Budgeting for a Custom Home

Write down your budget!

Let’s talk about the sticky subject of budget. I realize this can tend to be a total downer when talking about designing one’s dream home, but it is important to begin by writing this number down so that all parties (architect, contractor, interior designer, etc.) are all on the same page. It is very very  important to have your home designed by someone with current knowledge of construction cost. This is true regardless how large or small your budget is. I consider it a tragedy when family spends precious time and money designing a home only to find out from a contractor that they can’t possibly afford it.

How Budget Numbers Work

To look closer at how budget numbers work you have three main elements that set your total construction cost: the site, the structure design and the finish level. It’s very important to consider all these elements to establish the final project cost.

The site cost:

  1. The site obviously has the cost of purchasing the lot or land.
  2. There is the cost to prepare the land for construction? This can vary a great deal. As a good rule of thumb, flat lots with no trees are the least expensive. The more trees and terrain changes the more expensive the land prep will be.
  3. H.O.A. and city requirements for finished landscaping and fencing will need to be planned for.

The structure design:

  1. One story plans are more expensive than two stories due to more foundation and more roofing.
  2. Structure shape is a factor, with simple box to rectangle being the least expensive while U-shape or design with lots of ins and outs are more expensive. This is due to more perimeter material required and typically a much more complex roof design.
  3. Covered porches, outdoor living areas and oversized garages skew the cost per square foot numbers. The cost per square foot is figured based off of the interior living space or “conditional space”. Conditioned meaning air conditioned or heated space. These extra elements added to a house cost extra money that will raise the overall cost per square foot calculation. Many production homes are advertised at very low prices per square foot which make them very appealing at a glance. However, the base prices advertised will not typically include these features.
  4. Exterior materials range a great deal in cost as well. The lists of options are long and vary by regional. Homes clad in a vinyl siding will be considerable less expensive than and home with stone. That number can sky rock more if it’s an imported stone with cast stone accents. Doors and windows also vary tremendously based off quality, style and quantity.
  5. Roof design. The higher the pitch or slope the more expensive. The materials selected have an even greater impact. A low sloping asphalt shingle roof will be considerable less than a metal roof. If you go up to a tiled roof you not only have the cost of the tile, but also the cost of the additional structure to support it weight.
  6. Insulation, energy efficiency and mechanicals. I could write an entire book on the importance of this subject and many people have. I strongly recommend planning to budget for this. Not only will your dream home feel more comfortable but your monthly expenses for utilities will be considerable less. Your payback starts month 1. A knowledgeable contractor can put together an energy package that is easily tailored to your budget. There are many great options available.

The finish level:

  1. What products and materials used to dress the interior seem almost endless these days. The price ranges are vast.
  2. The amount of built-ins/cabinetry and their materials.
  3. Appliance choices.
  4. Lighting design.
  5. Plumbing selections.

All these elements combine together have impact on the cost per square foot of a home.  So you are probably asking, why is that such a big deal? Well let’s look at 2 very basic examples. In this example, let’s say we have a 4000 s.f. single story house and we will just compare a few elements.

Example A: small kitchen with 40 linear feet of painted kitchen cabinets with a basic white kitchen appliance package of $3500 dollars, plastic laminate counter tops throughout the house. The flooring is all carpet with sheet vinyl in wet areas like the kitchen and baths. No covered porches or garage space.

Example B: large kitchen plan with 80 linear feet of stained cherry wood cabinets. Half of the cabinets to have custom inserts, like a pop out shelf for a large mixer or butcher block carving knife organizer. The commercial grade stainless steel appliance package is $35,000. All counter tops throughout the house are granite. All flooring is wood flooring with travertine tiles in all the wet areas. Lastly, let’s add a covered porch with built in grill and fireplace and a great 4 car garage.

Now we are still talking a 4000 s.f home, but we certainly are not talking the same cost per square. By establishing your budget in the beginning your custom home can be designed and finished to fit your budget. Trust me a home design and built with in budget is much more enjoyable to live in.

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