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o/t my latest question about freaking houses :)

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Old 01-09-2004, 08:07 AM
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Default o/t my latest question about freaking houses :)

Ok this will be short and sweet...I promise

First off, big thanks to everyone who's helped me and given me advice....it's really helped. We met with yet another builder last night and things went really well. He said a lot of things that I wanted to hear and I think we might go with these guys. Got a quote of like 75-78 per sq/ foot.

Question is I don't know about all the ways to do this:
1. Let the builders have access to the account and they draw it out as they go and we do nothing but gripe at them if something is wrong, but we run the risk of them drawing too much, etc. Basically builder handles everything

2. My wife and I handle the bills and have recipts on everything that comes in, might be harder for the builders waiting on us, but we'll have peace of mind knowing where the $$ goes.

3. Cost/plus - This one I know very little about except that we pay cost of the house, then whatever fee the builder has.

Which of these is the easiest and safest to go with?
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Old 01-09-2004, 08:29 AM
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Get a firm price from a quality builder.

Then pay in in steps after satisfactory completion of each stage.

example :

say a $200,000 house

$40,000 down to start
$40,000 after foundation
$40,000 after Framing and shell is complete
$40,000 after drywall is complete
$40,000 upon recieving your C/O

In most regions, A building inspector has to approve after each one of these steps anyways, so once he has stamped yor permit, I would release the funds
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Old 01-09-2004, 08:30 AM
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1. No, might as well send your kids to Micheal Jackson!
2. Better
3. Yes, If you get what we call a GMP, guarantied Maximum Price. In cost plus jobs you have to watch the self-perform work by the GC (that is where we can make a little more profit) charging guys at $25 that cost $15. Also who says his plumber by billing $5000 on your job is not encompassing work done on another house for that particular GC.

With a GMP with our clients we usually put an incentive for savings when the GMP is not attained;
Ex: Your budget and Construction Management fees (CM fees) add up to $250,000 if the final is $235k then you split the $15k with your CM. This provides an incentive for him to lower the construction costs. Or else the only way to increase his profit is by increasing costs.


Maybe your best bet is to negotiate the fee similar to the CM fee lets say 10% based on the budget.
Ex: Budget $225k / 10% CM fee is $22,500 then make a lump sum management contract for $22,500 and split the end savings with him if there are any. You might want a penalty if he goes over.

After that make sure the changes are off contract and negotiated in the same matter.

You might what to tie in the schedule to his fees with liquidated damages per day in a designated amount per days late. Than when you make changes you add days to the overall number of days for execution of the contract.

I might seem a little over cautious but I tend to try to err on the side of self-protection, also once you sign your off the cliff buddy.

Also make sure as I mentioned before you own the land, I imagine that price per foot is without the land.

Hope this helps.

G.L.
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Old 01-09-2004, 08:33 AM
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Quote:
Originally posted by OTIS311
Then pay in in steps after satisfactory completion of each stage.
example :
say a $200,000 house
$40,000 down to start
$40,000 after foundation
$40,000 after Framing and shell is complete
$40,000 after drywall is complete
$40,000 upon recieving your C/O
In most regions, A building inspector has to approve after each one of these steps anyways, so once he has stamped yor permit, I would release the funds
That is a lot to start, specially if you own the land. Banks issue monies usually after Foundation / Roof / Drywall /CO on construction loans, like Otis said. Firemen they have all the answers!!!
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Old 01-09-2004, 08:43 AM
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It was like 223,000 before the lot......the lot is 40K, so all together thats 263,000. This is in the neighborhood that I was shooting for, actually 250K is what my magic number was

I think I go with the cost/plus as you mentioned, that sounds like the best bet.

GLH - mind if I contact you by email?
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Old 01-09-2004, 08:58 AM
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Hey Gl, Thats what I would need to start, I need drinking money and Motors you know !!
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Old 01-09-2004, 09:12 AM
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I guess I should find out if this guy has a boat or not you got me worried now....my house money could be a new set of twins for him ha.
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Old 01-09-2004, 09:13 AM
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97Boss,
Email at [email protected] take the VT out (a little spam control!.

G.L.
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Old 01-09-2004, 09:14 AM
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GLH has nailed it.

GET IT IN WRITING! A standard AIA document is fair to both the owner and contractor. And make sure you know who's flipping the bill for non-material, job related items such as: Building permit, inspections, Builder Risk Insurance, etc...
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Old 01-09-2004, 09:22 AM
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GLH hit it on the head. Man 78 a sq ft is CHEEP!!!!! I wish we could get construction done for that kind of money around hear. My suggestion is keep a DETAILED list of things that you are requireing from him. Number of windows, number of walls everything. Then any time something changes you have a sit down and initial or sign off any changes. That is were people ussually get into trouble. As soon as you start to make changes you do not realize how fast those changes add up and believe me your electrician, carpenter, and stereo guy are not going to move things for free. I used to do things with out a lot of paperwork and it has bit me in the ass to many times. I am now doing lots of paperwork and I hope that it helps out not only me but also my customers. Last thing you want is a supprise. Just so that you know we are working on two houses that are over 1000 dollars a sq ft so I am just amazed that you can get one built for that kind of money.

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