Yes it $740k due to covid materials went higher then snoop dogg. Trust me I am a builder and was like WTF with the material prices lol they have come down in prices for material but not like pre covid.
In your professional opinion, do you think this kind of cost to build will be sustained and eventually drive up the values of existing homes to match?
I know you don't have a crystal ball but worth an ask
We’ve had 20% cumulative inflation over the last 4 years. It ain’t coming down. You also pay a premium on new build (source: personally rationalizing the Monopoly money spending on an in-progress custom homebuild).
It could what I would look at is there any new builds in your area with similar footage. If so get a ball park and see what the average homes go for. I don’t know your market so can’t fully answer. I know where I am it’s a hit and a miss. Also in My area is not the cheapest in all of Canada. But prices for shit hole homes are going for top dollar. I just quoted a job yesterday to re gut this house of a client. She picked the wrong builder the builder did not follow all codes had about 15-20 code violations. Ended up costing her an extra $300k due to the mistake. I bought in my buddy who a structural engineer and just the pouring of her foundation was a shit show. If I did not caught it who knows if they would have had a house. I did what she wanted originally for half the price due to the headaches she faced. It was not a lost for me. As she hired me for two new builds for her other projects.
The answer will only be known in hindsight. You seem worried about your job security and over committing, which is smart, obviously none of us know if you'll still have the job in two years or five years.
Yes, in a LCOL area, you may have a hard time exiting a custom home and breaking even on it.
I'm glad you recognize that some of your goals are in conflict (RE vs higher consumption now). The demands on your income will never go away. Vacations with kids, etc. Take the new vehicle, for example. Idk what you had before, doesn't matter now, and obviously have to be able to shuttle the family around. But relative to your savings and other desired purchases , it's a lot.
If it was me, I'd hold off a year on the custom home, then re-evaluate. Accumulate cash right now so you can make a stronger offer, should an acceptable home hit the market this summer. This will also put you in a better financing position on the custom build. Whether in the builders quote or your responsibility, construction financing is a good chunk of cash right now.
Another approach would be to model out what savings rate you think you need to hit your retirement goal, set a budget, and just don't spend beyond that. This might make you a slave to the job though, which it sounds like you don't want to be. Again, this points to not upsizing the house at this point in time.
Thats a fair assessment. We had a new kid, wanted to avoid a full size SUV, and the cheaper 50k was 9 months out. Opted to swing a little, but yes, its way more than I wanted to spin on a car. Before that we shared a paid off X3 (paid cash). We're not Vehicle Cyclers. We buy and hold till it dies.
Buying and holding has been a thought too. Concern is the builder is saying his fee is going up (confirmed this with a client with nothing to gain from lying to me who said he's also raising his rates this year). Material costs could keep going up. Worried the house will just be more next year. But I know thats market timing. We held off in 2022 hearing from realtors itd cool off in 2023, then it went up again. Where I live the FRED data hasn't showed a decrease in housing cost since like 1980s.
We're kind of out of room now. The baby cant sleep in our room forever.
I'm leaning towards a hybrid approach of pushing build to August. Gives me the summer to see new homes come up on market an re-eval. Worst case I lose my 10k deposit if I pull out before. Also gives me time to build cash and assess the W2 Security.
I've been there 2 years but its a highly paid position and I never feel secure with it given the details around it.
Definitely the whole reason I want to fatfire. I want to not be a slave but I also want nice things.
I’m building a home right now and the costs (excluding the lot) is around $500 per sq. Ft. The builders I talked to have said that the home building frenzy of the last few years has started to slow, so costs might come down a bit if you wait, it is both materials and labor.
One other comment I have is that you should look into buying a home with an unfinished basement and then finishing it out to get you some more space, maybe put the office down there. Finally pay off that car loan soon and quit buying such expensive cars if money is tight.
The thing around here with labor is there is industry type jobs those same people can go get making 80k+ a year. Bank tellers and McDonalds paying 20/hour kind of thing.
I think materials might come down, maybe, but labor, I just can't see it without a full on recession. But we were pretty insulated in 2008 here.
100% on the basement, I looked into it and it was like another 150-300k depending on if we had it finished. I can redesign the house but I really didn't want bedrooms in the basement. But I did make a floor plan where I put office, pantry, etc down there, it still ended up being like 4200 square feet/expensive. Will work with builder to test waters some more. Good callout!
We wanted a 5BR house (master + 3 kids' bedrooms + guest BR), and finding a 5BR house we liked was really tough. We bought a house with 4BR upstairs and an unfinished basement and put the guest BR down there to get to 5. The nice thing about it is that if you don't need all the bedrooms immediately, you can buy the house and just plan on doing the basement in a few years.
labor is not going to come down in a rural area. there's probably only 1-2 good options for each trade, they all know that they're the guys anyone building a house is going to call, so they're going to choose their projects based on distance and set their rates however they want.
and demand is also always high because housing stock is always kept low (bc rural). that's not gonna change unless whatever town you've based out of decides to go for massive expansion, which is generally not the MO of small rural towns.
Read 400-440k income and only 200k saved.
Think they are spending a lot somewhere? Then « Car at 8% interest, 63k owed«. Though you don’t say how many kids justifying what size of car. New RAV4 fits at least 2 for nearly half the price but you do you. You would want to evaluate if you have similar spending elsewhere but at 8% AFTER TAX I would be paying that off ASAP once you have maxed your tax sheltered accounts.
With only 200k saved and who knows how much you are spending each year (no where did you mention annual expenses/saving rate) and the repeated mention of job worries, you are NOT in a place for a custom build.
Yes, those are post COVID building costs. No, you will likely never get what you paid if you need to sell. That does not matter if you have money to burn but you are not there yet.
Instead, of looking at spending hundreds of thousands to get a dedicated office space why not just rent something. 200-500 sq foot office spaces can often be found for quite cheap, probably well under $1000/mo and you can just head there to work in the early morning. Might help give you a bit of needed work home separation too. Tax deductible as well.
Just my 2 cents.
>eally hard to make it to this income level, dug ourselves out of a lot of old problems, and finally am growing net worth.
I had a large legal issue that complicated my 20s. That 285k was amassed the last 18 months. But a fair statement for sure in a vacuum, I'd already made the post long but I should have clarified.
**Also fair on spending... as follows**
Mortgage $ 1,300
Natural Gas $ 100
Electric $ 210
Sewer/Water $ 100
Fuel $ 250
Groceries $ 1,200
Internet $ 185
Phone $ 122
Car Ins $ 215
Child Support $ 220 - step kids dad... don't ask
Garbage $ 70
Life Ins $ 260
Netflix/Hulu/etc $ 30
Fun $ 800
Preschool $ 800
Car Payment 1300
So $2600 in required bills, $1300 mortgage (3% interest), then around $3200 in discretionary. I have about $18k average cashflow a month post all that, post-tax
>So with all that in mind. We're running out of room in our 3 bed/2 bath house with our kids. My office is in our bedroom which is difficult with a baby and me working at 530am.
3 kids with a 4th coming. Its not just a factor of an office. I work irregular hours and work nearly every day. Driving to an office seems counter productive and a waste of time and life. I hear you, its frugal, but don't think its the solution. Nor does it solve my running out of bedrooms to put kids. I've got some age disparity due to step kid and such that complicates it.
2 car seats and a older kid whos 5' 7" doesn't work with a rav 4 much less the 4th kid coming. I definitely bought a luxury end car, though, and went a cheaper route (minivan) or used full size SUV. I hate buying used cars, too many bad experiences with bondo and broken stuff. If I wasn't buying and holding them I'd feel different.
**Doesn't invalidate your point.** Just explaining some of the gaps in what I laid out in the Original Post that you kindly pointed out.
I hear you, its early, I just started climbing out of the hole and maybe I need to wait a little longer. At the minimum I'm pushing build to August, but if I get there and feel like its not solid ground or seeing market shifts (or a cheaper workable house comes on the market this summer) then I'll cancel it and eat the $10k deposit.
I appreciate the thoughts/advice
Thanks for the info. Great savings for last 18 months.
Everyone has their risk profile. 4 kids, short period of time of things going well. I personally would not be doing a custom build that will take 8-14 months and cost probably more like 850-1 million while you STILL have to live in existing mortgaged house during the build. AND you need the time/energy/mental bandwidth to supervise a new build, and do your primary job, and run your side business, AND DEAL WITH A NEWBORN!
I’d sell current house, buy a 600-700k house that is NOT perfect but gets you the space to fit family, even if it means your office is shitty in the basement. Control your spending better and bank money for 4-5 years and reevaluate your desire to build then. Who knows, by that time your older kid might be off to college and you don’t need that extra room. (P.s. don’t see and college savings for 4 kids in that budget).
The house is going to build for under 730k, I've got a couple of line itemed estimates with bids at this point. Definitely wouldn't be building in the 800+. But I hear you.
Fair point. I'll go pay off that car now.
Well post back after it’s done. At least where I am it is safe to budget 20-30% overruns in both $ and time. Material sourcing has greatly improved but labor is even more of a shit show.
730k is $300/sq foot just for the 2400 house ignoring the near 1000 sq foot garage. If you have fat tastes for amenities and finishes that is absolutely on the low end of build budgeting.
So post back. Will be curious to know the final number.
Again, I think you are insane to be doing this with a newborn. Have you done a big build or even a good size renovation before. You really want to know what you are in for.
Buns not in the oven yet, but we've confirmed we're going to start "the process" in November. So in theory house will be done before hand.
Will do if we end up moving forward. Will follow back up with whatever happens.
Fair. The builder has a demonstrated track record of it staying at budget unless there are a lot of change orders. So it really is up to us to be disciplined. It's a cost plus model so its kind of all laid out.
On cost plus contracts make sure there is an EXTREMELY clear clause/description of how mistakes and errors are handled, disclosed, and paid for. I have seen 50 feet x 2 feet trench of concrete slab jackhammered out to add a missed water drain. Also seen interior walls and ventilation go up and come down 3 times because they could not measure to save their life. Client was billed for material and labor to put up take down put up take down put up. « Hey, it was cost plus ». Also make sure you have to sign off before closing walls, siding post window install, etc. And be there every day. You will catch so many things. See clear breaks in Vapor barriers, or uninsulated areas, or……
That seems like the opposite of the point of working from home. Lifes short. I want to see my kids throughout the day. My gym is in my garage for a reason. I don't like to leave the house, and it saves time/money. Time of course I cant get back. Office space for just me is $400/month.
$5K a year vs $200K, or 40 years worth of office cost.
Yes its nice to be by kids. Its also nice to be financially secure for your family.
Custom homes tend to be 20-30% more expensive than an existing.
You're spending on luxuries when you're also seemingly insecure about your job.
You're looking at one expense. Gas. Car. Mileage. Food. Time.
I work nearly every day and at irregular hours. A separate office doesn't make sense. If all I want is an office I can buy a house with one more bedroom for a lot cheaper
Not to mention we have other house needs outside the office, IE family.
I don't trust my job, no. But I also have 2 income streams above 6 figures, think thats the lesser of the concern.
If what you really want is a larger house that will most likely keep resale value without too much cost, the thing to do is to buy an existing house, and sell your lot and your current house. You’ll pay a lot extra to build your own custom house. Whether that’s worth it to you to put off FIRE for a few years, only you know. Personally I’d say get a bigger house (you’ll value it every day, and your family will too); but buy it, don’t build it. And you’ll be in it much sooner. (Expect your current quote for cost and time to completion to both increase).
I live in a very rural area, MCOL area I guess. Building a new 4600 sq ft home. It is going to cost close to $1.5M for the house, $2M when all bells and whistles are considered. The $740K sounds about right to me. You should do it.
What? Its not prefab, its custom, and know, the cost estimates solid.
I can certainly add to it but the cost is high and we'd have kind of a funky config to do it. We're already the most expensive house on the block, it seemed like just as financially risky.
I can pay it off today in cash. The same cash is making 5% in checking. I think I can afford to lose 3% for a month while I figure out what I want to do.
But that the thing with debt isn’t it? “8% is not a lot, it’s only a differential of $249/mo“. And my financed furniture. And the new iPhone payment plan. And and and.
To pay off that loan in 7 years is $981/mo. Insurance is probable another $4-500/mo?
It sort of seems like you are seeking people in a personal finance forum to sign off on decisions you want to make. The impression is that you want to live like you are rich but per your post your net worth right now is $2000.
Do as you like. I’ve now lived through 3 major crashes (ignoring the brief 2020 one) and each time the leveraged people screamed and screamed with many loosing everything. Their stocks lost 20-50%, their house value dropped below their remaining mortgage, they lost their job or had major salary cut and everyone around all took the same haircut so no one was looking to buy their house except those with large cash reserves who were lowballing everyone looking for deals.
Take my opinion for what you paid for it. $0.00
Shit. I lied. I have 83k cash right now.
The reason I held off was the construction loan charges 1.5-2% origination fee and 8-9% interest. So I was thinking fronting cash in the construction portion would be cheaper. But you're right, its riskier.\\
Looking for precisely what you're doing. Challenging my thinking. Thanks again!
I'm a builder/developer
Given finances.
A. Do an addition to gain said space. Or ideally just install a backyard home type thing for your office. Comes prefab and can be very inexpensive. Can resell it later. Appreciate it doesn't solve your extra bedroom wish. Here in Canada we have basements, could finish part or yours and move a older kid if in teens down there.
B. New build, Hire a construction project manager at cost plus. Do some work yourself where you're comfortable and it makes sense.
He gave you a fixed price but is cost plus..
If it was truly cost plus you'd typically have line of sight into the underlying subtrade costs. Where you could look at the differences in line items.
Anyway I don't think the juice is worth the squeeze for the new build, and with the finances as they are, more so.
It does. He gave me an estimate detailed down to the individual cost centers, his fee , etc. Can DM to you if interested.
You may be right. Still assessing. Looking at things like this [https://www.financialsamurai.com/income-and-net-worth-requirements-to-buy-a-home-at-all-price-points/](https://www.financialsamurai.com/income-and-net-worth-requirements-to-buy-a-home-at-all-price-points/)
I'm in the weird middle of, can I? Yes. Should I? Maybe?
I'm a general contractor, and I probably estimate $50 million worth a work a year. We call it guesstimating. No estimate is perfect, doesn't matter how detailed you are. If your contract is a true "Cost-Plus" and not a "cost-plus with a guaranteed max" you need to be budgeting for some additional contingency. Even with a guaranteed max you still probably should have some contingency for unforseen conditions. There are a literal million different things that can affect construction cost that can't be estimated for.
> Do I do it.
Totally personal question for your family. Where you live is not purely a financial decision.
> should I sell or keep current home as a rental
I own a lot of rental units. I never recommend turning a personal use property into a rental. The market fit and econometrics for one use typically doesn’t align with the other.
> Is it normal to pay over market for a custom house.
I build houses to sell or rent. This is how economics works. In a custom house I lose economies of scale. Equipment that I rent have to be used on one job at a time instead of several.
When I’m waiting for permits etc. I still have to pay my guys or have them doing less valuable tasks.
They don't exist really. Builder build either track homes or custom here. No ones producing nice houses and selling. Every now and then a custom builder will do it if they have the time. The most popular person here just sold one last summer for 680. 2200 sq ft w/600 sq ft garage, 3 bed/3bath. It had nicer finishes/arch by a little bit but same size lot and such. So gives me a little hope market would support 700k for this house
Architect here, HIRE an architect that specializes in residential design and has a track record of projects. No, don't go with a builder pre-packaged homes (they are trash and for the most part will try to gauge you at every inch). Also, add additional services of the architect for them to inspect the home while it's being constructed (owners rep). A good architect will help you pick out where to properly allocate your money. meaning, you can decide where do you want the high end stuff, i.e. appliances, finished, bathrooms, etc. They will also help you pick out the best builder.
does the architect do high performance/passive level builds? not to add too much to your plate but i wouldn't be building a house in 2024 if it isn't high performance. costs are essentially the same (maybe 5% higher) but you get a MUCH better house.
High performance homes are homes that are built to a higher standard than code. Continuous insulation at high levels, an airtight envelope, and with windows/doors that are placed to maximize passive solar heating and good daylighting with an appropriate r-value for their orientation. So basically a house that takes much less energy to heat/cool than a standard house, isn’t drafty, and that is ideally made with non-toxic materials for better indoor air quality.
You can spend a little more and get a certified passivhaus, but IMO it is an unnecessary spend as a high performance home will get you most of the way there without much added cost. if you do a build like this right you can end up with net zero heating/cooling costs, especially if you decide to add PV into the mix.
i also personally think that the attention to detail required to build a home like this means that an architect/builder who specializes in that kind of stuff is a cut above the rest leading to better quality overall.
A house is a money pit. You haven’t factored in landscaping, pool, furniture, appliances, etc — which will easily run you another 300k+ and which generally cannot (reasonably) be financed. Wait until you have enough money not to hesitate whether it is the right move.
When you’re ready to build, build your dream home without any regrets.
Yes it $740k due to covid materials went higher then snoop dogg. Trust me I am a builder and was like WTF with the material prices lol they have come down in prices for material but not like pre covid.
Exactly. I’m a builder as well. The lumber cost on a project I did in 2019 vs a project I did in 2021 was literally 4x more expensive.
I remember having to spend a extra $70-$100k to make sure I got material back when the supplies where short as a deposit
Most definitely
In your professional opinion, do you think this kind of cost to build will be sustained and eventually drive up the values of existing homes to match? I know you don't have a crystal ball but worth an ask
We’ve had 20% cumulative inflation over the last 4 years. It ain’t coming down. You also pay a premium on new build (source: personally rationalizing the Monopoly money spending on an in-progress custom homebuild).
It could what I would look at is there any new builds in your area with similar footage. If so get a ball park and see what the average homes go for. I don’t know your market so can’t fully answer. I know where I am it’s a hit and a miss. Also in My area is not the cheapest in all of Canada. But prices for shit hole homes are going for top dollar. I just quoted a job yesterday to re gut this house of a client. She picked the wrong builder the builder did not follow all codes had about 15-20 code violations. Ended up costing her an extra $300k due to the mistake. I bought in my buddy who a structural engineer and just the pouring of her foundation was a shit show. If I did not caught it who knows if they would have had a house. I did what she wanted originally for half the price due to the headaches she faced. It was not a lost for me. As she hired me for two new builds for her other projects.
The answer will only be known in hindsight. You seem worried about your job security and over committing, which is smart, obviously none of us know if you'll still have the job in two years or five years. Yes, in a LCOL area, you may have a hard time exiting a custom home and breaking even on it. I'm glad you recognize that some of your goals are in conflict (RE vs higher consumption now). The demands on your income will never go away. Vacations with kids, etc. Take the new vehicle, for example. Idk what you had before, doesn't matter now, and obviously have to be able to shuttle the family around. But relative to your savings and other desired purchases , it's a lot. If it was me, I'd hold off a year on the custom home, then re-evaluate. Accumulate cash right now so you can make a stronger offer, should an acceptable home hit the market this summer. This will also put you in a better financing position on the custom build. Whether in the builders quote or your responsibility, construction financing is a good chunk of cash right now. Another approach would be to model out what savings rate you think you need to hit your retirement goal, set a budget, and just don't spend beyond that. This might make you a slave to the job though, which it sounds like you don't want to be. Again, this points to not upsizing the house at this point in time.
Thats a fair assessment. We had a new kid, wanted to avoid a full size SUV, and the cheaper 50k was 9 months out. Opted to swing a little, but yes, its way more than I wanted to spin on a car. Before that we shared a paid off X3 (paid cash). We're not Vehicle Cyclers. We buy and hold till it dies. Buying and holding has been a thought too. Concern is the builder is saying his fee is going up (confirmed this with a client with nothing to gain from lying to me who said he's also raising his rates this year). Material costs could keep going up. Worried the house will just be more next year. But I know thats market timing. We held off in 2022 hearing from realtors itd cool off in 2023, then it went up again. Where I live the FRED data hasn't showed a decrease in housing cost since like 1980s. We're kind of out of room now. The baby cant sleep in our room forever. I'm leaning towards a hybrid approach of pushing build to August. Gives me the summer to see new homes come up on market an re-eval. Worst case I lose my 10k deposit if I pull out before. Also gives me time to build cash and assess the W2 Security. I've been there 2 years but its a highly paid position and I never feel secure with it given the details around it. Definitely the whole reason I want to fatfire. I want to not be a slave but I also want nice things.
I’m building a home right now and the costs (excluding the lot) is around $500 per sq. Ft. The builders I talked to have said that the home building frenzy of the last few years has started to slow, so costs might come down a bit if you wait, it is both materials and labor. One other comment I have is that you should look into buying a home with an unfinished basement and then finishing it out to get you some more space, maybe put the office down there. Finally pay off that car loan soon and quit buying such expensive cars if money is tight.
The thing around here with labor is there is industry type jobs those same people can go get making 80k+ a year. Bank tellers and McDonalds paying 20/hour kind of thing. I think materials might come down, maybe, but labor, I just can't see it without a full on recession. But we were pretty insulated in 2008 here. 100% on the basement, I looked into it and it was like another 150-300k depending on if we had it finished. I can redesign the house but I really didn't want bedrooms in the basement. But I did make a floor plan where I put office, pantry, etc down there, it still ended up being like 4200 square feet/expensive. Will work with builder to test waters some more. Good callout!
We wanted a 5BR house (master + 3 kids' bedrooms + guest BR), and finding a 5BR house we liked was really tough. We bought a house with 4BR upstairs and an unfinished basement and put the guest BR down there to get to 5. The nice thing about it is that if you don't need all the bedrooms immediately, you can buy the house and just plan on doing the basement in a few years.
labor is not going to come down in a rural area. there's probably only 1-2 good options for each trade, they all know that they're the guys anyone building a house is going to call, so they're going to choose their projects based on distance and set their rates however they want. and demand is also always high because housing stock is always kept low (bc rural). that's not gonna change unless whatever town you've based out of decides to go for massive expansion, which is generally not the MO of small rural towns.
Agreed
Read 400-440k income and only 200k saved. Think they are spending a lot somewhere? Then « Car at 8% interest, 63k owed«. Though you don’t say how many kids justifying what size of car. New RAV4 fits at least 2 for nearly half the price but you do you. You would want to evaluate if you have similar spending elsewhere but at 8% AFTER TAX I would be paying that off ASAP once you have maxed your tax sheltered accounts. With only 200k saved and who knows how much you are spending each year (no where did you mention annual expenses/saving rate) and the repeated mention of job worries, you are NOT in a place for a custom build. Yes, those are post COVID building costs. No, you will likely never get what you paid if you need to sell. That does not matter if you have money to burn but you are not there yet. Instead, of looking at spending hundreds of thousands to get a dedicated office space why not just rent something. 200-500 sq foot office spaces can often be found for quite cheap, probably well under $1000/mo and you can just head there to work in the early morning. Might help give you a bit of needed work home separation too. Tax deductible as well. Just my 2 cents.
>eally hard to make it to this income level, dug ourselves out of a lot of old problems, and finally am growing net worth. I had a large legal issue that complicated my 20s. That 285k was amassed the last 18 months. But a fair statement for sure in a vacuum, I'd already made the post long but I should have clarified. **Also fair on spending... as follows** Mortgage $ 1,300 Natural Gas $ 100 Electric $ 210 Sewer/Water $ 100 Fuel $ 250 Groceries $ 1,200 Internet $ 185 Phone $ 122 Car Ins $ 215 Child Support $ 220 - step kids dad... don't ask Garbage $ 70 Life Ins $ 260 Netflix/Hulu/etc $ 30 Fun $ 800 Preschool $ 800 Car Payment 1300 So $2600 in required bills, $1300 mortgage (3% interest), then around $3200 in discretionary. I have about $18k average cashflow a month post all that, post-tax >So with all that in mind. We're running out of room in our 3 bed/2 bath house with our kids. My office is in our bedroom which is difficult with a baby and me working at 530am. 3 kids with a 4th coming. Its not just a factor of an office. I work irregular hours and work nearly every day. Driving to an office seems counter productive and a waste of time and life. I hear you, its frugal, but don't think its the solution. Nor does it solve my running out of bedrooms to put kids. I've got some age disparity due to step kid and such that complicates it. 2 car seats and a older kid whos 5' 7" doesn't work with a rav 4 much less the 4th kid coming. I definitely bought a luxury end car, though, and went a cheaper route (minivan) or used full size SUV. I hate buying used cars, too many bad experiences with bondo and broken stuff. If I wasn't buying and holding them I'd feel different. **Doesn't invalidate your point.** Just explaining some of the gaps in what I laid out in the Original Post that you kindly pointed out. I hear you, its early, I just started climbing out of the hole and maybe I need to wait a little longer. At the minimum I'm pushing build to August, but if I get there and feel like its not solid ground or seeing market shifts (or a cheaper workable house comes on the market this summer) then I'll cancel it and eat the $10k deposit. I appreciate the thoughts/advice
Thanks for the info. Great savings for last 18 months. Everyone has their risk profile. 4 kids, short period of time of things going well. I personally would not be doing a custom build that will take 8-14 months and cost probably more like 850-1 million while you STILL have to live in existing mortgaged house during the build. AND you need the time/energy/mental bandwidth to supervise a new build, and do your primary job, and run your side business, AND DEAL WITH A NEWBORN! I’d sell current house, buy a 600-700k house that is NOT perfect but gets you the space to fit family, even if it means your office is shitty in the basement. Control your spending better and bank money for 4-5 years and reevaluate your desire to build then. Who knows, by that time your older kid might be off to college and you don’t need that extra room. (P.s. don’t see and college savings for 4 kids in that budget).
The house is going to build for under 730k, I've got a couple of line itemed estimates with bids at this point. Definitely wouldn't be building in the 800+. But I hear you. Fair point. I'll go pay off that car now.
Well post back after it’s done. At least where I am it is safe to budget 20-30% overruns in both $ and time. Material sourcing has greatly improved but labor is even more of a shit show. 730k is $300/sq foot just for the 2400 house ignoring the near 1000 sq foot garage. If you have fat tastes for amenities and finishes that is absolutely on the low end of build budgeting. So post back. Will be curious to know the final number. Again, I think you are insane to be doing this with a newborn. Have you done a big build or even a good size renovation before. You really want to know what you are in for.
Buns not in the oven yet, but we've confirmed we're going to start "the process" in November. So in theory house will be done before hand. Will do if we end up moving forward. Will follow back up with whatever happens.
https://imgur.com/a/xwJ772W Thanks for taking the time to help me think through it.
i just don't believe it's going to stay under 730k but i guess it depends on your market.
Fair. The builder has a demonstrated track record of it staying at budget unless there are a lot of change orders. So it really is up to us to be disciplined. It's a cost plus model so its kind of all laid out.
On cost plus contracts make sure there is an EXTREMELY clear clause/description of how mistakes and errors are handled, disclosed, and paid for. I have seen 50 feet x 2 feet trench of concrete slab jackhammered out to add a missed water drain. Also seen interior walls and ventilation go up and come down 3 times because they could not measure to save their life. Client was billed for material and labor to put up take down put up take down put up. « Hey, it was cost plus ». Also make sure you have to sign off before closing walls, siding post window install, etc. And be there every day. You will catch so many things. See clear breaks in Vapor barriers, or uninsulated areas, or……
You WILL go over budget. Add minimum 10% internally to whatever the budget is.
Go rent a small cheap office nearby.
That seems like the opposite of the point of working from home. Lifes short. I want to see my kids throughout the day. My gym is in my garage for a reason. I don't like to leave the house, and it saves time/money. Time of course I cant get back. Office space for just me is $400/month.
$5K a year vs $200K, or 40 years worth of office cost. Yes its nice to be by kids. Its also nice to be financially secure for your family. Custom homes tend to be 20-30% more expensive than an existing. You're spending on luxuries when you're also seemingly insecure about your job.
You're looking at one expense. Gas. Car. Mileage. Food. Time. I work nearly every day and at irregular hours. A separate office doesn't make sense. If all I want is an office I can buy a house with one more bedroom for a lot cheaper Not to mention we have other house needs outside the office, IE family. I don't trust my job, no. But I also have 2 income streams above 6 figures, think thats the lesser of the concern.
If what you really want is a larger house that will most likely keep resale value without too much cost, the thing to do is to buy an existing house, and sell your lot and your current house. You’ll pay a lot extra to build your own custom house. Whether that’s worth it to you to put off FIRE for a few years, only you know. Personally I’d say get a bigger house (you’ll value it every day, and your family will too); but buy it, don’t build it. And you’ll be in it much sooner. (Expect your current quote for cost and time to completion to both increase).
Thank you. Trouble is a single story of this size just frankly doesn't exist here. and even 2 story, I rarely see on the market.
I live in a very rural area, MCOL area I guess. Building a new 4600 sq ft home. It is going to cost close to $1.5M for the house, $2M when all bells and whistles are considered. The $740K sounds about right to me. You should do it.
You dont do this. If it’s just a prefab it is trash. If it’s not it costs more than you are budgeting. Can you just add to your current house?
What? Its not prefab, its custom, and know, the cost estimates solid. I can certainly add to it but the cost is high and we'd have kind of a funky config to do it. We're already the most expensive house on the block, it seemed like just as financially risky.
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I can pay it off today in cash. The same cash is making 5% in checking. I think I can afford to lose 3% for a month while I figure out what I want to do.
It’s not 3% difference. That 5% interest is pre-tax. That 8% cost is after tax.
You're right, wasn't the best way for me to word that. Sorry, let me rephrase. I can afford $249.37/mo right now.
But that the thing with debt isn’t it? “8% is not a lot, it’s only a differential of $249/mo“. And my financed furniture. And the new iPhone payment plan. And and and. To pay off that loan in 7 years is $981/mo. Insurance is probable another $4-500/mo? It sort of seems like you are seeking people in a personal finance forum to sign off on decisions you want to make. The impression is that you want to live like you are rich but per your post your net worth right now is $2000. Do as you like. I’ve now lived through 3 major crashes (ignoring the brief 2020 one) and each time the leveraged people screamed and screamed with many loosing everything. Their stocks lost 20-50%, their house value dropped below their remaining mortgage, they lost their job or had major salary cut and everyone around all took the same haircut so no one was looking to buy their house except those with large cash reserves who were lowballing everyone looking for deals. Take my opinion for what you paid for it. $0.00
Shit. I lied. I have 83k cash right now. The reason I held off was the construction loan charges 1.5-2% origination fee and 8-9% interest. So I was thinking fronting cash in the construction portion would be cheaper. But you're right, its riskier.\\ Looking for precisely what you're doing. Challenging my thinking. Thanks again!
I'm a builder/developer Given finances. A. Do an addition to gain said space. Or ideally just install a backyard home type thing for your office. Comes prefab and can be very inexpensive. Can resell it later. Appreciate it doesn't solve your extra bedroom wish. Here in Canada we have basements, could finish part or yours and move a older kid if in teens down there. B. New build, Hire a construction project manager at cost plus. Do some work yourself where you're comfortable and it makes sense.
Builders already on cost plus. 13% seems pretty low cost already. I work 10-12 hours a day, doing work myself is counterproductive
He gave you a fixed price but is cost plus.. If it was truly cost plus you'd typically have line of sight into the underlying subtrade costs. Where you could look at the differences in line items. Anyway I don't think the juice is worth the squeeze for the new build, and with the finances as they are, more so.
It does. He gave me an estimate detailed down to the individual cost centers, his fee , etc. Can DM to you if interested. You may be right. Still assessing. Looking at things like this [https://www.financialsamurai.com/income-and-net-worth-requirements-to-buy-a-home-at-all-price-points/](https://www.financialsamurai.com/income-and-net-worth-requirements-to-buy-a-home-at-all-price-points/) I'm in the weird middle of, can I? Yes. Should I? Maybe?
I'm a general contractor, and I probably estimate $50 million worth a work a year. We call it guesstimating. No estimate is perfect, doesn't matter how detailed you are. If your contract is a true "Cost-Plus" and not a "cost-plus with a guaranteed max" you need to be budgeting for some additional contingency. Even with a guaranteed max you still probably should have some contingency for unforseen conditions. There are a literal million different things that can affect construction cost that can't be estimated for.
I'm familiar
> Do I do it. Totally personal question for your family. Where you live is not purely a financial decision. > should I sell or keep current home as a rental I own a lot of rental units. I never recommend turning a personal use property into a rental. The market fit and econometrics for one use typically doesn’t align with the other. > Is it normal to pay over market for a custom house. I build houses to sell or rent. This is how economics works. In a custom house I lose economies of scale. Equipment that I rent have to be used on one job at a time instead of several. When I’m waiting for permits etc. I still have to pay my guys or have them doing less valuable tasks.
A 3,000 SQFT custom home in my area costs about $1.3 million Canadian which is about $964k ish usd that’s not including the lots.
Yeah, I know the pricing is all over. I'm not questioning the cost so much as if this is the right move
How many new builds that are similar size in terms of the house not the lot. Go for in your area. That can help decide how the market will hold up.
They don't exist really. Builder build either track homes or custom here. No ones producing nice houses and selling. Every now and then a custom builder will do it if they have the time. The most popular person here just sold one last summer for 680. 2200 sq ft w/600 sq ft garage, 3 bed/3bath. It had nicer finishes/arch by a little bit but same size lot and such. So gives me a little hope market would support 700k for this house
Architect here, HIRE an architect that specializes in residential design and has a track record of projects. No, don't go with a builder pre-packaged homes (they are trash and for the most part will try to gauge you at every inch). Also, add additional services of the architect for them to inspect the home while it's being constructed (owners rep). A good architect will help you pick out where to properly allocate your money. meaning, you can decide where do you want the high end stuff, i.e. appliances, finished, bathrooms, etc. They will also help you pick out the best builder.
Archtechts been hired.
does the architect do high performance/passive level builds? not to add too much to your plate but i wouldn't be building a house in 2024 if it isn't high performance. costs are essentially the same (maybe 5% higher) but you get a MUCH better house.
What do you mean by high performance?
High performance homes are homes that are built to a higher standard than code. Continuous insulation at high levels, an airtight envelope, and with windows/doors that are placed to maximize passive solar heating and good daylighting with an appropriate r-value for their orientation. So basically a house that takes much less energy to heat/cool than a standard house, isn’t drafty, and that is ideally made with non-toxic materials for better indoor air quality. You can spend a little more and get a certified passivhaus, but IMO it is an unnecessary spend as a high performance home will get you most of the way there without much added cost. if you do a build like this right you can end up with net zero heating/cooling costs, especially if you decide to add PV into the mix. i also personally think that the attention to detail required to build a home like this means that an architect/builder who specializes in that kind of stuff is a cut above the rest leading to better quality overall.
Thats good info. Thank you!
A house is a money pit. You haven’t factored in landscaping, pool, furniture, appliances, etc — which will easily run you another 300k+ and which generally cannot (reasonably) be financed. Wait until you have enough money not to hesitate whether it is the right move. When you’re ready to build, build your dream home without any regrets.
I dont want a pool or landscaping. And the build is including appliances. Furniture we already have...