Learning how to build a new house as an investment property can seem daunting for real estate beginners or fix and flip investors looking for portfolio diversification. For many investors, understanding the different types of construction permits, which ones are needed, and how to get a permit to build a house is a foreign practice.
Luckily, CIVIC is here to help! Below, we’ll simplify the building process by explaining the permits needed to build a house and how to develop a successful scope of work (SOW) for building approval.
Do You Need a Permit to Build a Residential Home?
The answer to this question is an emphatic yes. Whether you’re learning to build a new house or undertaking a major renovation project, you will need a building permit. A building permit is an authorization form issued by local governments granting permission to construct, alter, or demolish a building or structure. Building permits are essential because they ensure any project complies with local building codes, zoning regulations, and safety standards.
While permit requirements vary from town to town (or county to county), in general, local governments are typically looking to verify that the proposed construction does not cause problems with:
- Entering and exiting the structure safely
- Fire resistance
- The health and well-being of others
- Water and sewer lines
- Electrical services
- Industrial waste
- Structural integrity
If approved, the building permit may also outline additional specific conditions that must be upheld throughout your construction project.
Permits Needed to Build a House
There are many different types of construction permits you can acquire. Fix and flip investors who have taken on large renovation projects may have had to “pull” electrical, plumbing, demolition, or even mechanical permits. While all of these permits are necessary for new construction, builders are not required to attain each individual permit to remain compliant and begin the building process.
Instead, residential real estate investors looking to build a new home will acquire a residential building permit. A residential building permit accounts for each of the individual permits needed to build a house, including any trades permits (electrical, plumbing, HVAC) and demolition if necessary.
To successfully acquire residential building permits, investors and builders must develop a scope of work or SOW.
Developing a SOW
For beginners learning to build a new house, the SOW is arguably the most important document in any construction contract. Aside from acquiring a residential building permit, the SOW lays out the expectations, vision, and objectives of the project throughout its entirety.
The SOW also covers communications for all involved parties (including local governments) communicating the obligations, responsibilities, tasks, vendors, layout, parameters, timelines, and any other details that may influence the project.
While the SOW can change throughout construction (unexpected delays, a change in vendor, etc.), the initial SOW is a roadmap for local permit issuers to assess the scope and legality of your proposed projects. A well-researched and thorough SOW can go a long way in ensuring permitting approval.
Researching Local Regulations
Once you find the right lot or raw land to build on, researching local regulations should be the next step on your building permit checklist. With varying zoning laws, building codes, and regulations, understanding specific requirements and restrictions can save time and help guide your SOW creation.
Many local building departments publish their regulations online. However, it could be beneficial to schedule a meeting with building officials to ensure the land is eligible for residential builds, help avoid confusion regarding specialty permits needed to build a house, and clear up any other uncertainties.
Drafting Your SOW
Once you have educated yourself on the local building regulations and restrictions and have ensured the land is okay to build on, it’s time to start drafting your SOW. An investor or builder’s SOW will vary depending on the nature of the project. However, several common elements should be included in your SOW for permit approval.
- Project overview: Create a summary of your proposed building plan at the beginning of your SOW. Include project parameters, construction plans, timelines, and overall goals.
- Project deliverables: This is a detailed breakdown of the deliverables, or tasks, that must be completed throughout the project’s lifecycle. This can include things like foundational and structural construction, electrical wiring, plumbing, roofing, and so on.
- Construction plans: Work with licensed architects and engineers to draft official construction plans that include:
- Site plans
- Floor plans
- Electrical and plumbing schematics
These detailed visuals should showcase your project’s compliance with various local building codes.
- Scope details: The project scope provides greater details, zooming into the specific tasks and technical specifications associated with the build. While aspects of the scope can change, providing as much detail into the 5 W’s (who, what, when, where, and why) helps permit issuers to determine what works and what needs to change. Additionally, this is how to avoid building permit rejection.
Include details about:
- Contractors and subcontractors
- Tradesmen and their tasks
- Parameters
- Layouts
- Materials
- Costs
- Timelines: Communities are seldom happy with ongoing construction in their backyard. Developing a timeline within the SOW creates a deadline for you and building permitters. This helps them visualize the full scope and timeframe of your project as a whole.
Tips for Writing a Professional SOW
When it comes to writing a professional SOW, remember to remain as clear and thorough as possible by:
- Using plain language: A SOW should be easy for everyone to understand. Avoid ambiguous or vague language, jargon, or unnecessarily complex words.
- Clearly establishing objectives: Establish clear objectives throughout. Both at a project level in the Project Overview and a more concise task-specific level in the Project Deliverables and Scope Details sections.
- Using visuals: In addition to your Construction Plans section, use visuals in other areas such as 3D renderings or photos to reinforce key concepts and plans.
Once you’ve completed your SOW, you will submit it with your application form, supporting documentation (proof of ownership, license and insurances, etc.), and permit fees. While costs vary, residential new-build permits generally cost between $750 and $2,000.
If all requirements are met, your building permit, and any other permits needed to build a house, will be issued. Although the building department will require several inspections throughout the construction process, you are ready to start digging, demoing, or building.
CIVIC: Your New Build Investment Partner
If you’re learning to build a new house as an investment property, one of the greatest assets for success is adequate financing. CIVIC provides superior lending packages for investors and builders of any experience level.
Our Ground-Up Construction Loan Packages provide:
- Flexible 12 to 24-month term lengths
- Financing in 44 states
- Up to 100% of construction costs
Our team of industry experts can guide you through the new build process, providing insights into the permits needed to build a house, costs, and financing options.
If you’re ready to profit in the residential new build market, let CIVIC guide you to financial success. CLICK HERE to schedule a FREE consultation with a CIVIC team member today!
