New construction on the edge of the fork - by all means

#Initiator of the Week Yifat Steyer #Post4

Yesterday I talked about characteristics, advantages of our method and some of what can go wrong in a new construction.

Today I promised...

So in the most simplistic and abbreviated way, (after we studied, researched, did a market analysis, checked and selected professionals and service providers, verified costs, made a business plan and plan B) - how do you approach a new construction project:

Land purchase –

There are many things to check (some of which depend on location and local regulation). among the rest:

· Zoning (that the land use corresponds to our planning)

· Lot boundaries (Survey)

· Elevation (to make sure that there is no need to pour a larger amount of soil than expected, which will make the project more expensive),

Building rights/restrictions on the land (for example: distance limits from the edge, % of the area on which it is possible to build, demand for a Sea Wall, and more according to local requirements and regulations),

Presence of protected animals/plants and other "environmental regulations",

· Soil tests,

· Connection to municipal infrastructure,

· The condition of the area in terms of vegetation (there are wooded areas that just removing the vegetation and preparing them for construction will cost thousands of $),

· Of course, a title check and a check of fines, deviations and comments in the county, just like we would do for any built property we would buy.

Concrete examples of some of the "local" matters that need to be checked in the Cape Coral area:

The presence of a certain species of owls and turtles on the ground,

· On land that touches the water - if you must have a full Sea Wall or you can be satisfied with an alternative (irrelevant if you are building a pool, then you need a Sea Wall)

· If it is an area that is connected to the municipality's water and sewer or an area where a well and sewer (septic) must also be added to the cost calculation,

· In case you are connected to the municipality - how many Assessments are left to pay,

· There are areas with very cheap but forested land, so sometimes cheap is expensive and you can't always see everything on Google Maps,

· What is the level of the Flood Zone

Choosing a contractor-

Beyond the obvious, one must be a contractor with a license, insurances, without lawsuits pending against him, that we have received recommendations for him from several independent parties (and not only clients but also for contractors who have completed projects with him, for example), that we have seen properties that he has completed and that have been sold in the area and we have made sure that their level of finish matches our expectations, etc. etc., you also need to make sure that he has enough experience in new construction - enough houses that he has completed and sold, usually in the last 3 years, for our landlord to approve a construction loan for him.

construction plan –

It should be adapted to the regulation, to the demand in the area (depending on the comps: size, number of rooms and bathrooms, garage, construction style, in Cape Coral, even if a pool is needed or not) and also to the area itself (to the size and "lay out").

> There are contractors who build Spec models - they have a number of fixed models with predetermined pricing, which they use, you can make changes in the finishes, but the structure is a given and you cannot make structural changes to it. The advantage is that you save costs and time of architectural planning, these are models that have already received permits from the municipality and that we can already see them with our eyes and also see how much they sold and how quickly.

> And there are contractors who make Custom Homes - produce a dedicated and unique model. These will usually cost more and also take more time - because you have to add to the schedule the duration of preparing the model in front of the architect, until it is approved and an engineer's approval is received on it. will usually suit more prestigious areas or end customers who are building their dream home.

Permits –

Before starting construction, the contractor must submit the plans, adapted to the area and to all the requirements of the Authority for obtaining construction permits. Without them it is impossible to start building. There are all kinds of other local matters at this stage.

For example, in Cape Coral, if it is a plot of land on the water, there must first be an approved sea wall (which has passed inspection and approval from the municipality), if it is an area not connected to the municipal infrastructure, before submitting construction permits to the municipality, one must obtain approval from the Health Department in the county for the planning of the sewer (Ceptic) .

The construction process-

From here we will move to the construction phase, which is conducted as a project whose phases are known in advance.

As with any project - we will monitor progress, utilization of the budget, costs, compliance with schedules, we will make sure to carry out controls, for regular communication with the professionals/service providers, etc.

Financing - assuming you take a construction loan, you need to find a loan that fits our business plan.

Ensure compatibility between the lender's draw schedule and the contractor's work plan and expense structure.

and to deal with the contractor and the lender throughout the process.

Inspections - as I wrote at the beginning, every basic stage of construction must be approved by the municipality (every authority has different nuances. Generally, the basic stages that will require an inspection are foundations, framing, roof, plumbing/pipes, electricity, HVAC, and of course a final inspection before receiving certificate of occupancy). You cannot move forward in the process until the completed step has been approved. And the transfer of funds to the contractor is conditional on receiving these approvals.

Completion of the project - in terms of the construction itself, we finished when we received the occupancy permit from the municipality, then the buyers can close the mortgage if they buy with financing or move in if they bought with cash.

The project as a whole will end, of course, with the closing of the sale and the transfer of ownership and the money... I'm delaying it, because there is a situation where we received a CO, a year has passed since the closing of the construction loan, we still haven't sold, and now we have to cover the loan. You should be prepared in advance with solutions for such an option as well.

So much for this matter.

New construction is a whole world and I know that even in two posts, it was basic and concise.

I will be happy to complete details and answer questions privately.

Tomorrow another post on the tip of the fork, this time some insights, highlights and tips regarding financing and working with lenders, from my experiences and struggles.

see you 😊

**In the pictures: some of the stages of progress