Often we are asked to quote a client on a potential build project. The build can be a stressful process for both the client and the builder. Hence the importance of establishing trust before the inevitable problems occur. There are some costs you will incur in any build that are outside of the contractor's scope; a good understanding of these will set realistic expectations of unexpected costs that may arise.
So just what might those costs be in no particular order?
Firstly you will need to understand what you own, that may seem an obvious statement though the standard legal plat or download from the local GIS mapping resource is unlikely to define your property properly. You will need an accurate and recent survey showing the delineation of the boundaries, any grand trees or curb access, rights of way and easement as well as setbacks of other legal limitations such as critical lines and elevation at a few key points across the site if not a full topographical survey. At this point, you will know what you have to build on and just where you can build without future issues arising. Occasionally you might also get a pleasant surprise, I won't mention specifics, but for one client we discovered they had purchased two buildable beach-front lots not a single one as thought. So allow say $2-4,000 for the survey.
Once you have a survey, you may also want to understand the soil conditions both its load bearing capacity and how it will drain or perk. If pilings are envisioned, then you will need to understand soil conditions and to conduct foundation monitoring during the installation. So for the soil survey $3-5K plus a further $1K during installation for monitoring disturbance to nearby structures. If your site does not have access to public sewer lines, you will need to understand where to position your septic system drain field and just how big that field can be which will, in turn, affect how many bedrooms the house can hold. $2K again or thereabouts.
Now that you are armed with information on the lot, where you can build, how big you can build, soil conditions to define foundation design, you know of any grand trees on the site (as these are generally protected) and where you can access from the road - what's next? That depends on your location and what is required for preliminary site preparation. That may take the form of beachfront protection ($40K upwards), drainage, access roads, power, and water etc. The costs of these items can vary substantially and are typically outside of the direct build costs.
Moving on, you will want to get started designing your home. Again, you have quite a span of costs. From a pre-planned modular home where architectural costs are minimal through to a full-blown custom design where you are looking at perhaps $40-$100K in upfront design costs covering both architectural and structural engineering fees. Our new build in Palmetto Bluff, falls into the middle of this range with $55K in architectural and about $12K in structural engineering fees. There are ways to reduce these fees by using standard plans that are then modified to suit site conditions. This can be accomplished by using architectural drafters than having those drawings stamped by your structural engineer or by having your architect draft a builder set with greatly reduced detail. Many of our historic renovations in downtown Charleston use a builder set for drawings. In this latter case, your contractor will need to make multiple decisions on site so select one that has that proven capability.
So, all in all, you should expect something like an additional 10% of the build cost to be required to cover upfront fees that will be outside of the construction costs themselves.
Sadly, you will still not be out of the woods here. There are more costs that may arise. The local authority will require permit fees typically based on the cost of construction and payable before work begins. You will see tap fees for connection of services, builders risk insurance will be required by your lender to cover the construction duration, and you will have holding costs for the finance though this is often rolled into the construction loan and city taxes though these are typically low of a building site. You may also see costs rise to cover Change Orders where events, circumstance or preference results in changes in the initial plan with attendant costs. These are often outside of the scope of the construction loan so be prepared.
The takeaway from all of this is simply that as a general rule you can expect to make a 10 to 15% profit from the exercise. Our aim is to illustrate that there are additional costs that should be planned and allocated for. Do that, and the process will be far less stressful and far more rewarding. Try to avoid the contractor who glosses over these requirements in pursuit of your business.
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