This inspirational project was completed by architect Edward M Baum and developer Diane Cheatham in Dallas in 2004. As I review the Dwell article detailing the project I am reminded at the similarities to our current project. The project was a prototype for building modern and affordable homes on Dallas’s standard building lots of 50′ x 150′. They were able to fit four, one-story, 1,700 square foot homes on two of these lots and build them for roughly $100 psf using mainly materials sourced from local big box retailers like Home Depot and Lowes.
While I have a love/hate relationship with these big box home improvement stores, there is something to be said for designing homes that can be built with materials from them. It allows the homes to not only be built economically, but greaty reduces the difficulty in obtaining the materials for construction. One could argue that with the right plans, a really long weekend of ordering materials at Home Depot and a couple thousand man hours of labor, you could end up with one of these lovely homes or at least something very close to them.
OK, lets talk development again. This team also had the goal of making these affordable, market rate units and ended up selling them within weeks of completion for $275K each. That’s pretty not bad and quite admirable in my humble opinion. The article says they bought each lot for about $80K so that means that a sale price of $275K – $40K in land costs – $170K in construction costs leaves them with about $65K to cover their soft costs, financing costs and leave them with some cash to pay their bills and put food on the table for their families and possibly some close friends.
Let’s look at their potential profit in a bit more detail. They need financing and we’ll estimate that they paid roughly $15K for each home in loan fees and interest. This is fairly conservative if the project takes 12 months from time of closing to selling the homes. They need to pay their realtor 5% or so which takes another $14K from their pockets. We’ll estimate that they got a good deal from their other professionals and paid another $11K or so in architect, engineering and miscellaneous fees per home. This could be much more but I am just guessing. That gives us an estimated profit of $25K per home.
Why are we looking at their estimated financials in such detail? A couple reasons:
- To show that their profit is not $105K per house ($275K – $170K).
- To show that they could choose to add $20K – $40K more in high end finishes and fixtures and command 50% more for their homes to increase profitability but they choose not to.
- To show that making $100K every two years or so on a project that makes one proud while providing quality architecture and construction to a lower level of the market than the upper middle class is not a bad living. It’s not a fortune but it beats starving or selling your soul to corporate America (feel free to substitute your personal extremes here. These are just mine…).
Enough words. Let’s see some more pics!
Special thanks to Steve Segal for reminding me of this project.
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