Step 6: How to Manage the Construction Phase Like a Pro | 7 Figure Builder

Step 6 of the series: how we run the construction phase, from hiring the trades to hitting the final walkthrough.

Step 6 of the seven step series. Most people think building a house is the whole game, and it is the step that matters least to your profit. The money is already made or lost in finding the land and running the numbers. Construction is execution, and execution is mostly about who you hire and how you pay them.

Avoid the $250 per square foot quote

When a builder quotes $200, $250, or $300 per square foot, he has taken his hard and soft costs and added a profit margin on top, and that margin is your equity. What you want instead is cost plus: the actual cost to build, plus a fee to manage the whole project. Nationwide that fee runs 10% to 15%.

Ruben calls the right profile a boutique builder, someone running five to ten builds a year. Arthur calls it a spec home builder. Same person: he buys land, builds, and sells, which means he is investing, not just running a service business, and he is genuinely good at controlling cost. A custom home builder says bring me the lot and here is my flat price. That is a different business model and it is not yours.

Define the finish level before anyone quotes you

Builder grade usually means LVP or engineered hardwood floors and metal balusters rather than full metal railing. That is not an insult, it is a scope. We still do tile and hardwood. We do not do floating staircases or stone across an entire house, because it does not pencil as an investment. Custom upgrades, speakers, aluminum window frames, frameless glass showers, all cost real money. Ask exactly what the builder is promising to deliver for his number.

Schedule, scope, budget

Never sign an open ended cost plus contract. Three things go in writing: a budget you both sign, a detailed schedule, and what happens if the project comes in under or over budget and who carries that. Back the budget with actual bids. Then ask the builder for his previous builds, the plans, the costs, and the finishes, plus links to those homes on a public listing site. He built them to sell, so they are all findable.

The double inspection, then the check

Your leverage is the money. The lender releases each draw as the build progresses and you pay the builder. Two sign offs come first: the city or county inspector passes the completed work, then the bank’s third party inspector verifies the work was actually done. Both check marks, then you write the check.

Why prepaying is worse than it sounds

Subcontractors carry lien rights. If a homeowner fails to pay a sub, that sub can lien the property, and the homeowner then cannot sell, and in the worst case can be foreclosed on. The homeowner has fewer rights than people assume. So put a simple agreement in place before a sub starts: net 30 on this scope, once the job is finished, inspections pass, and the bank approves the draw. You can always pay early. You cannot un-pay.

Watch more on Ruben's channel.

Common questions