I am finishing my last major renovation project and the house will be done in the spring. This is my third house that was bought cheap in bad shape and reno’d throughout.
This is an evening/weekend thing as I work a day job for a large contractor in Indianapolis.
I am thinking for my next project of buying a small lot and building a ~1600 sf ranch on it. We would live in it for 2 yrs to avoid capital gains on our current house sale.
Two questions (I’ve read the spec house from hell threads): 1. any good sources / web sites etc. for spec house builders, 2. and are people seeing the old rule-of-thumb of 25% land value – to – finished house rule still?
The big change in this project for me would be pulling permits for all of the scope of work (here owner-remodelers are exempted except for structural and some other), and doing the foundation work. I am competent for it though. I need to research at what point I can get a certificate of occupancy to move in, I would like to do so before the interior finish would be complete.
thanks in advance,
remodeler
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I had a home built for me. A contractor did the major work, but I wanted to finish out the inside: built all the kitchen cabinets, layed all the tile, built and installed oak & zebrawood doors in the foyer, etc. The contrator did all the drywall and trim. So, I had to get a certificate of occupancy before the house was 100% complete. I'm sure the requirements vary somewhat by jurisdiction and inspector. Here's what they required for me.
All the safety features had to be complete and functional: smoke detectors, firestopping (i.e. no openings between floors that would normally be filled), railings, fire door & firewall between garage and house, etc. There had to be at least one functioning bathroom, and a functioning kitchen sink (a laundry tub in the kitchen met this requirement). Electricity had to be working. Essentially, that was it for me.
As for size/value, I've never heard the rule of thumb, not being a contractor. But, I'm transferring to a new town this week, and looking for houses. I can't find any new houses for less than $200,000. And, they are all too big. I asked two real estate agents why no one builds small but fully modern homes. Neither had a solid reason why builders won't, but both agents were emphatic that they have told builders many times that they need to build homes for $150,000 tops. There are scores of unfinished $250,000 to $400,000 homes sitting unsold. The agents said that they could sell every new $150,000 home the builders could build, if only they would.
and are people seeing the old rule-of-thumb of 25% land value - to - finished house rule still?
The only place I have seen/heard of that large a percentage was for single homes on 1+ acres lots. I learned that the rule as 10% for city lots. Even that standard appears to have been tossed out the window. The old-growth teardowns look to be as low ar 1.5% or 2.5%. The big builders around Austin & Dallas seem to be using 5% for sizing houses. That gets you five quarter-million houses to the acre, each with a huge garage door, and the only real difference is the HOA mandated house numbers.
Using 25% is not bad, it just may take some "selling" to get bank financing (bankers just don't seem to "get" Fine Homebuilding). Ok, so what does that mean? That means, if there is a great feature on the lot, accent it or feature it. Personally, I think a 1600 sf house is an ideal size. If you wind up with a big back yard (a good feature), try and keep some sort of access, in case a future owner wants a pool, or other feature in all of that great space.
On the other hand the 25% is really low where I am. Try 50% and that's more like it.
Depends on where you are. Ask the real estate agents. You can also check out prices on vacant lots and comparative lots with buildings to get an idea. The size and finishing you put in will depend on the neighborhood, try not to be the most expensive house.
May be it's time to diversify. Interested in the stock market? :)
>May be it's time to diversify. Interested in the stock market? :)
We had done the mutual fund thing for years, putting our savings into several funds. We are up 30% this year, but break-even with where we were October 2001 even after monthly contributions for the last two years.
So we enjoy the run-up, but I'm moving completely out of the market probably by February. And shorting everything I have in the bond market, expecting a run-up in interest rates next year.
So we'll have money to do the spec house, and may end up renting it out at the end.