Red Cedar Homes
What Is a Fee Build? How Investors Build New Homes on a Fixed Vertical Price
A fee build lets you own the lot and the home while a production builder builds it on a fixed vertical price. Here is how pricing, risk, and the process work.
A fee build is a way for an investor to own a new home without becoming a builder. You own the lot and the finished house. A production builder builds it under contract, using its plans, crews, and pricing. At Red Cedar Homes, the house itself is built on a Guaranteed Vertical Price that is fixed at signing, and the lot-specific costs are billed at actual cost.
How a fee build works
In a fee build, title stays with you. You own the land before construction starts, and you own the home when it is finished. The builder's job is to permit, build, and deliver the house to a certificate of occupancy.
There are two common ways to start:
Build on a builder-supplied lot. The builder releases a lot it has vetted and assigns it to you. You close on the lot and own it, then the build starts.
Build on your own lot. You already own the lot or have it under contract. The builder estimates site work and foundation for that specific lot before you sign.
Either way, you choose from the builder's plan library. That is the main difference from hiring a custom builder: you get plans that are already priced, permitted, and built in the market, instead of paying to design and price a one-off house.
The three-line price: what is fixed and what true-ups
Red Cedar prices every fee build in three lines, with the land kept separate. One line is fixed; two true up to actual cost.
Line 1, site work and foundation. Estimated for your lot and billed at actual cost. This is where lots differ most: grading, clearing, soil conditions, and foundation type all show up here.
Line 2, soft costs. Estimated for the project and billed at actual cost.
Line 3, the Guaranteed Vertical Price. Fixed at signing. It covers the house itself, built to the plan and interior level you selected.
Lines 1 and 2 true up to actual cost within 30 days of the certificate of occupancy. Line 3 does not move unless you add a change order.
What the Guaranteed Vertical Price includes
On Red Cedar's current fee build terms, the Guaranteed Vertical Price includes:
Level 2 interiors
A one-year limited warranty
Builder's risk insurance
It does not include site work and foundation (Line 1), soft costs (Line 2), the land, or utilities.
Interior levels
One interior level applies to the whole home. Level 2 is the standard and is already in the published price. Level 1 is a one-step credit on the Guaranteed Vertical Price; Level 3 is a one-step upgrade. The level governs countertops, tile, LVP flooring, carpet, plumbing fixtures, cabinets, and interior trim. Oak stair treads, satin nickel lighting, and chrome plumbing are standard at every level.
Change orders
Items outside the level package are priced as change orders: lighting, door hardware, bath accessories, mirrors, shower doors, plumbing finish, appliance packages, and cabinet crown. Each change order adjusts Line 3, so price them before you commit to a sale or rent target.
Who carries which risk
A fee build splits risk between you and the builder. Read the split before you run numbers:
Vertical construction cost: the builder carries this once the Guaranteed Vertical Price is signed, subject to the signed documents and any change orders you add.
Site work, foundation, and soft costs: carried by you, because Lines 1 and 2 are billed at actual cost. A good estimate narrows this risk; it does not remove it.
Land: carried by you. You choose or approve the lot and own it.
Financing and carry: carried by you. Interest, taxes, and insurance on the land during the build are your costs.
Market: carried by you. Sale price, rent, and time on market are your decision and your exposure.
Your all-in cost is the land, plus Lines 1, 2, and 3, plus change orders, plus your own financing and carrying costs. Compare that number to a realistic sale price or rent, not to a list price you hope to get. The deal calculator runs this math with your lot and your sale price. As the calculator page puts it, your numbers stay yours until you ask for the report.
Fee build vs. buying a finished home
When you buy a finished home, you buy it at a retail price set by the market. In a fee build, you buy the land separately and the house at a fixed vertical price, so the carry and sales costs of a finished home become yours to manage. Whatever the home sells for above your all-in cost, or the equity you hold if you rent, stays with you.
The tradeoff is time and exposure. A finished home is income-ready the day you close. Building asks you to fund the land and carry it through construction, and to own the market risk at the end. Investors who already hold lots, or who want several homes on a schedule, are the usual fit. If you are comparing the two for your own situation, start with the homes Red Cedar has available now and price the same plan as a fee build.
From lot release to the build queue
Red Cedar runs every build through the same six steps:
Lot released. A vetted lot becomes available, or you submit your own lot.
Your Deal Sheet. You get the plan, interior level, and the three-line price for that lot.
Your review. You run your numbers and ask questions.
Documents. You sign the fee-build documents.
Deposits. You fund the required deposits.
In the build queue. Your home is scheduled to start.
Expect to show proof of funds early. A builder that matches lots to investors needs to know a deal can close before it holds a lot for you.
Questions to ask any fee builder
Use these whether you build with Red Cedar or anyone else:
Is the vertical price fixed at signing, or is the house built cost-plus?
What exactly is inside the fixed price: finish level, warranty, builder's risk?
Which costs are estimates, how are they estimated for my lot, and when do they true up?
When did the published plan prices take effect?
Are these plans already permitted and built in this market?
Are the superintendents, trades, and inspections the same ones the builder uses on its own homes?
What is the start schedule once I sign?
What warranty applies after the certificate of occupancy, and who handles claims?
Your exit: sell, lease, or hold
Because you own the home, the exit is yours. You can sell it with your own agent or with Red Cedar's, lease it through Red Cedar Homes, or hold it. Plan the exit before you choose the plan. A floor plan that sells quickly in one submarket may rent better than it sells in another, and the interior level you pick should match the exit.
Frequently asked questions
Do I need to own a lot first?
No. You can build on a lot Red Cedar releases and assigns to you, or on a lot you already own. On a Red Cedar lot, you close on the lot and own it before the build starts.
Is the price of a fee build fixed?
The house is. The Guaranteed Vertical Price is fixed at signing. Site work, foundation, and soft costs are estimated for your lot and billed at actual cost, with a true-up within 30 days of the certificate of occupancy.
Can I rent a fee build home instead of selling it?
Yes. You can sell, lease the home through Red Cedar Homes, or hold it.
Where does Red Cedar offer fee builds?
Fee builds are available in the Charlotte, Greenville, and Spartanburg markets, with Hickory, Statesville, Lancaster, Clinton, and the Lake Keowee and Clemson corridor coming soon.
How many plans can I choose from?
Red Cedar publishes vertical prices for 11 plans, with the date each price took effect. The full set is in the Plan Book; you can also browse the floor plan library.
Get the Plan Book
The Plan Book has all 11 fee build plans with current Level 2 vertical prices. Request it on the fee build page, then run your lot and sale price through the deal calculator. If you want to talk through a lot first, call 980-890-9381.
Prices, inclusions, and terms are set by the documents in effect at signing. Any return or profit estimate is your own analysis.
