer him quite a bit.

Originally posted by @Justin Woodworth:

@Jay M.

So your spec will sell for 510-540k. Your loan is for 337k. What is the projected cost to build the actual structure?

Land was 75k, construction cost is budgeted for $300k.  $300k cost is me eating some of the labor I'll do.  Like the plans, finish, kitchen etc.

@Justin Woodworth   The price point my spec will sell for will be somewhere between $510-$540k.   In my area that is just a simple 2,400 sq. ft. house.

@Justin Woodworth  No, that 15% is what I need to pay all the subs listed above until I get my 1st draw.  I can't have the excavators come and clear the land, dig the hole, put in the septic system then backfill after the foundation is in on credit.  Everyone wants to be paid immediately after completion and usually in stages while they're working (above excavator has the $23k over 4 payments.  My $337k loan is split up into 5 stage payments although you can have more in the case of my bank they charge $150 for every inspection for release of funds over 5 factored in.  So when I walked away from the closing of the purchase of the lot / construction loan I knew I needed a minimum of 10% to carry me the 1st month.  I have 15% and even then it will be a very carefully orchestrated dance to not run out of money between stages as I pay for the materials / subs.

I commend you Ann for giving honest objective advice even though you could be seen as having a horse in this race.  You seem like one of the "good guys / gals" in this industry!!

Builders profit margin in my area is 17%-20%+ if they're financing.  It sounds like you're hiring a construction "consultant" who will not be issuing checks etc.  Even then someone would want 10% plus in my area and even that doesn't register on the "good deal scale" (too low).   What are you going to do for money for the house plans, building permits, engineering permits for septic / sewer connection, tree removal, excavating, septic system installation, foundation, concrete all before you get your first stage payment?

Rule of thumb in my area.  You need 10% or more of the cost of total construction cost to cover your subs (unless you can convince them to work for up to a couple months without money) until you get the first stage payment.  I'm going through a spec home right now and I have 15% of construction cost in reserve for subs until stage payment.  It's the bare minimum and that's using my credit accounts (not accounted for in above 15%) at the lumber yard that will buy me 30 days for the framing, roofing and siding.

The numbers you gave above I wouldn't bet success........BUT I'm pulling for you!!

As for your question does 7% sound legit?  In my area if you offered 7% in even 2008 almost every builder would still chuckle, mumble and walk off....  In today's economy?  I would assume if he's working for that he's unlicensed and uninsured........

Oh, that's another upfront item.  In my area in order for me to build my own house I had to come up with liability insurance $2.3k, builders risk $1.7k, workmans comp. $600 (no employees) and road bond $100.

Oh, another upfront number is energy modeling.  That's another $700 deposit.  I'm sure you're in an energy zone living that far north.

Good luck but I really think you need to pick the brain of an objective builder in your state with no skin in the game.  Even in the dark depths of the last recession no one would work for the numbers you quoted above that was LEGIT.....  If you're a real estate agent surely you have worked with a builder before that you could buy them lunch and run your numbers over with them. 

Be more specific about what you need for the site work.  Also why do you need drawings for the house if you're not moving walls or expanding?  In my area engineers are well over $100 an hour.

Do some more research on soundproofing.  I think you'll be "unpleasantly" surprised at how little 3 1/2" of insulation will go towards "soundproofing" the wall.