Avery: Hey guys, welcome back to the Short Term Show! Today, we’re going to talk about something a little bit different than what we normally do. We haven’t really hit on doing new constructions for short-term rentals and what that entails. We’ve got a panel of ladies today who have bought, sold, and been involved in building short-term rentals.

Avery: On the call, we’ve got Julie McCoy, Reagan Natho, and Natalie Wall Tower. We were just having a conversation about the correct way to pronounce that, so I’m glad I asked! Hey guys, how’s it going?

Julie: Hey, good! Let’s go!

Avery: Great to have you, Julie! Let’s dive in. It’s usually Julie who helps me with my social anxiety. She’s always right there with me, whether she likes it or not!

Julie: It’s a real hardship [laughter].

Avery: Alright, let’s get into it. We’re going to talk about new constructions. I’ve personally done one. I’ve bought a spec build, and I’m in the very beginning stages of doing a custom build, which is an entirely different thing. So, Julie, what’s the difference between a spec build and a custom build?

Julie: A spec build is when a builder or developer already owns the land and has a set plan. They build it and then sell it to an end user when it’s complete. Most choices are already made—floor plan, finishes, everything within their budget and asking price. The buyer generally gets a contract while it’s being built, and sometimes even before they break ground, but they don’t take possession until it’s done.

Avery: And you’re not financing the construction, right?

Julie: Correct! You’re not financing the construction; the seller is. You buy the completed product with limited choices, which makes the process simpler. A custom build, on the other hand, is when the buyer is responsible for everything—finding the land, the builder, and conceiving the entire floor plan. It’s very time-consuming but can be a lot of fun if you enjoy that process.

Avery: From a financial perspective, you’re either paying with cash or getting a construction loan. In a spec build, everything is already presented to you, and you can usually close with conventional financing.

Julie: Exactly, and when you’re doing a custom build, you’re getting an architect, builder, and maybe even a construction loan, which you close on before the building starts.

Avery: What happens if something goes sideways, like if they hit rock when digging?

Julie: It’s expensive! Most builders have some sort of contingency in their contracts for unexpected costs, whether it’s materials or labor.