Building a Dream: Our Vacation Rental Property Series #3

Picking up where we left off last, Dave and I had selected the perfect piece of land that met all of our requirements for a perfect beach house and was well suited for building. Next, we had to put in an offer and cross our fingers that we’d land this little slice of heaven. This particular property had been on the market for a while, was owned by the same person since the 1970’s and was a bit overpriced. We did our research. By looking at other comps and measuring distance to beach and size of other lots we felt pretty well informed about the right price for this piece of land. Our realtor had also informed us that the selling agent was “old school” and probably not as inclined to know or do all the same research we were doing and might not accept our initial offer price right off the bat. We were undeterred. We wrote up an offer that was a bit lower than the asking price and submitted the offer WITH a detailed spreadsheet that essentially reflected all of our research so that the seller (and his “old school” agent) could see that the price we were offering was fair and reasonable for the area. As expected, they gave us a counter offer and we countered back eventually settling on a sale price that was about 11% below asking. Doing an hour or so of research payed off and saved us over 20 grand! In our minds, that was more money that we could put into the building of our beach dream home.
As we searched for land we had also been simultaneously looking for builders. We were able to see who had previously been successful in the annual Outer Banks Parade of Homes (an event sponsored by the Outer Banks Home Builders Association). We selected several builders from this list of previous winners and reviewed their websites, googled the crap out of them, and stalked them on Linked-in and Facebook. I heart internet research! After we narrowed down our top 3 contenders we sent them a detailed list of questions. We sent all of them the same 47+ (yikes – we probably seemed like nightmare clients from the get go) questions. Tip – don’t be afraid to ask questions – even if it makes you feel like a pain for asking! This may be the single largest investment you ever make so you should understand it all so you can make good decisions. So, here’s our list of 47+ questions we posed to 3 builders. If you’re embarking on a custom building project feel free to use them and truth be told as an internet research nerd I probably copped a few of these from elsewhere at the time! We also talked with a friend that was building a custom home and he had a few good ideas that we questioned builders on as well. Note, we also prefaced our list of questions to the builders with some context about who we were, what we wanted to build, size, location, purpose (i.e. vacation rental) etc.

Builder Questionnaire

1. Can you show me a copy of your business license?
2. Please describe the structure of your company.
3. Do you design/build or will you work with our plans or our architect? Are there extra fees if we select one over the other?
4. How many members of your team can I expect to work with through the process?
5. How many homes have you built in the Outer Banks?
6. Can you provide home owner referrals for recent builds we can contact?
7. How many homes have you built dealing with the Southern Shores or Chicahauk Property Owners Associations?
8. Are there any HOA covenants that will affect building in these areas?
9. How many homes are you currently involved in building?
10. How many homes are you currently bidding to build?
11. Of the last 10 homes you have built, how many have been awarded based on a competitive bid?
12. If we decide to use a stock plan we find on the internet, what format would your company require the plans be in for use (reproducible master, CAD, etc.)?
13. Could you specifically explain what quality control measures you will implement to ensure the highest standards of excellence throughout the building process?
14. Who will be assigned to my job?
15. Will my job have a job site manager? Would you provide the name of that person and describe their educational background and experience?
16. Will I be given one single point of contact throughout the construction of our home or will have I have to deal with subcontractors and separate installers individually?
17. What role will you play once my house is under construction?
18. How often will you be at the job site?
19. Will you have sub-contractors working on my job that you have never previously hired?
20. How long have each of your sub-contractors been working for you?
21. Do you have preferred pool installers you have worked with in the past?
22. Have you ever worked in conjunction with a prefab company? Would that be something you’d be willing to do?
23. How do you protect damages to building materials, appliances, plumbing fixtures, stone, tile, glass, etc. during construction?
24. How do you maintain temperature/humidity control inside the home during construction?
25. How will you keep me informed during the building process considering we will be in Virginia?
26. When will I be required to be present at the job site? Historically how accurate are you at coming in on budget?
27. Once a budget is established, how will you keep me within my established budget?
28. Do you offer any form of plan modification, design, or construction credits or discounts for Military Personnel?
29. Would you be able to provide a working timetable of this project prior to an agreed start date?
30. Do you include a timetable as part of your contract?
31. Would you expect to be penalized for not completing the job on time?
32. How do you want to be compensated? In a Cost Plus – Fixed Fee Contract, what is your fixed fee?
33. Do you have a bank you are familiar with and have worked with in the past that is located in the Outer Banks?
34. What is your billing schedule?
35. How will I be billed?
36. How will change orders be managed?
37. How is home plan modifications and landscaping designer paid?
38. How much liability insurance do you carry?
39. Can you show me a copy of your Builder’s Certificate of Insurance?
40. Do you provide workman’s compensation?
41. Do you carry fire insurance? What other insurance do you carry?
42. What protection do I have if your business fails?
43. We are focusing on lots found in “X” flood zones – what are unique building ideas you use to still try and give the homeowners a water view?
44. What are your pet peeves when it comes to dealing with homeowners?
45. How open are you to allowing the homeowners complete certain home finishings (such as painting), as long it does not interfere with the build schedule, as a way to reduce costs?
46. How can we be your best client?
47. What have I forgotten to ask you?