Financing

First, you’ll need money. This is where some heavy research comes in handy. A contractor will need to start with home-development plans and look into some cost-estimating spreadsheets. Templates along these lines can be found online with a simple Google search.

When an established general contractor is building a new home, he has to account for materials, labor, and the cost of the land, all of which make up about 75 percent of the selling price of the new home. But he also has to account for his own profit and overhead, which make up the remaining 25 percent. Alternatively, a property owner acting as his own general contractor only has to concern himself with the land, labor, and materials.

One cost-saving resource available to South Sound residents is the Tacoma Tool Library, where, with a suggested $40 donation for the entire year, a builder can check out just about anything they need for a remodel or build. 

“That’s our main clientele, people that are homeowners doing their own projects,” said Sharayah Kinney, board chair of the organization. “People working on a driveway will use our cement mixer, or (check out) a tile saw so they can tile their bathroom. We had someone who re-sided their house by using our scaffolding and someone else redid their attic with our tools.” 

Once a cost estimate has been formed, it’s time to start saving or looking for a construction loan.

A construction-to-permanent mortgage from a lender can help a builder borrow exactly what is needed through a one-time close loan. This includes financing for the lot purchase and building construction, and charges interest only during the construction phase to keep initial costs down. The loan will automatically convert to a permanent loan once construction is complete.

The downside to this type of loan is that the builder cannot go over budget; otherwise, he runs the risk of needing a second loan.

Permitting

Applying for permits may seem foreboding, but they are essential in ensuring work is done safely while meeting all applicable regulations and building codes.

For each new home constructed, permits need to be applied for and obtained for plumbing, mechanical, sewer, driveway approach, site development and drainage, and more. There also are impact fees for traffic, parks, and schools. Plus, administrative fees.

Permitting regulations and fees vary by the jurisdiction a home or property is located in. In total, permitting for a 1,500-square-foot home in Pierce County can cost approximately $15,000. This amount climbs as square footage increases. Double the size of that 1,500-square-foot home, and permitting and fees can climb to approximately $16,600.

These numbers do not include development-related permits, like those needed for such things as fire protection permits, building and sign permits, and land-use reviews. Additionally, there will be Tacoma-Pierce County Health Department-imposed fees for the well and septic systems.

Jean Sabeth via Unsplash

Like many jurisdictions, the City of Tacoma has a user-friendly online permitting application process, which walks contractors through the process beginning with answering questions regarding why one might need a permit, what is needed to apply, and how much fees will cost, and culminating in the permit inspection. From January through June, the City issued 85 percent of its 894 residential permits in under 11 weeks.

City of Tacoma Development Specialist Jayme Martin said the best way for new builders to apply for a permit with the city is to go to the permit office during walk-in hours. And once an application has been submitted, Martin said builders are welcome to keep communication open with the department. 

“Have patience with the process, but also have open communication if you have questions about that process,” Martin said. “If you are wondering where in the process you are, coming in or making a phone call is very easy for someone to do, especially if you are acting as your own contractor because you may need more help. And realize that everyone here really wants to help you get through the process because the goal is the same: it’s to get you a permit and get you to that final inspection as quickly and painlessly as possible.”

Subcontracting

A subcontractor, or sub, is an individual contractor who often is hired to perform part or all of a homebuilding job — some may need to be licensed in their trade.

These specialists can include contractors who concentrate on the bigger picture, such as a designer or architect, structural engineer, carpenter, or surveyor. Or a sub can be someone who is more specialized and very knowledgeable about one aspect of homebuilding. These can include plumbing; drywall; heating, ventilation, and air-conditioning (HVAC); painting; roofing; and landscaping contractors.

One poor subcontractor can slow down an entire build, even if he is just installing cabinets or carpet. This is why vetting a subcontractor is crucial. Ask for references with each subcontractor before hiring, and make sure you ask whether work was done on time and on budget.

According to the Master Builders Association of Pierce County, one of the best ways to vet a contractor is through the Washington Department of Labor and Industries website. 

“Check to see if the contractor is registered in the State of Washington on L&I’s website,” said Jeremiah Lafranca, executive officer for MBA Pierce County. “Being registered in Washington requires that the contractor No. 1, purchase bond and liability insurance and, No. 2 have a valid business license. This provides homeowners financial recourse if a job is poorly done or left unfinished, provides coverage for damages, and gives you a known business to work with. Additionally, records will show if they’ve ever had a claim or legal action against them.”

Additionally, a builder can verify if a subcontractor is a member of an accredited association, like the Master Builders Association. If a subcontractor is a member, they are required to be registered with the State of Washington to maintain their membership with such an organization. This provides builders an extra layer of protection.