How a rock ledge under the driveway nearly ate the margin on a spec build, laid out with the full numbers

The rock is the story everyone will react to, but the loan documents are the more interesting part. When the site work blew past budget, did the lender treat that as a budget shortfall and require the difference to be deposited into the loan account before releasing the next draw, or did they let the excavator get paid direct and keep drawing? Those are very different documents. Most construction loan agreements carry a balancing or in balance clause that says the lender can stop funding until the remaining budget covers the remaining work. If yours has one and they chose not to use it, that was a favor rather than a right.

The draw part is what's tripping me up after two reads. Does the bank hand you money and then you pay the framer, or does the bank pay the framer? And who decides the framing is actually done?

Where did the plan set come from and what did it cost inside that 21,400? That line decides whether the same plan on the next three lots is a real business or whether the lots differ enough that the drawings get redone every time. A reused plan amortizes with each house, while a custom set per lot is paid for again every time.

Was the 3,600 of insurance during the build a normal landlord policy? I thought a house with no walls yet needed something different, and I've never understood what covers you if a framing crew leaves a stack of lumber out and it walks off overnight.

Did anyone run a soils test before you closed on the lot, or did the county simply not require one for a single family slab? The thing that breaks a build budget is very often below grade, and it breaks it because nobody looked.

Honestly my question is one step earlier than everyone else's. How did you find a vacant lot at all? Every listing search I run gives me houses.

40,800 on 383,700 of cost is 10.6 percent, which is thin for eleven months of full development risk. What I'd want before calling it repeatable is the cash number. How much of your own money was actually out and for how long, and what does the return look like on that instead of on total project cost? The two figures tell very different stories and people quote whichever one flatters them.

A stretch of no framers on a build is a scenario worth planning for before it happens. Paying the draw fast is a real lever and most people never think of it. Beyond the interest cost, the bigger risk is losing a subcontractor slot downstream because plumbing rough-in gets pushed and the whole schedule shifts behind it.

What made that lot the pick over the others in the running? Ranking a list of lots purely by price per square foot of dirt is usually a bad way to rank them, worth pushing past.

You bought and built in the same cycle, which is the fast version. I hold lots for years and pay taxes on them the whole time. Your 3,600 carry line stays small only because eleven months is short. Two years of sitting on that lot before you got plans approved and you'd be looking at a different bottom line, and I'd want to know how long entitlement actually took you from purchase to permit in hand.

Take a builder running a job like this alongside a day job. It's worth asking who takes the call when the excavator hits rock at 9am on a Tuesday, because that's usually the detail that decides whether the schedule holds.

Following canton's question. I want the cash timeline, not the totals. 62k at closing on the lot, then what, and when? The thing that keeps stopping me is I can't tell whether the first deal needs 80k or 200k and everyone answers in percentages.

Your 500 dollar change order rule is the single best line in the post and I'd like to know if it held. On renovations the allowances are where the money leaks, because the client (in your case yourself) walks a tile showroom and comes back with a number 3x the allowance. Did you actually come in on your flooring and cabinet allowances, or did you eat overage there and just not break it out separately?

40,800 for eleven months of holding all the risk is roughly what I make on two quick renovations in the same window with a third of the capital exposed. I'm not saying you did badly, I'm saying I don't yet see why I'd move over. What's the argument, that the margin scales when you run three houses at once?

The price per foot at sale is the persistent worry here. On 452,000 across 1,780 feet, call it 254 a foot. Had the market given 240 instead, the margin would have cleared around 15k and the rock alone would have wiped it out. How much cushion did the buyer actually believe there was when signing for the lot?

Do you always have to buy the lot in cash? That's the part that stopped me reading for a second.

Nobody's answered my draw question yet so I've been reading around. I think it works like this: the bank holds the loan money, an inspector goes out and confirms the framing is up, then the bank releases that portion, and the builder gets paid after the work, not before. Which means somebody has to float the framer's cost for a few weeks. Cairn, is that somebody you, or the framer?

Juniper, it's usually the sub floating it, which is exactly why they walk to the bigger job. That's the whole mechanic behind cairn's 19 days.

Cairn, the question I'd ask is what breaks when you run two. My ceiling right now is that I'm the only one who can answer the 9am phone call, and I don't think a second house makes that twice as hard, I think it makes it four times.

The one I would've been too embarrassed to ask in person: at the end, when your buyer's lender sends an appraiser and the appraiser says 431 instead of 452, what happens? Does the buyer just walk, do you cut the price, or is there something in a new construction contract that handles it?

31 days on market on a brand new house in a 1970s neighborhood is interesting to me. Did the newness help or did it price you above what buyers in that pocket were mentally willing to pay? I'd love to know what the agent said the competing inventory looked like.

My question is about the moment before. What was the number you wrote down before you bought the lot that told you to go, and what number would've told you to walk? Not the finished analysis, the go/no-go.

A rock shelf at four feet in a neighborhood built out since the seventies usually means somebody already knew. The houses on either side have foundations, and the excavators who dug them are probably still working within 20 miles. A conversation with a local excavator before closing costs nothing and often surfaces the answer in about ten seconds. On the numbers, roughly 244,000 vertical on 1,780 feet works out to about 137 a foot, which reads like a builder-grade finish package with no surprises built in. Spec up to please a buyer at the top of the neighborhood and that number moves fast, and material pricing has been drifting up a few percent a year, so carrying an escalation line on the next one is worth doing rather than assuming 137 holds.

Flint's point is the one worth chewing on. The renovation version puts less money at risk for a shorter time. What ground-up seems to buy an operator is that they are not inheriting somebody else's bad framing, which cairn traded for somebody else's bad geology, apparently.

Worth working through the bad version. Suppose the house hadn't sold in 31 days and instead sat for six months. What happens to the construction loan when it matures with the house finished and unsold, and was the extension cost disclosed in advance?

Two document questions worth asking on a build like this. Were lien waivers collected from every sub at each draw, or only from the general? And was the house held in an entity separate from any rentals? That second one is a conversation for an attorney and it varies by state, but a mechanic's lien filed after closing is the failure mode worth papering against before starting.