New Construction #11.1, Acton – Under Agreement

My next project is under contract and it’s going to be my first intentional new construction project.  I say intentional because as you may remember on Rehab #8, Wenham, I ended up rebuilding 99% of the house which deemed it new construction in the town of Wenham (stay tuned for exciting news on that project in my next post!).   

A RE agent brought me this Acton property when it was listed on the MLS.  These deals may be few and far between on the MLS, but if your plan is to add on to the existing structure or tear it down and rebuild, they can still be found.

As it currently stands, this is a 1,300 square foot Cape style house with 3 beds and 2 baths.  It’s sitting on 0.6 acres of flat land on a nice street with a backyard abutting the woods.  I’m really excited about this project not only because it’s going to be my first solo new construction project but it’s in a very desirable town in Massachusetts.  Acton is a family-oriented town with a school system ranked #12 in the state, right behind Lexington.  My plan is to tear the house down to the first floor, and build a 2,900-3,000 square foot colonial style house by adding a 2 car garage on one side of the house and a large family room on the other.  There will be 4 bedrooms on the 2nd floor including a huge master suite.  This project is scheduled to close on September 5th so I have a lot to do before then.   I’m working with an architect on the plans now and hope to have a final plan in the next week or two so my contractor can review and work with the town for permitting.  I’ll be adding a new septic system as the current one is a 3 bedroom cesspool and I want to have someone lined up to install it before the cold weather hits.

I’m going to use bank financing on this project due to the overall high construction cost and low cost of funding from my bank.  My contractor and I discussed pricing and we’re going to be right at $195k for construction and permitting, $25-$30k for septic and I’m budgeting for $15-$20k for soft costs (architectural/engineering), overruns and unexpected costs.  Since this is a new construction, my expectation is that unknowns are less common as we’re starting from (almost) scratch.  I’m budgeting for an 8 month hold, however, I’ll likely pre-market the house once we start framing so we can tap into the high summer-market buyers.  I feel this strategy will elicit the best outcome since it’s looking like we’ll complete the project in the beginning of 2015.  The down side to pre-marketing is that I need to have a detailed plan early on so I can present it to buyers and not sway from those decisions.  While I’m usually pretty good about this, there are times that I make last minute style decisions based on how the finished product is coming along.  Finally, my RE agent strongly feels that the ARV will be in the $730k-$740k range but based on my comps, I’m conservatively budgeting for $710k.  Hopefully she’s right!  Here is how the project breaks down:

New Construction #11.1, Acton - Budget

 

Here are some before pictures of the house.  I’ve only included exterior pictures since I’m tearing down the house.

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  • Shaun Reilly

    Very nice town to be in.
    Sounds like it will be an interesting project.
    Looking forward to the updates.

    • Thanks Shaun. I’m looking forward to starting this project.

  • Very exciting! I love your blog. I’m a rehabber also and it’s funny to me that your construction cost to build a new home is the same as my renovation project in Chicago (my partner doesn’t find that as funny as I do).

    • Allyson – Thanks. I’m happy to hear that you enjoy the blog. Is your cost a component of the labor rates out there or that you are doing a large renovation?

      • Both. Labor rates in Illinois, specifically the City of Chicago, are very high due to Unions, Permit Fees, and supply/demand. The construction industry took off this summer here. Our current renovation involves some extensive structural re-working including the raising of the first floors to level them out and shifting the bearing wall of a gabled roof to accommodate a better doorway (current one is 5ft high with a step up). This is a house built in 1890 so part of the labor is being careful.

        • Interesting…thanks for sharing Allyson. Good luck with the rehab.

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