To build or not to build
I own 8 lots that are 30 x 90 and make up 1 big lot that is 240 x180. The property does not have road access but has a right of way to build a road to the property. If I build a full road to the property, I would have to build 240 feet before I would reach the corner of my lot. I have never built a house before but am a little familiar with the construction process. I bought a DSLD home before they built it and watched them construct it and live in a neighborhood that has had about 500 homes built in it in the last 6 years. I would ride on my golf cart to the houses being built on the weekends just for fun. I work with a retired man would can draw plans for houses and used to build houses. He just built his own house. I acquired my property at tax sale and have quieted title. However, there could always be issues with title and title insurance may be difficult get. I am thinking about building a 3 bedroom 2 bath house that is about 1800 square feet. I estimate the cost to be about $200,000 based on no hard data but the DSLD house that I bought cost $270,000. The builder told me that I could just build a driveway to my lot rather than build an expensive road. I would probably build the driveway out of gravel. I would like to do something with this land to make it productive. I plan to build 3 houses on the land and build the house to sell or possibly rent. I am renting out my DSLD home for $2,300 per month and I think that I can get close to that. I like to own nice properties so I plan to use nice things in the house even if I have to rent it. I am looking for any feedback on whether I should take on this job to build a house with the builder and if so, what should I be looking for that I may not be aware of. I plan to build the house in Mandeville, LA.
Quote from @John Toerner:
I own 8 lots that are 30 x 90 and make up 1 big lot that is 240 x180. The property does not have road access but has a right of way to build a road to the property. If I build a full road to the property, I would have to build 240 feet before I would reach the corner of my lot. I have never built a house before but am a little familiar with the construction process. I bought a DSLD home before they built it and watched them construct it and live in a neighborhood that has had about 500 homes built in it in the last 6 years. I would ride on my golf cart to the houses being built on the weekends just for fun. I work with a retired man would can draw plans for houses and used to build houses. He just built his own house. I acquired my property at tax sale and have quieted title. However, there could always be issues with title and title insurance may be difficult get. I am thinking about building a 3 bedroom 2 bath house that is about 1800 square feet. I estimate the cost to be about $200,000 based on no hard data but the DSLD house that I bought cost $270,000. The builder told me that I could just build a driveway to my lot rather than build an expensive road. I would probably build the driveway out of gravel. I would like to do something with this land to make it productive. I plan to build 3 houses on the land and build the house to sell or possibly rent. I am renting out my DSLD home for $2,300 per month and I think that I can get close to that. I like to own nice properties so I plan to use nice things in the house even if I have to rent it. I am looking for any feedback on whether I should take on this job to build a house with the builder and if so, what should I be looking for that I may not be aware of. I plan to build the house in Mandeville, LA.
1. Check with the planning department to confirm the zoning for the property would allow for your proposed use.
2. Checking with the engineering/public works department to see if they would allow for a dirt or gravel driveway in lieu of a full blown paved private road as it's cost prohibitive to build the full road right now.
3. Check with your regional banks to see what their construction and stabilized loan terms are and how much cash you'll need to bring to the table
4. Get pricing from your local builders to make sure the build costs are current
5. Talk to local agents to see what they think the value would be post construction and what the rental value / estimates would be
If you get answers that make sense to you to proceed from the above then keep unpealing the onion of development and keep performing the next due diligence steps towards making this project a reality!
Thanks for your advice. Those are some good suggestions. I think that road to the property is a major issue.
@Kristi Kandel I don’t know a lot about roads or to what level you would have to build it to just make it a driveway but I just used ledge pack gravel in an 8 car parking lot and driveway that all in would have been at least 120’ long and in about 60’ two car widths wide and with delivery, cost of the gravel, and cost for the bobcat to spread the materials and pack them down it was all in about $1000.
Now the driveway and parking lot were already there so no cost for build out and we could use one more load of the gravel come spring so probably another $500.
But if you don’t have to build up to road specs and there’s not a ton of large trees or anything big to be taken down and you could just use driveway grade materials you might be able to do a driveway for under $15,000.
I seem like a complete downer on these forums, but building new homes is much more difficult than most people think.
"I would ride on my golf cart to the houses being built on the weekends just for fun." - is not different than if I went on a restraunaunt forum and said "I want to open a restraunant. I have zero experience, but my wife and I eat out a lot???"
If you want to become a builder, I would recommend working for a builder to learn. I would give similar advice to someone that wanted to open a restaurant, landscaping company, hair saloon, etc.
I have a friend who would has experience that would actually build the house. The road is the issue. I think you are correct if I were building the house myself.
Look also at land banking some of these lots, if you want to build 3 homes, located them close to each other that may leave some space for future expansion if the first round is successful.
Talking to local builders is also a must, you are unlikely to be able to get the same pricing/etc as a larger builder for 2-3 homes. Resulting in lower quality construction and/or higher pricing to try and match them.
If you didn't do soils testing when you purchased lots, now would be a good time to understand any other hidden costs. That area of LA can be tricky.
Thanks for your input and advice.