How to Create an Investment Budget for Your New Build
What is this new house build going to cost me? That is probably one of the first questions that come to mind after you decide to build a home. In my previous blog post, we talked about hiring the right people for your new build project. I thought I’d follow that up with the money talk, or what your new build investment will require.
Let me preface this by saying that today’s conversation is not about providing you with a flat fee or a precise number. Why not?
First, every house can be so different. For example, if you are building a glass house with floor to ceiling windows throughout and steel beams are needed for structural support, then that 3000 sq ft house is going to cost much more than a 3000 sq ft house with wood framing and standard sized windows. Your costs are very dependent on the style of your house, how it is designed, and what is going into it from exterior features to interior finishes and materials.
Second, materials can vary widely in cost based on design and product selections. For example, marble tiles may require a higher investment than porcelain tiles. Engineered hardwood flooring is less expensive than real wood. And so on. Individual selections in materials and products will add up fast when you have hundreds of decisions to make for a new home. There may also be an impact on labor costs. The more elaborate or custom a material or design, the more specialized labor (and time) will be required to fabricate and install. Your design team can help you develop your budget and make design decisions and product selections that will help you adhere to that budget.
Lastly, the cost associated with your builder or general contractor can vary widely as well. It depends on the scope of work to be done, the size of the home, the features you want (extensive millwork, a floor-to-ceiling fireplace feature, etc.) and the quality level of the materials you choose.
So, what can you do to plan your new build budget? You can increase your awareness of what is involved and do your research. Creating a budget arbitrarily is impossible and impractical. In this post, I’m shedding some light on what goes into the cost of a new build and how to anticipate it.
8 Actions to Help You Budget Your New Build
1. Architect & Interior Designer
These two trades may have different pricing structures. They can either charge a flat fee, hourly based on time, a percentage for project management or a combination. Their roles usually come first before you contact your builder. They are the ones in charge of creating the exterior of the house and the floor plan or layout.
Action: Reach out to your desired professionals, ideally ones who work in a style you love, to get some quotes.
2. Structural Engineer
Their role is to ensure your home is structurally designed and built to withstand its own weight and endure earthquakes and other natural elements. Structural engineers are likely to charge a flat fee.
Action: Get a referral from your architect or interior designer. Then, reach out to the structural engineer for a quote.
3. Landscape Architect & Arborist
Landscape architects add the curb appeal to your home. You may need an arborist if your property is likely to have some protected tree species. They can either charge a flat fee or hourly.
Action: Get a referral from your architect or interior designer and reach out to these professionals for quotes.
4. City Application & Permit Fees
These fees can be unexpectedly high - usually in the tens of thousands. It is also completely based on your city as well as your particular property and square footage. It includes application fees, permit fees, school fees, park fees, inspection fees, and more.
Action: The only way to find out what these fees will be is to ask your city planning and building departments or consult with an architect or builder who has done projects in your city before for a ballpark estimate.
5. Builder / General Contractor
You can expect your builder or general contractor to either quote you the cost of construction plus their fee, or you’ll receive an all-inclusive quote. Bear in mind that the construction cost estimate will be based on the plan you’ve created with your architect and designer. This means that if any changes occur to the plan during construction, they will also be reflected in your cost. Take note…changes during construction almost always result in an increase in cost! It’s best to solidify your plans as much as possible during the design phase.
Action: Create a plan with your architect and interior designer. Get a referral to a trusted builder or general contractor. Contact these trades for quotes. Work with all of these parties on your team together to design a home within your investment budget.
6. Materials, Finishes & Fixtures
Rough materials, such as lumber, insulation, grout, etc. are usually included in your builder’s estimates. Finish materials, such as plumbing and light fixtures, hardwood floors, tile, cabinets, appliances, etc. may not be and can vary widely, as I mentioned above. Some contractors will purchase everything for you and include it in their numbers. Some will not and will expect you or your interior designer to purchase and deliver these items to the job site for them to install.
Action: Work with your interior designer and builder to budget the cost of materials that will be installed in your home, from the type of material and finish to the amount of material needed for your home. Then, make sure either your GC / builder or your interior designer have the procurement and installation covered. These services are usually wrapped into either party’s fees.
7. Taxes & Shipping Costs
Bet you forgot about taxes and shipping! I wish I could tell you the price on the marble tile you love is what you can expect to pay, but that’s not the end of it. Taxes and shipping, especially for large or heavy materials and goods, can add thousands of dollars to your budget. If you’re working with an interior designer, we will get quotes for these expenses when quoting the cost of materials so that there aren’t any surprises later.
Action: Freight and shipping costs may be difficult to estimate. Work with an interior designer who can account for these expenses in your budget during the planning process.
8. Furniture & Decor
Last but not least, I have seen time and time again when homeowners finish building a beautiful new home or renovation and haven’t considered the furniture and decor investment it takes to really complete the home. They end up with a stunning home filled with outdated furniture or furniture from past homes that don’t work in the new house, paper shades, or empty rooms waiting to be furnished and decorated.
OR homeowners are so exhausted by the new build process and the hundreds of design decisions you have to make that you don’t have any headspace left to pick a sofa. The furniture and decor is the final layer to completing your home. Don’t forget to budget for what actually makes your house livable, comfortable, and beautiful.
Action: Like materials, furnishings vary widely in cost as well, which correlates to quality level and longevity. Work with an interior designer who can ask the right questions to help develop your budget. Questions like: What are your priorities? What function do you want this space or item to serve?
Together, we’ll help you save and splurge where it makes the most sense and will have the most impact for your dream home.
What’s the Next Step?
Building a new home can be equally exciting and daunting. There are a lot of factors to consider, and cost alone is a multi-layered topic that you have to plan for despite its convoluted nature.
My best suggestion is to do your research and talk to industry professionals. Take the “action” steps I recommend above, and work with professionals who can realistically and personally allocate and leverage your investment to its maximum potential.
If you have any questions or want to chat, click here to learn more about how I can help you with your home, or schedule a call to talk about your project here.
Talk soon!
Rosanna
