Closed the Garfield Heights spec last Friday, $287k, bought the lot for $41k in January 2023 and put $164k into the build. That's $82k gross before I back out the $14k in holding costs and the $9k I did not budget for on the egress window variance. Cleared just under $59k net. Not what I modeled but the first one I've done ground-up where nothing blew the timeline, permit to CO in 6 months flat.
The egress variance is the one to watch going forward because that cost almost never shows up in the pro forma and it compounds when you are building in an older housing stock area where the original permits predate current ingress codes. It surfaces late, after you have already framed and insulated, which is the worst possible moment to absorb a redesign or inspector standoff.
What municipality are you pulling in next, and have you confirmed whether they run egress review at permit intake or at rough inspection?
$59k net on a $205k all-in cost is about 29%, which clears most people's hurdle rate on a flip, let alone ground-up where your unknowns multiply. Six months permit to CO in Cuyahoga County is the part I'd actually be bragging about.
What did the variance process cost you in time, not just the $9k?
Six months permit to CO in Ohio is the part worth sitting with, because that timeline is what makes or breaks whether the carry costs stay manageable on the next one. The $9k egress variance is annoying but it is also a fixed cost once it is paid, and the more instructive number is the $14k in holding costs against a six-month build. That is roughly $2,300 a month in carry, which suggests either a construction loan with a rate in the low-to-mid range or a lot of equity cushion keeping the interest bill down. Which structure you used matters a lot for what the second build looks like financially.
The fork most people hit after a clean first ground-up is whether to go back to the same lender on a conventional construction-to-perm or move to a private or hard money draw structure. The construction-to-perm wins when your next lot is already under contract before the build starts, because the lender underwrites the exit at origination and you fold the two closings into one, which saves points and title costs. The draw structure wins when you need to move fast on a lot that will not wait for bank underwriting timelines, or when your next project has a complication, a non-standard floor plan, an unconventional site, anything that makes a bank committee nervous, because private lenders price risk instead of declining it. Given that you navigated a variance on this one, a bank may flag that as precedent on the next application even though you resolved it cleanly. What did the financing look like on the Garfield Heights build, and do you already have a lot identified?
@harriet_boone here. The $9k variance cost is the number I'd want to dissect before the next one, because egress exceptions usually signal a zoning or survey assumption that was wrong at the time you priced the lot, and that same assumption will reprice itself again on the next acquisition if you don't trace it back to its source.
Take a lot you model at $41k with $8k in soft costs baked in. If the survey comes back with a nonconforming setback or a drainage easement that forces a redesign, that $8k becomes $17k before a single foundation pour, and your $59k net compresses to $50k on the same sale price. The question is whether the $9k was a one-time bureaucratic surprise or whether it flagged a gap in your pre-purchase due diligence checklist.
What did your lot underwriting look like before the January 2023 close, specifically on zoning conformity?
