10 Ways to Control the Budget on Your Custom Home

Budget and Schedule are two things that homeowners do not fully understand when they are planning for a new custom home or an addition. From relying too much on what they see on TV to trusting that what their neighbor paid for their project will be what they pay, there are many mistakes people make on setting up the budget for their project.
In this video I take you through ten tips to help you maintain control of your home construction project.
www.n3architecture.com
Resources: Head over to my website to grab these resources
- 5 Tips to Start Your Project
- Book: The Homeowner's Guide to Residential Design and Construction Projects
n3architecture.com/resources
#architecture #architecturedesign #customhome #customhomedesign #construction #architect #design #n3architecture #massachusetts #connecticut #rhodeisland #newhampshire #house #home #newengland #newenglandarchitecture #newenglandhome #residential #residentialdesign #residentialarchitecture #modernhome #modernhomedesign #modernhouse #sustainable #architectureanddesign #greenhome #sustainablehome

[@bunnyblue9311]

Thank you so much for this. We are currently in the process of buying our 4 acre lot and we want to know as much as possible before we start. We just want a single story high ceiling 4,000 sq house and so we’re trying to be as realistic as possible so this video helps.

[@n3architecture]

Im glad it helped!

[@tombaker674]

Excellent Suggestions! I've been desinging houses since 1964.

[@n3architecture]

Thanks, I'm glad you enjoyed it.

[@rodneywright4344]

Hi Tom. What state are you in?

[@tealkerberus748]

The budget is what you're comfortable spending - which will be less than the total amount of money available. After that, you've got to fit what you want into that budget.

[@chrism8013]

Too add, you need to have schedule of deliverables in place prior to signing a contract. If the deliverables are not met on said time line, causing you a delayed move in date, then the deliverables "penalties" kick in, causing the contractor lose money.

[@brianscott135]

I’m in the process of planning for our custom home and even though I sort of recognized it, it still surprised me that cost per sq ft applies to more than just the living space. It’s an easy trap to fall into to think that of that nice plan with 3000 sq ft of living space will cost me $600k @ $200/ft2 and ignore the cost for the 3 car garage and 750 sqft of porches. Those aren’t free.

[@n3architecture]

Absolutely! you are not alone in thinking that, I have had many conversations with people who have added up the useable square footage of the rooms but don't take into consideration all the other spaces.

[@MichaelJ674]

Great tips. I really enjoyed the video. One thing you didn’t mention that I think is really important for clients to understand is that cost/SF is not a flat line when determining the overall cost of a home. The cost/SF is to some extent inversely proportional to the size of the home due to economies of scale, fixed costs (utility connections, driveways and other paving, landscaping, and certain overhead costs) being the same regardless of the house size, etc. So the initial design for a 3,000 SF house might come in at an estimated cost of $300/SF, for example, but your budget is $750,00. So you work with your architect to trim the house down by 500 SF thinking you’re going to be within budget, but the contractor’s updated estimate is now $800,000 because there’s less economy of scale and those fixed costs are spread out over less square footage. So doing the math, you’re now at $320/SF and you realize there are diminishing returns to cutting more square footage plus you’re probably paying your architect to redesign the house. So you need to start with a realistic budget as it’s easier to add things to the project than to cut.

[@n3architecture]

Yes good points!

[@eduardotoledano]

Super didactic and helpful. Great vibe and content. Thanks for sharing!

[@n3architecture]

Thank you, glad you enjoyed!

[@JL-hn6hi]

Good tips, as always. Thx.

[@n3architecture]

Thank you!

[@lindafoster471]

Really appreciate your tips. Question to you as an architect: How involved are you in keeping tabs on the budget, and designing with the budget in mind? In other words, are you estimating costs along with the contractor and client? Or do you leave that to others.

[@n3architecture]

This depends on what level of services you are hiring your architect for and if it is a custom project, semi-custom or spec build. In a custom project the architect should be involved in all stages. Semi-custom they should also be heavily involved during the construction phase, but some of the finish selections and how those smaller decisions change the budget may just be between the homeowner and the contractor. In a spec build the architect would most likely have little to no involvement in the construction phase. In my opinion, in terms of an exact budget, the contractor is the best at this job. They deal directly with the manufacturers and suppliers and are more up-to-date on current pricing. There is also many levels of budgeting. In the early stages of designing a project, you won't know exact final costs as many decisions have not been made. This is where a square foot based estimate comes in, I will look at my last few similar projects for their final budgets and then apply that square foot value to the current project. Also included in this is talking with contractors to get a sense of if that square foot value is in-line with what they are currently seeing for pricing. Designing a custom home is iterative, and the design evolves - so does the budget, working first from the square foot values which might be within 20% accuracy of the final number and then refining that budget as things become more detailed. This is also why hiring a contractor early, to be part of the team and to have them offer you pre-design services is money well spent. I usually like to bring a contractor onto the team once the schematic design for the home is completed, this gives them something tangible to work with, but not all of the decisions have been made yet. They can offer insight into construction details, saving time later as well as providing updated cost estimates as the design and the drawings become more refined.

[@lindafoster471]

Thank you for the details! That helps my understanding. I think for my situation, an architect connected with a builder or visa versa would probably be the best. All you professionals is too much for me to juggle! I enjoy your channel. Keep 'em comin! @@n3architecture

[@Scott-rf5ux]

It is ridiculous to talk about "the" cost per square foot. This varies widely, even within the same neighborhood.

[@n3architecture]

Not when you have a decent idea on what that cost is. I only use in the very early stages of a project to set or confirm the size based upon the clients budget. If a client comes to me and says they want to build a 5000 sf house and their budget is $950k and I know the average cost per SF is around $300 then they are way off and need to either reduce size or increase budget.

[@Scott-rf5ux]

​@@n3architectureBut what I'm saying is that the price per square foot can vary widely so how are you coming up with that number? For example, on the street I'm building on, there are houses with per square foot build coats ranging from $450 to over $1000.

[@n3architecture]

@@Scott-rf5ux I haven't personally seen that large of a gap in the same street, or most often even the same town. When I first start working with a client and knowing if it is a more or less expensive area and through multiple conversations with them - discovering what they want in a the house in terms of style, structure, finishes, mechanical, I can get a decent sense of what the cost per square foot will be. Again this is not intended to be exact, but just a starting point for the initial conceptual design and setting the approximate size of the house. After the schematic design work is to a point where the homeowner is satisfied (but not too far out that changes can't be made) I always recommend they bring in a contractor for preconstruction services, to provide a more detailed budget number which will then get refined as the project moves forward.

[@Scott-rf5ux]

@@n3architecture the consistency of pricing must be a regional or market-specific thing. If you look at, for example, Austin and suburbs, you'll see square foot pricing ranging from $300 (maybe even lower) to a minimum of $900 (from a builder like Four Square)

[@MichaelJ674]

It’s not ridiculous at all to talk about cost per square as you need a starting point for establishing a realistic budget. A relatively short conversation with an experienced architect or builder can identify the type of house a client is looking to build (size, performance goals, level of finishes, special amenities, etc.) and exactly where the site is located in order to identify a realistic starting point for budgeting. I just had that exact conversation with an architect yesterday and determined that $400-$450/SF is a reasonable budgeting assumption for what I want to accomplish on a fairly steep site in an area where construction costs have been coming in anywhere between $275-$600/SF. That cost will be refined as the design is developed and refined, but it gives me the initial information I need to determine if I have a viable project that I can afford and gives my architect and builder the information they need to make decisions/suggestions about design elements, systems, materials, etc.