Tricks about residential home construction you wish you knew about before starting

By Daniel Quindemil

Special to the Financial Independence Hub

Designing a home is often one of the best (or worse) experiences for most people.

Building in general is a relatively difficult task, but building your own house can sometimes be nerve racking!

As a construction company, we understand the importance of planning the project beforehand, designing a solid design, getting pricing and the labor and material take offs done early so you can accurately create a budget.

That’s why we wrote this simple guide packed with tricks so you don’t fall into pitfalls some owners and investors fall into.

First, let’s look at the different types of residential projects.

What is Residential Construction?

Residential construction is building or remodeling a structure designed for everyday living.  Residential consists of Single Family, Duplexes, Triplexes, Townhouses, even Apartment and Condo buildings.

Each has its own challenges.

Single Family

Single family construction is typically designed for one family, hence the name single.  They typically are one or two stories, although some places like New York often go more vertical due to availability of space.

Duplexes, Triplexes, and Quadplexes, Twin Homes, Townhomes

These are single structures designed for multiple units.  A duplex will have two units within the structure, triplexes have three, quadplexes four.  A twin home is similar to a Duplex but has two owners.  Duplexes are owned by one party.  Townhomes are a group of units within a structure.  They are usually two or more stories.

Apartments and Condominiums

Apartments and Condos can be single story, but more often multi-story. Apartments are designed for rentals while Condominiums are for purchase, although they look very similar.

How long does it take to design and build?

The short answer: it depends. Every project is going to have its unique budget, schedule, sequencing, and craftsmanship.  All of these will come into play when planning your schedule.

When planning the overall project, you have to take into account four important timelines:

Design time

Timeframe for architects will vary quite a bit depending on size, details, and complexities involved with the project.  Often when an interior designer is involved, the timeline doubles or even triples because of the level of detail required.

Typically a single family and duplex home can be designed in 1-3 months.

Townhouses can take longer depending on the number of units.  Designing a townhouse building is very similar to a duplex and often the units are repeated or “flipped,” which speeds up the design process.

Apartment buildings and Condominiums vary too much to give a realistic timeframe.  But because they are multi-story, there are additional things to consider that extends the timeframe.  These includes fire sprinkler and riser requirements, plumbing and roof drainage challenges having multiple floors, and designing systems that work in a 20+ unit building.  In short they can range between 6 months to 2 years to design a building.

Financing timeframe

Financing new construction and existing construction is going to require either cash, a loan, or investor group depending on the value of the project.  Financing for these timeframes vary.

For Single family Residences, applying for a new construction loan can take 2 weeks to 45 days for the approval process.  For existing residences, you can get a remodeling loan, but those take into account the existing equity in the house and take longer to be approved.   It could take up to three months to get approved sometimes because there is a longer underwriting and review process.

When building a larger costs project, financing with a bank will take much longer because of the additional risk involved.   Often these big projects are built using combined funds from an investor group or even a mutual fund sometimes.  It’s common to combine the power of tens, and sometimes hundreds of investors, and there will be one managing investor that is the decision-maker for the project.  This is very common in commercial real estate.

When a project is built for profit, commercial investors are usually the ones backing the project.  Getting a group of investors can take time, so there isn’t a solid answer here.  It can take 2 months or 3 years to get a large project financed.

Permitting timeframe

In order for a project to legally be allowed to build, you have the pull a permit with your city or county.  This varies, but in general 1-3 months is common.  If you have a good architect and engineering team, the timeframe is on the faster end.  The delays come when the drawings aren’t conforming to the local building code, and plan reviewers ask for corrections.  Then the design team needs to revise the drawings and resubmit, then wait for the reviewers to complete their review.  There can be several rounds of reviewing before a project is approved.

Construction time

Construction for a single family residence depending on size can take between 3-6 months.  Larger projects take more time.  If you have a good general contractor with good subcontractors, they can often man the project well and speed through the construction.

Here are two examples of projects we built and timelines:

• Interior home remodel (no structure) – 5 weeks
• 5-Story Apartment Building 20,000 SF – 15 months

How much does building residential construction cost?

The national average in the United States to build residential is $150 per square foot (SF), although this varies a bit depending on the area and construction demand.

Areas in the Northeast like New York and Massachusetts are among the higher labor rates, sometimes in excess of $70/hour for a carpenter which inflates their labor rates almost double.

Some areas also have Unions who demand higher salaries.  This raises the private rates as well because if your neighbor is making $70/hour with the union, you can charge $60/hour for non-union and still be competitive.

In South Florida, a single family residence will be in the $130-150/SF range.  Some parts in California have a high demand for construction and contractors charge outrageous overhead an profit leaving construction in some higher end areas up to $600/SF.  But this isn’t the norm.

You can easily determine how much your house is going to cost to build by calling a few builders in your area and asking for comparisons.  What drives your construction cost is the quality of your contractors and the finishes you select.

Financing for Residential Construction

Financing a project can be a simple operation if it’s not a large amount.  Typically smaller residential projects require average credit (650+) and 20% down for new construction, of if remodeling an existing residence, you can get an FHA remodeling loan with only 3.5% down.

For larger projects like Townhouses, Apartments, and Condo buildings, depending on your bank, you’ll need between 10-20% down.

If you use an Investor group, you won’t need anything down.   You’ll all pool your money and one managing investor will direct the project.

Selecting a great Architect and Contractor

Selecting your team is going to be the most important part of your project.  This can make you or break you.

One of the first things you need to look at is their Customer Service.  You need a design and construction team that is going to respond to you quickly and efficiently.  This is critical.  Don’t be blinded by cost.

I was once part of a team that built a small guest house that took over a year to build.  This was mostly due to issues in the drawings, delays in the revisions and approvals because of an inadequate architect, and due to budget constraints, we were forced to select cheap subcontractors.  Needless to say, if ownership would have paid a bit more for a better architect and subcontractors, the project would have been completed much faster.

Conclusion

Building your residential project is going to take planning, time, and stress!  But if you use some of the information above for your planning and execution, then you’ll have a well-financed, quickly built project.

Daniel Quindemil is the Founder of I AM Builders, a Construction Estimating and Consulting Firm.  He has a Bachelor in Architecture and is a Licensed General Contractor.  He has supervised and managed projects for the University of Miami, Bacardi, and private investment firms.  He is an expert at design, construction, and estimating