I’ve been a carpenter for many years and recently came into enough capital to buy a lot and build a spec home. I will get a construction loan against the lot. I’m planning on a simple spec home for my first, with the hope that 1) I will build a sound house and 2) I sell it within 6-8 months of groundbreaking.
I’m in the northern Colorado area and was amazed at the water/sewer/electric/ set up fees! $20,000 to $30,000 and up. I’m wondering what the fee structure is like in your neck of the woods?
Replies
$185
all my utilities are to the curb, cost of the lot includes the utilities ran for the whole subdivision. All i do is pay my utility companies to hook me up. Usually around $200 to hook up water gas and electric.
If youre paying those prices to hook up the developer only had to put in a street and subdivided the land into lots. Plus some cost for storm water planning.
I feel sorry for people who have to pay that kind of money on top of the land
>> I feel sorry for people who have to pay that kind of money on top of the land
I don't see why. A tap fee is a tap fee, and the buyer pays it whether it's included in the land price or billed separately.
They just jacked ours up to about $2,000 for water and sewer. But the city provides the backhoe, a lot of labor, and the materials to bring the lines up to the sidewalk.
Even in the best and most peacefully civilized countries many occasions arise when a woman versed in the knowledge and use of firearms may find that information and skill of great importance. [Annie Oakley, Oct. 1919]
Hook up fees? Never had to pay 'em. But I've built about 20 septic systems and had drilled about 20 wells. I'd say that combined, they averaged close to 20 G.
Andy Engel, The Former Accidental Moderator
Hook up fees? Never had to pay 'em. But I've built about 20 septic systems and had drilled about 20 wells. I'd say that combined, they averaged close to 20 G.
Yikes! We're looking at $6.5-7k (well + septic) now that the new stoneless drainfields are available. Septic is now down to $2500, depending on size.
In some localities here hookup fees include impact fees for the municipality. Existing population often not being thrilled with picking up the tab for increased service demands of newcomers.PAHS Designer/Builder- Bury it!
Stoneless drainfields weren't on the table seven years ago, when I put in my last septic. I built in NJ, where we'd usually have to dig about 1000 sq. ft of hole, 5ft. to 8ft. deep depending on the soil logs, and fill it in with load after load of a sand/clay mixture called select fill. On top of that went the gravel bed, whose sides were bermed with more select fill. The tank, distribution box and pipe usually cost more than a grand. Drill 300 feet of well with a minimum of 50 ft. of casing, put a pump in it, and we'd be at 4 to 5 Gs.Andy Engel, The Former Accidental Moderator
I used to live in a northern Colorado town when they first established the tap fees there in the seventies.
It had been a stable community in many ways but a sudden influx of growth placed high demand on all the systems. New water and sewer treatemnet plants needed to be built. Old time residents didn't see why they should have to foot the bill for the new growth and it really wasn't fair to force them to pay more when it was the new population that caused the extra costs.
So the decision was made to keep monthly bills nearly as low but to poass the cost of the new facilities on to new customers based pro-rata as a percentage of construction cost and the anticipated number of households to be using the facilities. Developers had the choice to pay all tap fees when they developed the lots and built the roads and to pass that cost on with markup for land price or to let each purchaser pay the tap fee at time of construction. (Remember that out there, all water rights must be bought and paid for even before the rain falls out of the sky or a delivery system is built)
my memory is that water and sewer tap fees ran about $9000 back then and the lot was about $15 - $25,000
By way of comparison, I paid $25,000 for land here, plus $12,000 for septic, $2000 for a well, and have put over ten grand into the 1/4 mile driveway a few years ago. Today, those costs would be more lie 40K, 17K, 3K, and 14K.
Think of this little surprise as a lesson in doing business. What did you learn? Answer it right and you have graduated from first grade in entrepreneurship school. Answer wrong and you are on your way to working for free or going into debt.
BTW, do you mind saying what town?
Excellence is its own reward!
Piffin- I'm looking at lots in Wellington, Co and Severance.
By the way, I guess I may have used the wrong term. "Impact fees" are what they are calling them these days, and they vary greatly with town. Wellington has about $12,000 in impact fees, but some of that money goes to FUTURE stormwater holding areas, a new wastewater treatment plant, ped walkways, streets and libraries. I'm not opposed at all to paying it, if it goes into something other than "city general fund."
That'as what they are called here now. The local ordinance allows for them but they must be actuarilly based, that is, there must be an objective measure for determining how much they will be.
You must still be musing over the question, "What did you learn from this suprise?"
;).
Excellence is its own reward!
"What did you learn from this suprise?" Have a clause in the contract that passes the cost on to the HO?Do it right, or do it twice.
No, though that's a good idea - Do a lot of homework and ask a lot of questions ahead of time to anticipate all the costs. Start now to develope checklists so you are less likely to forget something..
Excellence is its own reward!
Like Piff said, it's very hard for small towns like Wellington to fund the improvements needed for growth.
I'm at the other end of the State, Walsenburg. Here the water and sewer tap fees are now $3,500 - up from $1,500 just seven years ago. I think it's an incredible bargain.
You're so close to Cheyenne and Ft Collins that the town of Wellington is smart to realize that it's gonna get clobbered with growth.
Speaking from experience, It's not always easy to make money on spec building! Twice I took lots of risk and made wages - in an area that was supposedly booming - north Phoenix. The time cost of money has to be figured in whether it's yours or the banks. I'd recommend that you start by going to your county assessor's office and getting a print-out of sales in the area over the past 12 months for similar sized homes. It would be good to talk to some real estate brokers AFTER you've already digested the info from the County. In my experience, many brokers will tell you whatever they think you want to hear and that won't help a bit (I'm a real estate broker).
Also do your best to find out how long those homes were for sale before they sold. Ask the neighbors, the mailman, the brokers, the utility installation guys, etc. Every bit of info you get off the street will be worth it weight in gold (gold either made OR not lost!) That's what cost me my hoped for profit on the specs I built. There was a little slump in the economy, a few months slipped by before closing and bam: the bank got the profit.
Good luck!
Any jackass can kick down a barn, but it takes a carpenter to build one.
Hasbeen-
Thank you for that reply. That kind of detailed response is exactly what I like to see. Fortunatly, I've been doing my homework for some time, like you mentioned. Im trying to get the word on the street.
Answer me this- Am I crazy to use this as my paradigm for building a spec home:
-Assuming it sells in 6 months, the project will give me steady income for those 6 months, and as long as my financing fees (and all other fees) are covered in the sales price, this first project does not need to make me money as long as I pay myself well during it? Also, use this sacrifice as a springboard/ marketing tool for future pre-solds?
I know it may be a fools gamble, but that is how I'm looking at it. Fortunatly, my wife makes a steady decnet income (although not enough to pay for all bills)
Thanks- T
ROAR!!
I'm building our new home right now and "my wife makes a decent income", too!
I'd say it is a gamble and probably a big one. Sometimes big gambles are worth it.
I'll ask again: Do you know how many homes have sold, and for what price (square footage, amenities, etc.), and how long on the market. I'd say those questions are the keys!
Have you read Boss Hogg's thread about his spec?Any jackass can kick down a barn, but it takes a carpenter to build one.
Yeah, Hasbeen, I've uncovered some numbers.
1500- 2000 sq ft 3bed 2 bath unfinished bment simple starter homes selling for $180,000- $210,000. Lot prices 45-65 K impact fees 20 K, labor, subs and materials 100 K realtor fee 10K. I'll have 180,000 into it, asking price (to start) 195,000.
House on market average 30 weeks from dig.
I'll be putting $40,000 on the line in order to pay me for 4-5 months, and try to earn $5,000 on that initial 40K. Thats an (annual) return of 30%. I cannot make that kind of jack anywhere else, and in these parts people just keep movin in driving the demand for houses.
$10K for a well, + $12K septic (which also included trench work for electric and some water lines) $3,500 for transformer and wire & misc from electric co. Telephone is at the highway, natural gas is out there too, but it's a 1000'+ trench to get it to the house so I think I'll bhe propane for awhile yet. Think the tap fee is $5K on top of my trench & pipe to meter.
Southern Utah. Well has since eaten one pump, extended warranty covered pump, $200 to replace. New Grundfos pump took a sh*t in less than a week, another $200 to replace as Grundfos warranty sez "screw you, customer" parts only. Think I won't be looking for another Grundfos when this one dies.
Joe H
Sounds like you've got it nailed down! Best of luck to you.Any jackass can kick down a barn, but it takes a carpenter to build one.
Down here in Durango, it's $6000+ to the city for sewer and water, and $515 to Atmos Energy for gas. Electric is $30.
Formerly BEMW at The High Desert Group LLC
Prescott, Arizona,, city tap in fees of water/sewer and impact, library, oh and other stuff, $5,400, plumber charged right at $6,000, to do the actual tap at sewer, and run(80lf) water,sewer and gas line to project "stand alone" garage/workshop. The power Co. charged $1,800, overhead service, they were very clear that they did not care if the zoning was res./comm. For the power co. provides "free" service for the first 600 ft. on residential. If it's underground you provide ditch and pipe, they will provide wire, and the labor to hook up. Oh, then there is something about a monthy bill. The city has a set basic fee, and then starts adding up the cubic feet of the homes, and then comes the multiplier. Jim J
$500 for sewer and $710 for water. West Coast, Washington