Everybody looks at the truck. A finished house rolling down the road is a good picture, and the two days in the factory is a good statistic.
Neither one is the financial case. The financial case is the calendar, and the calendar is the only part of this that shows up on a bank statement.
Here is what a construction loan actually does to you while you wait.
You are paying interest on the drawn balance. That part everyone knows. What gets missed is everything that runs on a monthly clock whether or not a single person swings a hammer that month. Builder’s risk insurance. Property taxes on the land. The general conditions, which is the unglamorous line covering site supervision, the trailer, temporary power, the portable toilet, fencing, and the dumpster. Those bill by the month. They do not care about weather. If your loan runs long, you also hit extension fees, and those are pure penalty with nothing to show for them.
And if it is your own house, you are paying for somewhere else to live the entire time.
Add those together for your own project. Your rate times your drawn balance, divided by twelve. Plus general conditions. Plus taxes and insurance. That single number is what one month of delay costs you, and it is almost always larger than people guess, because they only ever count the interest.
Now the thing that makes weather so expensive, which is not the weather.
A house down my street got stopped by snow more than six times in two months. It sat tarped. The natural assumption is that they lost six days. They did not lose six days. They lost their place in line.
Construction is a chain of trades, each one booked weeks out, each one unable to start until the one before it finishes. When you go down for two days, your framing crew does not sit in their truck waiting for you. They go to the next job. When you are ready again, you are behind that job, and possibly the one after it. Inspections get rescheduled into the next available slot, not the next day. Concrete has temperature requirements, so a cold snap does not delay the pour, it cancels the window. A two day snow event routinely becomes a two week schedule slip, and you pay carrying costs on all fourteen of those days.
There is a quality cost sitting under the tarp too. Framing lumber and sheathing absorb moisture. Wet then dried then wet again is how you get movement, and if somebody closes that wall up while it is still damp, you have bought a problem that does not introduce itself until year three, inside the wall, where it is expensive.
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Against that, the modular version. Six modules, about 1,200 square feet, assembled in a factory in two days, arriving about 85 percent complete. The foundation is done and cured before the truck shows up, because that work runs in parallel instead of in sequence. What is left is floor, siding, porch, paint. Two days indoors also means the framing never met a raincloud.
I urge people to look at both simple ROI and market ROI on any decision like this, because they answer different questions.
Simple ROI is the floor case. What did modular cost me against stick built, including the delivery, the crane, and the site prep, and what did I save in carrying costs by finishing earlier. That is a subtraction problem and you can do it on one page.
Market ROI is the upside case, and it is the bigger number. If you are cash flow positive six months sooner, that is six months of income you would never otherwise collect, and it never comes back later. You are also holding a completed, occupied asset six months earlier, which is a different thing to a lender and to a buyer than a job site with a tarp on it.
I am not going to pretend it is free. Modular buys you schedule and charges you flexibility. The site has to be right, the crane has to get in, the foundation has to be dimensionally exact, and once a module is on the truck, the decisions inside it are finished. If you are a builder who likes to work things out in the field, modular will punish you for it. You move your thinking forward in time, which is harder, and then you stop thinking and start installing.
The factory is a manufacturing story. The money is a calendar story. Only one of them is on your loan.
—Jon