Reply to Come along as we build our custom home- lessons learned in real time.

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[quote=Anonymous][quote=Anonymous]
So to recap:
Cost of Land: 82K (self financed)
Site Prep & Financing costs: 163,000 (self financed)
Construction costs:1,150,000 (80% bank financed, 20% owner financed--estimate, as we're not done yet)
Total cost:  1,395,000

I'm sure there are other ways to do this--this is just one path.

[/quote]  One important, interesting detail.  Because we are doing cost-plus, we know exactly what the builder is making on our project. Actual construction (materials, labor) is almost exactly 1M.  The builder is making 150K, bringing total construction cost to the aforementioned 1,150,000.

The reason we felt this was a fair price to pay the builder included:  
1.  Quotes we got from other builders, that were 'fixed price' were actually in the same ballpark.  We got one builder that quoted about 200K higher, and one that was 150K lower.

2.  From the 150K, the builder is paying his team, which includes project manager who is onsite, bookkeeper, and assistant manager who tracks and negotiates with and schedules the vendors (from countertops, to fireplaces, to flooring).  The builder also pays various additional engineering costs (ie, an additional review of our roof and floor trusses).  And for a smaller builder, they may only build 1 house/year.  Our has two custom builds going right now, and 2-3 smaller remodel projects as well.

Having been able to review multiple bids for everything from plumbing to lumber to bathroom fixtures, I'd say that most builders are not making vast amounts of money on each build.  While I know there are unscrupulous builders out there, our cost to build would likely be the same no matter where we built in the DMV.  Its the land and site prep that varies wildly.  I'm (so far) a big fan of cost plus because you get to see prices for everything.  Labor and materials are not cheap.  Honestly, labor shouldn't be. Watching these folks build, you can see the skill and training that goes into it.[/quote]

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