Here is a slide show of my project! It will be updated with new pics as we approach completion, so check back often!
Here is a slide show of my project! It will be updated with new pics as we approach completion, so check back often!
When the builders began to dig for the foundation, they discovered that it was backfilled with unsuitable material — old trees, bricks, pieces of the old foundation. They removed it all and replaced with recycled crushed concrete, a suitable sub-foundation for the house’s foundation. All that other material is prone to decay and rot, which leads to an unstable sub-foundation.
The builders saved a few artifacts for me — two vintage glass cups, original bricks stamped with the brick factory’s name, and pics of a hand dug well they uncovered under the ground.
After a week of excavation, preparation of the sub-foundation (which is 14′ of compacted crushed concrete!), and installation of the water/sewer lines, the actual foundation for the house arrived. It is pre-cast and installed on-site in one day. After watching how quickly and easily it goes up, I can’t fathom why most builders don’t use this type of foundation. Plus, it’s a great foundation system (see details in my post The Basement Foundation).
The pre-cast panels arrive on a trailer. They’re hoisted and placed in position by a crane. The crew is on-ground to receive the panel and lift into place. Once in place, they adjoin it to the adjacent panel and seal all seams so it’s airtight.
I’m going to talk about a topic that makes many people uncomfortable: money. It’s such an important piece of this endeavor that it’s surprising to me people are cryptic about it. Sharing pics of your bathroom and the color of your bathrobe is not “personal” but how you paid to build your small house seems too personal for most to share. I arrived at this conclusion after reading scores of small house blogs trying to answer the question “How am I going to pay for this??”
Since we don’t live in a socialist society, it’s obvious some have more than others.
I will tell you right now that building a small house, even a tiny house, is not cheap. Constructing a tiny house that is < 300 sq feet, even if you build it yourself, will cost at least 25K in materials, plus the cost of the land, permitting fees, excavation fees for tying in to utility lines, etc. It’s awesome if you inherited the land or have enough equity in your current house to sell it for the entire construction price. Or a grandparent left you a sizeable inheritance. Or you’re the princess of Monaco. However, most of us in our 30s haven’t lived in homes long enough to acquire that much equity, are still renting, or don’t have enough savings to pay for it all in cash. Plus, as you can imagine a small (not tiny) house of approx 1000sq ft will be a sizable sum. Hmmmm…
In my mind, since I like to compartmentalize everything, the cost can be blocked off into the following sections:
2. pre-construction fees (surveys, zoning, design, soil testing, engineering, permitting)
3. foundation construction
4. building construction
5. post-construction (occupancy permits, landscaping, furnishings/interior decor)
So, ask yourself this: how much do you have for each of these elements? Whatever you don’t have, you will need to finance (=borrow). Or you will need to take baby steps, such as purchase the land one year as an investment, begin the pre-construction process another year, then build the house next, etc.
I discovered a type of bank loan called construction financing. Nearly all the major banks offer this, and many local banks do as well. The structure of the loan is very much like a mortgage. 20% downpayment, low APRs, and monthly payments up to 30 yrs with interest only payments while the house is being built. You apply for one just like you apply for a mortgage. There a few key differences, however, which become mucho important in the end:
a) They want to know the location and specs of your future house before they approve the loan. That means you need to identify a lot, have a houseplan and a description of the interior finishes before you apply. An example: Proposed house will be a 2bedroom/1bath house located in Mysuburb, PA with energy-star rated appliances, solar panels, nickel fixtures etc.etc.etc. … and will look like this (attach pic of floorplan and exterior elevations).
b) Once the loan is approved, the dollar amount approved is just a placeholder. This is the kicker: they will appraise the post-construction fair market value of the house and loan 80% of that value. This is the part that’s scary, and here’s why: let’s say your entire estimated cost is $200K, and the bank approves a loan for 80% of this amount. However, your lot in Mysuburb, PA is in a neighborhood where 2BR/1Ba homes are selling for $100K. The appraiser looks at these “comps” (comparable sales) to appraise the final value of your home. Even if they say, well your house is new so we’ll appraise it $50K higher than the comps, that means the appraised value is still short at $150K. They’ll only loan you 80% of that, which is $120K. So guess who has to pay the difference of $80K? You! Yikes!
That is the reality of how real estate values work. Just because a house cost $200K to build, doesn’t mean that’s how much it’s worth. On the flip side, it could be worth a lot more if you build in the right neighborhood where comps are selling for a lot higher. It really is about location.
c) The bank pays for the construction in stages, and typically directly to the other party, not you. The bank and builder come to an agreed upon “draw schedule”. This commonly reads as : 15% of funds to be disbursed once construction of foundation is complete, 20% once construction of exterior walls and roof is complete, etc… If you’re financing the lot, the bank may have a separate agreement with the seller of the lot.
d) They won’t finance the “tiny house” due to poor resale value. If this is your plan, banks that offer financing for mobile homes may be a better option.
Here is my disclaimer in case a lawyer or banker is reading this: the above information may be fraught with error as it is my, and only my, understanding of construction loans. Please consult with your loan adviser before applying for a construction loan. 😉
I’ll leave with a song that I just can’t get outta my head today 🙂
Construction hasn’t even begun, yet a whole lot has happened. So much more was involved than I anticipated! This may be a good time to pause and review. Here is a recap of the pre-construction process, in the general order the steps were taken:
a) Find a lot. You can do this yourself or if you’ve chosen a builder, he/she can help you.
b) Make sure the lot is buildable. Buildability really depends on the location of the lot. There are, however, a few general factors to keep in mind:
– Is the lot improved? If the lot has access to public utility lines such as gas, water, and sewage, then it is an improved lot. An unimproved lot can certainly be buildable, but will require significant cost and time to bring the utility lines in.
– Is the soil and terrain suitable for small house construction? Essentially the soil needs to support the weight of the foundation and house. It also needs to be free of contaminants that could leach into your house. See my post The Soil Test for details.
– Will your city’s zoning/planning dept give you permission to build your small house on the lot you’ve chosen? One potential reason for rejection, for example, is that the lot is in a neighborhood of sprawling homes and your small house doesn’t fit with the neighborhood’s style. Another common reason is that your lot is not zoned “residential”. If it’s zoned “commercial”, for example, you’ll have to apply for a variance to change its zoning classification so you can build a house and not a storefront.
c) Find a builder. Ask for recommendations from your real estate agent or friends, scope out local new construction and its builder, see if your area has a builder’s association.
I found my builder incidentally — the local paper’s real estate section quoted my builder’s opinion in an article on green construction. I googled him, found his company’s website, and discovered they were local green modular builders — exactly what I was looking for!
d) Have the lot surveyed. The type of survey you need is a site planning survey, which includes the boundary lines, marking of utilities and easements, and topography.
e) Determine a houseplan. You can hire an architect (cost = 8-20% of budget), choose from the builder’s stock set of plans, purchase a plan online, design your own, or make small modifications to any published plan. Remember to determine the city’s setback requirements to figure out the max allowable width, depth, and height of the house.
Personally, I found 2 houseplans online I liked. I took what I liked best from each and combined into a single houseplan. The builder has an engineer that reviews the plans to make sure they are sound. Many versions later, we arrived at the final houseplan.
f) Have the survey guys put your house on a plot plan. This plot plan is basically a diagram to scale showing where your house will be relative to the lot and its surrounding structures.
g) Talk with the utility companies (gas, water, sewer, electric) to determine the connection lines, notify them of proposed project, and identify any potential issues.
h) Take the plot plan to the zoning dept for approval. The zoning department needs this plot plan before it’ll even consider approving your house. Once approved, you can apply for a building permit. If it’s not approved, they will tell you why and if you can apply for a zoning variance.
i) Apply for the building permit!
Steps A-E were done by me, but they can be done by your builder or architect if you choose. Steps F-I were all done by the builders (thanks, guys!) The entire process took 6 months. This is way longer than anticipated and I imagine it’s way longer than average. The main issue was how long we spent in the design phase, which was about 4 months. I know, crazy, right? Each time I thought the plan was finalized, there was an issue with the feasibility and/or cost effectiveness of the design once the engineers reviewed it. I suppose that’s what happens when you find a plan online and try to make it fit a narrow, sloped lot plus build it using modular construction techniques 😉 Lesson learned, but I don’t think I would’ve done it any differently in hindsight — what I lost in time, I gained by avoiding architect fees and will hopefully regain because modular construction takes only a couple of months!
My next post will be a brief blurb on financing this little endeavor. This is a crucial step in the pre-construction process, which I thought deserved a post of its own!
This post will be (yawn…) a bit boring and a bit long, but necessary I think. The quality and characteristics of the soil are critical to the building process. As with the survey, there are different types of soil tests for residential construction. They can be broken down into 3 different types:
1. Water percolation test, or the “perc test” : this tests the soil’s water absorption rate. This information is used to design a septic system. Necessary for unimproved land (land without access to utilities, water, etc.). Unnecessary for an improved lot with easy access to the city’s sewage system (which is my lot. Yay!)
2. Environmental Site Assessment: this test evaluates the soil for pollutants/contaminants/harmful substances. It is typically performed by soil engineers or civil engineers. This test in particular has many nuances.
3. Geotechnical investigation: this test evaluates soil characteristics, such as soil composition and density. Designing the proper foundation relies on understanding the properties of the soil. If the soil cannot bear the load, or settles, the foundation will crack. The geotechnical engineers use their soil analysis to provide recommendations for foundation depth, size, location as well as recommendations for backfill and grading.
In the Pittsburgh area, most soil/civil/geotech engineering companies do not perform all 3 types of tests (in other words, it is not one stop shopping). This led me to presume that these tests do require a specific level of expertise and training, which is why a company specializes in just one. There are very large companies that perform all 3 types of testing under one roof, but they cater to large developers, not the person looking to build a single small house.
Just as an aside, would note how different people in the industry have different opinions regarding the necessity of above tests. One architect is emphatic that a geotech investigation would be a waste of money, since the load of a residential house is so light that virtually the same type of foundation is used for all single family residential construction in this area. Another engineer states that it’s absolutely necessary because it’s known my lot was backfilled, this backfill may contain organic material which will decompose with time, so if a foundation sits on this decomposing material, it will crack and sink. I think this difference of opinion will be common as I continue along this process. Perhaps the city’s building and planning department would be helpful.. At the very least, the minimum investigation necessary to obtain a building permit is a good starting point .. Or, as someone else advised, get everything done upfront so there are no future surprises, particularly relating to unanticipated costs. To which I said, surprises are inevitable in home construction – you can’t plan for them. That’s why they’re called surprises 🙂