Buying a home can be a daunting task, but building one is an even more challenging endeavor. When building a new home, there are many things to consider, but creating a budget is the first and most important step. A comprehensive understanding of your budget and the elements that contribute to your costs will enable you to plan wisely. From there, you’ll be able to monitor your spending as you go and avoid any unpleasant surprises.
So, what should you pay close attention to when budgeting for your custom builds?
It Isn’t Just the Building: Hard and Soft Costs
When people sit down to create a budget for their custom build, they tend to calculate things like how much they need to pay the builder and what it will cost to purchase the primary building materials. These are known as hard costs. However, other significant expenses can sneak up on them. These include the price of land, permit fees, land surveys, hiring an architect or engineer, loan fees, and taxes.
Such soft costs can be responsible for half of your building expenses — sometimes, even more. That’s why it’s important to identify and quantify soft costs at the outset of your budget planning. Trust us; you don’t want to be surprised by them somewhere down the line.
It can be tempting to start allocating your budget money based on the aesthetic details you desire. But your primary focus and biggest priority should be those components that are the most important to your house’s integrity. Those are often the most difficult to change, so you’ll benefit from getting them right the first time. For example, a well-insulated structure made of durable materials will have a lot more value in the long run than one that doesn’t, offering lower operational and maintenance costs and less depreciation.
Remember, you can always make those aesthetic additions in the future, when your finances have had a chance to recover. You’ll have a much harder time changing the structural aspects of your new home later on.
Consider Bringing a Builder in Early
It’s common to hire a builder after you have your designs —and thus, the basis of your budget— in hand. But by finding a contractor before or during your design process, you gain a valuable ally in accurately estimating your budget.
Integrating a builder into your design from its early stages will help you evaluate costs early on. They can give you a precise number for your hard costs and help you avoid making design decisions that might overrun your budget later. Your contractor will also be responsible for building to completion based on the estimates he or she provided during the design phase.
Whatever you do, always choose your builder based on their reputation, competence, and trustworthiness. Never gravitate toward the lowest bid.
Choose Premiums Wisely
Premium elements are finishing touches that are above the basics, and they can quickly add up. Choosing wood windows instead of vinyl, solid-core doors instead of hollow, and luxury hardware will drive your costs up from a basic estimate. Make sure you communicate clearly with your builder about what your choices are and how much they cost. This will help you choose premiums wisely, rather than piling them on and ramping up the expenses.
Keep on Top of It
All the preparation in the world is useless if you don’t monitor your budget throughout your project. Track your expenses rigorously and ask your builder for detailed line-item breakdowns. Stay aware of permits, fees, and other soft costs you may encounter. Respect your budget, and your new home build will be a truly rewarding experience.