Tag: #dreamhouse

In my previous post I shocked you with how much our original budget was to build our dream house. But I also told you my loan was significantly less than that- so what gives? In this post I want to share with you some practical money saving tips- and maybe a few “not fun to hear” ways to save money.

1. Adjust your expectations.

Sorry. It’s not fun to hear that your dream house costs $500K. The U.S. Census Bureau just released the median household income figures for 2017 and it is $60,309 for individuals and for families it is $76,676. (https://www.census.gov/topics/income-poverty/income/data/tables.html)

So that’s to say that the typical American cannot afford to build a $500K house. So something has to give.

For me this was a custom kitchen, another 100+ square feet of living room space, and black framed windows. It also meant a metal roof, but not a standing seam metal roof. I also compromised on our land. I would have loved 20+ acres with the grade being more elevated so I could have had a walkout basement vs. a walk-up basement.

For you this might mean vinyl siding vs. board and batten. Or just doing the front of your house in the expensive siding/brick. It could mean not doing a metal roof at all, reducing the square footage of the house, building a two-story vs. ranch style, or not finishing the basement. It could mean 8 ft walls instead of 9 ft. It means something structural has to give.

It does not mean choosing cheap fixtures that you can update later. Although this will save you money it will not save you $100K.

2. Choose the right builder.

This might not be an option for you. You could be buying land in a sub-divided neighborhood where you have to go with a certain builder (I’d still follow rule #4 below even if that is the case). However, if you do get to choose, choose wisely my friend.

• Make sure you are comfortable communicating with them. You will at one point disagree with your builder. Can you stand your ground with them? Or is it your cousin’s husband and it would make family gatherings awkward?
• Ask for references. References’ the builder gives to you and, I cringe saying this because this could be a rabbit hole, references from friends and family.
• Don’t steer clear of a builder because of one bad review, or you will probably never find a builder. Really listen to the person complaining- was it because of the builder or was it because of a contractor they used? Was it because of a personality clash?
• Physically view some of the builder’s work. How is the quality?
• Ask if you are allowed to do any of the work yourself or use other sub-contractors. This was a huge savings for us. My husband is really handy. He was able to help do our electric and plumbing, he installed the fireplace, he ran the water line from the road to our house, etc.
• Compare spec sheet to spec sheet. One of our quotes from a builder came back with 2×4 walls, it was an upgrade to go with 2×6 walls. With our other quotes 2×6 walls were standard.
• Know what parts you will be responsible for as the owner and what the builder will be responsible for. Some builders are the general contractor and will pull permits for you and coordinate sub-contractors- so essentially you’ll only be responsible for choosing preferences. Some builders are really just the ones handling building the house- so you will need a general contractor or to be your own general contractor Which leads me to my next money saving tip…….

3. Be smart about what you do yourself.

I am reasonably intelligent. I have a college education. I even at one point got straight A’s. However, when it comes to building a house I felt really uneducated. I was a little naive. My husband can pretty much build anything I ask him to, plus he operates an entire sewer plant and regularly uses heavy equipment to replace water and sewer lines. I thought for sure I could handle the paperwork side of things and he could handle the mechanical side of building. So we decided to save some money and be our own general contractor PLUS do some of the work ourselves. All of which happened, but it wasn’t pretty folks. It took more back and forth than I care to admit. Knowing you needed to have your soil tested, then have your septic designed, then submit your site plan to the township, who then approves it before you can go to the county to get the official building permit was not something we knew. Now if you have the time (because it also means being there for all inspections) and the emotional capacity to do this…. it might be worth the $30K savings for a general contractor. But be realistic. We now understand why we received a $30K quote for a general contractor. They do a lot of work.

Also, make sure when you are figuring out cost savings you are 1) adding the additional time it would take you to do something vs. a professional and 2) ask yourself if the cost savings is really worth it? For example: physically we could do our own wood flooring. It would take my husband probably a week or better (leaning towards the “or better”), it probably wouldn’t be perfect, and the savings for us would have been $2.50 a square foot in labor (so about $4,500). We took a hard pass on doing it ourselves. First, I think making a rule that if it takes you more than a week to do and doesn’t save you at least $5K then you shouldn’t do it is a great rule to have when building. Second, on something like the flooring it was easier to save money on material than labor. We picked out an engineered hardwood that we liked and saved $3 in material and didn’t lift a finger. Win, win.

4. Get another quote, then another.

I cannot stress this enough. I am going to give you two examples in our build of how this worked out.

1. Again, we choose a builder who let us bid certain things out (he wouldn’t let us bid out the foundation work or the roof because he had guarantees on those parts of the house). But we were allowed to bid out our heating and air costs. Our second quote came in at over $7,500 cheaper and get this……… the unit was a better brand and more efficient!
2. Even if you aren’t allowed to bid it out, sometimes a second quote gives you some negotiation power. By the end of our build we had saved so much money that our builder was questioning letting us do anything else ourselves. He had a certain $ amount he wanted to make on our house and we had a certain amount we wanted to save…… and in all cases like this the builder wins. I won’t lie it was a pretty sad day when he said he was finishing it up himself…..including the painting. We had just got our other painting quotes in. Our original quote was $13,825 for painting and staining where as our second quote came in at $5,900 for a very reputable painter in our area- an $8K difference. So being the typical middle aged mother I am without the “let me talk to the manager” haircut I simply let the builder know how much cheaper it would be to go with the other guy. To which our builder (bless his soul) said “OK, let me see what I can do”. Now, we didn’t save $8K but we saved something,so I put that in the win column.

5. Pick something cheaper.

I won’t write too much about this. I do think you can save some money by buying cheaper fixtures, doing laminate flooring instead of hardwood, or upgrading to granite later on down the road. It’s really up to you on how much you can save here. I’d estimate (if you went with super cheap finishes everywhere) you could save $10K, maybe more.

For me this was the area where I exchanged money. I really wanted matte black fixtures in the master bath- so my other bathrooms got brushed nickle. I had a very particular front door I wanted so that meant my back patio door wasn’t as fancy. The list goes on, but you get the gist.

6. Buy used.

Ok, this might be gross but we totally got our toilets used for our bathrooms. The plumber who helped my husband on our house had done a bathroom remodel and gave us (for free) the white basic toilets from the previous house. One part of me was grossed out, the other part of me said if I bought a house vs. built one I’d be buying used toilets……….

Auction sites, reuse centers, Craigslist are all free game if you want to save money. An auction site was where I was able to get my brand new free-standing tub for $95 and my brand new farmhouse sink for $110. Those two items alone were over $2K in savings based off their original sticker price.

My husband’s motto is “if it’s for free, it’s for me”. Which I always add and say “only if we really need it…. please…..”.

7. Buy at the right time.

This is another area I won’t spend a lot of time on. I try not to be an impulse buyer. I also tell myself regularly I don’t need to buy something just because it is on sale. I know it will be on sale some other time. However, I do know there are certain times of the year that things are usually marked down to their lowest. In this case I am going to talk about appliances. Appliances are usually cheapest during Black Friday. They are also significantly reduced around tax return season. If you can time it right, or have a place to store things, it might be worth buying certain things during these two times of the year. For our appliances we bought on Black Friday we were able to save over $1K on the set.

8. It never hurts to ask.

I actually don’t always believe this. Sometimes I think you can offend someone to the point they don’t want to deal with you. Ask any realtor reading this post right now. I bet they have a story where a seller was so offended that someone thought they could take advantage of them and offer some low ball figure that they refused to sell based on principal. I do think though that you can be respectable and take big leaps of faith and ask things. Maybe it is as simple as “can’t you go any lower?”, “I have $X amount in cash right now, would you accept that?”, or “that is a little more than I wanted to spend, if you don’t get an offer would you accept this?” You can negotiate a lot through the building process and you should.

One story I like to tell is how we got our land. If you don’t know my husband (Kyle), let me tell you about him. He is the KING of things just falling in his lap. I kid you not. One night we were talking about needing a bigger fridge. My Dad and his Great Dane lived by themselves in a three bed, two bath, 1,200 square foot house and he graciously let my husband, myself, and our three boys under the age of 6 move in. So to say his fridge wasn’t big enough is an understatement. The next day my husband goes into work and one of his co-workers says “hey, do you know anyone who needs a fridge? It works and is free, just needs moved out of the way.” So I recognize that maybe we don’t all have this gift of asking and then receiving- but maybe you do and you don’t know unless you ask?

Back to our land story: we had looked at houses for almost a year in the area we wanted to live. They were really expensive and there were only a few listings. My husband wanted to stay in our current house and build on. I was anti this because it was out of the school district our boys would be attending. So we kept looking to find the house we wanted, but unless it was the one, we weren’t going anywhere. Finally, we looked at this terrible house priced for $350,000. It was like a light bulb went off in both our heads. We could build a house for $350,000, in our school district, and get more of what we wanted than ANYTHING we’d seen. That same night Kyle called his friend and asked if he had any land he’d sell us. To our amazement he said he might. He was in the process of bidding on some land and if he got it, he’d love to sell us some. At the same time he told us that there were 8 acres across the street from the land he was bidding on that had sat unused for years. So Kyle called the land owner up out of the blue. We asked if he’d ever thought about selling his land. The guy’s exact words were “sure, how much were you thinking?” Next, we offered an insanely low amount. I’m surprised he didn’t get offended, but he still counter offered an amount that was 50% lower per acre than other land for sale in our area.

So that is a really long way of saying that asking (in a respectable way) for what you want can sometimes have great results.

9. Stay humble my friend.

So I mentioned that my Dad let us move in with him. I also mentioned how small my Dad’s house is and that he has an insanely large dog. There have been more times than I can count where I have sent a text to my husband saying “I just can’t do it anymore”. But I keep doing it. I keep living here, finding more gray hairs by the day, and trying to have a thankful heart. It’s not my space and sometimes I feel trapped. My Dad also is an excellent grandpa to my kids- this means he’s great at giving them dessert when they don’t touch a bite of their dinner and he also starts wrestling with them right before bedtime and then leaves it to me to get them settled down. But I’d choose this living situation again and again and again because it means that I have been able to save $20K in the past year. I am so thankful that he let’s us live here rent free. I know this is unique and not everyone is blessed to have a Papal Jim, but what I want to impress upon you is that whatever sacrifices or inconveniences you have to make to build your house, are probably worth it. It is a dream house right? Dreams aren’t built easily.

10. Planning is the key to success.

I have always been a planner. Procrastinating makes my heart race- and not in a good kind of way. I have 1 month budgets, 1 year budgets, 5 year budget plans, and even 20 year budget plans. I knew I was going to the college I went to as a 2nd grader and I knew what my major was going to be before high school.

It is pretty easy to see why planning ahead of time on a house is important- because 1) once you pour concrete that makes it… well…. concrete. 2) if you do change your mind- I don’t know of any builder who isn’t going to charge you for the change and 3) changing your mind equals time and time is money.

For a house things are done in steps. You can’t paint before the walls are up and you can’t put walls up before the foundation is poured. So pre-planning these things is what keeps things running smoothly so that nothing unexpected comes up. And when building a house the word “unexpected” always equates to $’s.

Two examples from our build:

1. I have wanted a wraparound porch for about as long as I could remember and if I was going to build my own house- it was a non-negotiable. We went with a concrete wraparound because it ended up being not too much more than lumber and who wants to stain a porch every few years??? Turns out when you put concrete all around your house it isn’t as easy as you’d think to run a water line through it. Thankfully Kyle knew this and so when the concrete forms went up he had already laid out his conduit for water and electric. If he didn’t do this he’d be drilling through concrete probably still to this day.
2. One reason why I stress communication is key with your builder is because of one of my major regrets with our house. We couldn’t do a true walkout because of the elevation of our land. We still wanted a door to the outside in our basement so we went with what I like to call a walk-up style. We also knew that we did not want the stairs to be tucked against the side of the house. If you’ve seen the Friends episode “pivot” you know what I am talking about. If we tucked them to the side we’d be forever yelling pivot to move anything down to the basement. Unfortunately, we did not communicate this enough to our builder- or maybe he’s never seen the “pivot” episode so he didn’t get what we wanted exactly. So on the day the foundation was about to get poured we were still on different pages. The compromise- or what I like to deem as the only choice we had – was a small building attached to the side of the house. It looks out of place and I will forever be trying to find ways to hide it.

This list isn’t inclusive, but it is where I’ve saved the big dollars that helped reduce my original budget of $425,000 to just over $300,000. If you’ve built a house what else is this list missing? If you are in the process or about to start, did anything here surprise you?

So how much does it cost to build a house? That was the first thing I googled when we decided to build. Then I googled mortgage calculators on what we could afford. Then googled how to sell a kidney to afford the house we wanted.

Since then, google and I are on a first name basis especially with all things building. If I was a professional at anything (other than my actual day job as an accountant) it would be “looking up stuff on the internet”. I am serious. I don’t have the time to watch a movie or the newest Netflix documentary, so I’ve developed the wonderful skill of heading over to Wikipedia and reading the plot so I can stay relevant when I go to the lunch room.

Based off my “research” (I use that term lightly) and then actual 1st hand experience of building a house I can tell you two certainties about the costs to build:

1. It depends.
2. It’s expensive.

It depends.

If you’ve heard it once, you’ve heard it a billion times. I’m going to get to actual numbers on my build, but that’s all they are. Actual numbers for my house. So when looking at my budget don’t take it as gospel. Keep in mind the specs of my house (the square foot amount, certain structural elements, finish grades, etc.) and keep in mind the location. Pretty positive that being able to buy 8 acres for less than $40K is on the lower end of the land price spectrum. So just so those in the back can hear: your tastes and where you want to live are going to determine your cost.

It’s expensive.

I don’t care what you’ve read about cutting your own timber, you and your spouse putting ALL the sweat equity in, and being able to find the most amazing deals. It’s all relative. What I mean by that is that just because you saved $1,000 on your perfect farmhouse sink……. that is just a $1,000. Concrete for your basement or other type of foundation isn’t free and if you find a deal on it I 100% believe there is a catch.

Also, you will go over budget. That is a fact. Now, you can choose to go over budget or not, cut budgets elsewhere to cover you going over budget, or if you are a billionaire I guess you could just not compromise on anything. I don’t fall into that last category so on our build I am constantly saving money in one area to cover costs in another area. Every time I turn around to buy something for the house it is at least $1,000. Five exterior farmhouse lights- $1,000. Toilets- $1,000. Again, I’ve gotten some major deals on fixtures and things but it still adds up.

Ugh. One last thing about the cost to build that I think should be mentioned is having cash helps. Bless my own Dad’s soul, he has let us live in his house with him for a year now. In the meantime (plus with the sale of our last house) we were able to secure some serious cash. Which is a good thing. Most banks are going to want 10% to 20% down in cash on a construction loan. This isn’t 10% of what you think you’ll spend by doing the work yourself or getting awesome deals- it’s 10% what the appraised value of the house you are going to build is. So although at the end of the day I will only have a little over $300K in a loan, my house and land were appraised to build at $425K. So we needed between $40K to $85K in cash just to get the loan, plus closing costs (which for us were about $6K).

Cash also helps you be able to snag deals when you see them. You can “float” yourself money until the next draw happens. Or if you are really dedicated you can see if you can just not reimburse yourself on the costs and therefore not add them to your loan balance. We’ve used our cash on hand to do a bit of both.

The Cost List

• Excavation (backfill, foundation, poured walls, drains) : $34,176
• Framing (I Joists, 3/4 Advantex, 7/16 Zip sheeting, 2×6 walls, trusses): $69,645
• Front door allowance: $2,875
• Exterior windows and doors (22 units): $8,250
• Roofing (metal): $11,325
• Porches (856 sq ft, concrete, vinyl ceiling): $5,992
• Gutters: $1,875
• Insulation (R23 spray foam walls, R38 Cellulose attic): $13,600
• Dry wall (smooth ceilings): $13,083
• Interior doors (6 panel oak, 18 units): $7,360
• Interior trim: $10,300
• Door knobs: $800
• Stairways: $3,500
• Plumbing (basement rough-in, 14 units): $10,500
• Plumbing fixture allowance: $3,500
• Whole house attic fan: $900
• Electric: $10,256
• Electric fixture allowance: $2,400
• Heating and air: $18,275
• Hardie board siding: $17,375
• Bathroom floor allowance (294 sq ft, $15 labor, $7 material): $6,468
• Shower tile surround (3 units): $3,000
• Hardwood floor allowance (1,840 sq ft, $7 material, $2.50 labor): $17,480
• Cabinet and counter allowance: $18,745
• Closet shelves: $1,000
• Painting allowance: $9,500
• Staining: $4,325
• Septic (4 bedroom, mound system): $28,000
• Septic design: $900
• Soil test: $410
• Site plan: $800
• Land clearing: $2,000
• Driveway: $6,801
• Water tap: $3,000
• Electric tap: $800
• Temporary electric: $300
• House plans: $2,340
• Electric to house: $1,000
• Water to house: $1,000
• Outdoor wood stove: $11,321
• Township and county permits: $2,500
• Fireplace (insert, hearth, mantel, propane tank, gas lines): $10,000
• Landscaping: $2,000
• Appliances: $5,000
• Land (8 acres, legal fee): $37,000
• Closing costs: $5,700

Total Budget: $427,877

Sticker shocked? I was too. Check out my next post on how I got this number down to a reasonable loan amount.