Debt Free

In this economy, how to save money building a house is more important than ever. Because of the relatively soft real estate market, recouping your investment could take much longer than in the recent past, so it will pay off to keep your initial investment as low as possible. This even applies if you are building a house as your primary residence instead of as an investment property or as a developer.

The cost to construct a home varies widely and is dependent upon a myriad of factors from size to finish quality. One traditional measure of a home’s construction cost is the cost per square foot. This is much like many other metrics and specifications; it’s fairly useless without context. Due to the tremendous variation in finish quality, features, layout, and local regulations, it’s not easy to compare the cost to construct two different homes on a cost per square foot basis.

As with many other things, keeping costs low starts with the preparation you do prior to starting the project. There are several things you can do here to save money on the finished home.

 

How to Save Money Building a House 1 –

• Where you build. - In many communities there is a significant difference in fees, permitting costs and cost of compliance with regulations depending on the specific community. This includes building permits, CC&Rs, and environmental mitigation costs. Often a difference of only a few yards in the location of the property can save or cost you thousands of dollars.

 

For example in my neighborhood the cost of a building permit is several thousand dollars higher on my side of the street, than it is directly opposite my house. Why? Because my house in the unincorporated county and the county line runs down the middle of the street. A building permit in the city (the other side of the street) is significantly less.

 

This is but one of the things that can add tremendously to the cost of a house before construction is even started. After the house is substantially complete other things can come into play, such as the cost of a water meter, which in some communities can run $5,000 - $7,000.

 

The type of lot you choose will also have a tremendous impact on the final building costs. Lots strewn with old structures, large trees, rocks, outcroppings, or steep slopes will be more difficult to clear and build on. Remember that anytime the builder utters the phrase “more difficult” that translates into “more expensive”. Likewise, depending on the type of home you’re building, some types of soil are more difficult to build on and thus more expensive. If your soil and topography requires pilings to be sunk into bedrock to stabilize the structure for example, costs will soar.

 

How to Save Money Building a House 2 –

• What you build. – This may seem self evident, but the type of house you build can significantly change your construction costs. Some types of architecture are much more expensive to build, and generally, the more you vary from a traditional box, the more it will cost building your house. Features such as garages won’t add to the living space, but they will add costs.

 

Generally a two story home will cost less to build than a rambler of equivalent square footage. If you add a basement or daylight basement, the costs will grow significantly due to the extra costs incurred for larger foundation walls, excavation, and if applicable disposal, of the extra soil. Keep in mind that finishing heretofore unfinished spaces, such as above garage bonus rooms, will add to the total construction costs. However, due to the fact that the area had to be built anyway, the overall cost per square foot of the finished house will be lower, and the value will be higher.

 

This means that it is sometimes worth it to add costs such as finishing attic or bonus room spaces, even though it will increase your total costs. Remember however that a larger house will be more expensive to heat, maintain, insure and in many locations, get a building permit for.

 

How to Save Money Building a House 3 –

• Who you use to build. – Some contractors are much more expensive than others, however in the long term they can actually be less expensive. This is especially true when building more luxury oriented homes. In this case there are so many details to be attended to that coordination between the architect, designer, engineering staff and builder is paramount to avoid unintended changes or conflicts in various elements of the house.

 

Needless to say (but I will anyway) that these can both add significantly to the cost of the home, and impact the livability and functionality of the final product. I’ve seen such problems add many months and millions of dollars to projects. Although it may seem like an on site construction superintendent may be a hopeless overindulgence, such a decision really depends on the scope of your project. On a large and/or technically advanced project, having an on site superintendent may actually save money and ensure the project is completed much more quickly.

 

Be sure the contractor you’re using has a solid track record with the type of project you are contemplating. If you’re building a larger home, or one with distinctive architecture and advanced features, a good, involved architect is worth their weight in gold (because that’s what one screw up can cost)

 

How to Save Money Building a House 3 –

• Know what you’re building and don’t change it. Any changes will precipitate the dreaded change order. Any change orders will drive up costs, aggravation and construction times. Any of these will not save you money on building your house. Think about it for a second. A change order typically involves tearing down something that’s already been built (that you already paid for), and building it again, but differently (which you’ll pay for again). This is not a recipe for low cost construction. A few months spent planning up front to ensure all the details are just as you want them will eliminate many headaches and cost overruns later.

 

How to Save Money Building a House 4 –

• How you build your house – The construction techniques will have a huge impact on costs. Modern techniques include pre-constructing many parts of the house, such as roof trusses, off site and having them trucked to the site. There are many companies that build panelized wall sections which are also built off site in factories and trucked in. Because of economies of scale and modern factory environments, using such pre-constructed components where possible can save you substantial money on your house. Prefabricated and constructed components can include not only trusses, and wall panels but other framing members as well.
  

Making sure all your “ducks are in a row” will have a dramatic impact on how much it costs to build your house. The most important thing you can do to save money building a house is to be smart not only when you’re building, but before you build as well.