I'm in Louisiana where it is legal to build one home a year without being licensed. Getting a GC license is in the plans depending on how this test home works out. With workmen's comp and general liability insurance rates being what they are, I simply can't afford to be a GC on just one project at this time. I would like to follow the KISS system (Keep It Simple, Stupid) but it seems that because of all the money outlay that it is required to stay in business as a GC, one would have to have 3-6 large projects going per year to spread out the costs. That doesn't make it simple at this point. I understand that as a GC around here, you're sub-contractors rates can be reduced significantly if they don't have proof of workers comp. I understand the onus is put on my shoulders in case of injury. The way the world is today I can't take that risk, so hiring non-covered subs is out of the question.
Here's my situation, we bought a lot in the old part of town (one of few remaining) and in a high demand area. We anticipate selling the home during construction. I have had people stopping and inquiring while I was undercutting brush, which is encouraging. The appraised value of the plans and lot are $303,000, 80% for loan purposes is $242,400. The lot cost was $69,000. $242400 - $69,000 = $173,400. $173,400 divided by 2525 sq. ft. living area is $69.36 a sq. ft. to build. How do you build for that, much less have a small income generated during the building phase. I am expecting the majority of the profit from the venture coming from the sale of the house. I plan on doing some of the work, flooring, painting, stucco, finish trim, etc. that I know I can do.
Now if I was a GC, building a home for a customer, and charging theorectically, 20% for my fee, that would leave $138,720 or $54.94 a sq. ft to build. I know all though it would be tough, a modestly appointed home could be built for that and even have a roof on it, but in the area where I am going to build, modest isn't going to sell. Nice kitchens, Master Baths are a must and the home's elevations will be patterned after the town's older homes. 1 and 1/2 story Acadian home with stucco and brick and a unattached 2 car/storage room garage.
Taking into account the costs of building are relative to the price of a house in your neck of the woods, could you guys do it and what would you realistically expect as a profit? I guess I am asking for some reassurance that my family won't starve while I am building this home. Homes are being built like this every day around here. Am I conjuring up skeletons in the closet before I even start this build?
Any opinions and personnal accounts would be most appreciated.