Wednesday, March 9, 2011

Home Building on a Budget

It seems that the cost to build a new home is much too high. Not everyone wants to spend $300K or more. Some people want a nice, medium sized home with some style for a more reasonable cost, maybe $150K or so. This would be a Midwestern cost, building on either coast will be more.

Regardless of where you build, there are a number of things you can do to reduce your building costs. Below is a list that I have put together:

1. Plan to save – As you develop plans and the design for your home, it is a good idea to start assembling initial estimates. Although these may not be quite accurate at this time, they can help you with making choices for the structure and finishes to be used and to help you understand what your total costs will be.

2. Build small – Every square foot of the home costs money. By reducing the footprint of the home, you will reduce your overall cost. You want the floorplan to be as efficient as possible but still have the spaces you truly need. Eliminate rarely used spaces such as a formal dining room and consider how rooms can serve double duty such as a home office can also be the guest room with a murphy bed.

3. Squares and rectangles – The cheapest form to build will typically be some variation of a square or a rectangle. Most other building shapes are more complicated to build will increase the cost.

4. Build up – Depending on the footprint of the home, it will typically be more economical to build up rather than out. Building up reduces the size of the foundation and the roof, reducing your overall costs.

5. Build for quality – As with any home, it is important not to skimp on the structure in order to save a few dollars. Use 2x6 framing on 24” centers. This costs the same as more typical 2x4 construction, but allows for more insulation. Also use quality exterior finish materials that will last for many years.

6. Build for energy efficiency – Making a new home more energy efficient costs very little up front but will save you money every time you pay the utility bill. Amortizing $1000 into your loan for energy improvements will typically cost you less each month than the money you save on utilities.

7. Consider alternative materials – Alternative materials include recycled and re-purposed products as well as using materials for uses other than originally designed. All of these can reduce your material costs.

8. Postpone frills – Actually, this should be postpone or eliminate the frills. For some things you can substitute for less expensive materials today, and upgrade at a later date. Other things can be eliminated entirely such as interior trim. If you are building a modern home, what is more modern than the clean look of no trim? Drywall returns at window and doors is an inexpensive way to eliminate trim.

9. Save in the kitchen – Traditional kitchen cabinets can be very expensive. $20K or more for cabinets is not uncommon. Consider alternatives such as a recycled stainless commercial counter/sink, homemade concrete counter tops, or possibly wire shelving racks for storage. Yet another option is cabinets that need assembly such as those from Ikea.

10. Sweat equity – Labor costs today are very expensive. Everything you can do yourself during the construction of your home can save hundreds or thousands of dollars. Painting is a great example. The average home costs several thousand dollars to be painted by a professional while the materials cost only a few hundred. So, the more of your time you can invest in the construction, the more you will save.

I am sure there are other ways you can save money on the construction of you home, but the list above might give you a good start. With good planning, hard work and a reasonable budget, you too can make your dream a reality.

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