Usually “cheap” is not a word we like to hear about building our homes. But like Penny Hoarders, we know there are ways to build a home and save money at the same time.
And with the real estate market turning into a frenzy with regards to existing homes, now might be a good time to think about building your own home rather than buying it.
You might think you got a lot of advice from all the trendy home building and remodeling shows on TV. Lots of ideas too. But remember that every additional idea costs money. Think a little – do you really need pot fillers for your kitchen or hardwood floors in every room?
Let’s look at how you can use planning and a little knowledge to find the cheapest way to build a home and still get what you want.
Do you have a general plan to build the house
A plan and a budget are not the same thing, but the plan includes a budget, and much more. This is where the house building process begins.
Be honest with yourself during this stage, says architect Donald Rothruff, California-based director of Dahlin Architectural Planning and a member of the National Association of Home Builders.
“I can work for any budget, but you have to be honest about the money you have,” Rothroff says.
Consider all aspects of your construction. Your plan should include:
- Money: How much do you plan to spend on everything for the house? Where will you get that money – savings, construction loan, or somewhere else? Rothroff suggests adding at least 10% to your budget for contingencies and increases.
- Earth: Do you have a piece of property in mind? What are the zoning requirements and regulations? Does it need excavation, remodeling, or other improvements?
- allow: What permits do you need and how long do they take to get them? Each city and municipality has different requirements, and most of them cost money. Also, understand the inspection process and what should happen and when. Missing an inspection can tear up things you may have already completed, adding to your costs.
- the people: Think about who will be involved in the construction. Consider the architect to make the plans, the contractor who will oversee everything, the subcontractors who will do the work, and everyone involved in building decisions.
- Home running costs: When you think about the square footage and other details of your new home, don’t forget to think about its maintenance costs. Measurement matters. There are property taxes, utilities, maintenance, insurance, and more. All of this should be part of your home building plan.
- timetable: How long will it take to build your house and where will you live in the meantime? According to the US Census Bureau, 50% of homes built in 2020 took four to six months, and another 18% took seven to nine months. Paying for both the building and where to live can lead to an increase.
- Necessities vs. nice people: What do you really need at home? How many bedrooms and bathrooms? What additional features do you want and what do you really need?
Many home builders will deal with things like land, permits, materials, and people (including contractors and subcontractors) so you don’t have to think about all of these things on your own. One such builder is Christo Homes in Cincinnati, where Michelle Fletcher is a new home sales consultant.
The experience gave Fletcher some ideas to help at this point in the home building process. For example: If you plan to make additions later, such as a completed basement, laundry room, or wet bar, it’s best to include rough stuff in your initial build.
“It will be more expensive later to add the bathroom if you have to hit the floors with a sledgehammer and not do the plumbing for it,” Fletcher says.
General contractor or not general contractor?
The general contractor is the person who will be responsible for overseeing the process of building your home on a daily basis. They are usually the ones who order materials, subcontract to dealers, oversee the quality of work that everyone does, and more.
To save money on your dream home, you can work as your own general contractor. But beware: This may seem like a good way to build on a budget, but it can cost you more in the end.
Before making the decision to be your own contractor, here are some questions to ask yourself:
- How much construction and project management experience do you have?
- How much time can you spend on a construction site?
- How well do you understand permits and the home building process?
- Do you have a lot of relationships with vendors and subcontractors?
Experienced contractors often know how to anticipate cost overruns and include them in their budgets. They know where to save, where to spend, and how to find subcontractors who can get the work done.
Good luck, Fletcher says of working alone. She points out that professional contractors have relationships and purchasing power with sellers. “If you do it yourself, you will overpay for everything and it may take years to build a house.”
Simplify the design of your dream home
We all have ideas about what our perfect home would look like, but if you’re looking to build on a budget, you can’t have it all. Simplifying the design of your new home can help save money.
- Box construction: The more rectangular the design, the cheaper the construction. A one-story farmhouse on a concrete slab with a simple roof is the cheapest form of home. Exciting bumps and angles add to the cost. You can always add landscaping elements later to add some oomph.
- Build instead of out: Land is expensive, so adding a story can be cheaper than getting more land. Construction basically means smaller and a smaller roof.
- Consider the design of the ceiling: Different ceiling designs and materials affect the price significantly. Flat roof is the cheapest construction, followed by gabled roof and then slope design. Types of roof coverings, such as shingles or tiles, also affect the price. Bit rate isn’t the only consideration; Be sure to check building codes and insurance rates in your area. Some roof designs can significantly reduce insurance costs, saving you money in the long run.
- Collective water areas: Putting bathrooms, kitchens, laundry, and other areas with water together reduces the plumbing you’ll need. Rothruff reminds people to plan where things like sinks will go and then stick to the plan. Changes can be made once the actual building has begun.
- not allocate: Using standard and available items like ready-made cabinets and bathroom linens can save a lot of money. Same thing with windows. Custom details are much more expensive than standard sized details.
Don’t get so caught up in the dream that you lose track of what cost you everything you want.
As part of your design process, Ruthroff suggests collecting photos of whatever catches your eye. “The more you have an idea of what you like and don’t like, the better the process is, which in turn saves you money.”
Prioritizing structural elements
Building with the basics with plans to upgrade things like finishes later can save some money when building a home.
Some inside tips:
- Skip the expensive fixtures and finishes: It’s easy to get caught up in brand names or think you need the best of everything, Rothroff says. Find something you love and then ask the designer or contractor if there is a less expensive alternative that can save you some serious money. In the future, you can always add upgrades, but you might be surprised that you don’t really miss them.
- Uniform coating: Fletcher advises clients that it is cheaper to paint an entire house in one color at first and then do a few hand customizations later.
- Resistance directions: Some of the modern things we see in home improvement programs are needs versus wants. Things like pot fillers and giant bathtubs can be tempting, but they aren’t necessarily worth it.
“I would have a discussion if we had a budget on how often you would use this[item],” Rothroff says. “Maybe you’d prefer to have a few square feet in the next bedroom or a slightly larger closet. If we take that sink outside, I can take those square footage and use it in a closet you’ll use every day.”
A designer or contractor can help you decide when to waste and when to save on interior design.
Flooring is one place where it might be a good idea to spend more, Rothroff says.
“In my house, we spent money to get engineered hardwoods because we have a big dog,” he says. “The floors have stood out. I am so glad we spent the money there.”
Another place you can splurge, he says, is kitchen countertops because you see and touch them every day.
It is suggested that the appliances be a space to save. “Choose carefully how you will use it. Do you really need the (high end) range?”
Understand the cost of building materials
There are many ways to build a house and many materials that you can use during the home building process. Choosing the right materials can reduce costs.
Home builders like Cristo have already multiplied the numbers for you. Here are some examples of items that can save dollars:
- Framing: Wood framing can be less expensive than concrete blocks, but in some places it may be cheaper to secure the blocks. Custom-built, factory-ready wall panels shipped can reduce both frame and labor costs. The same is true of precast concrete that is poured into molds, cured indoors, and then shipped to the construction site. It is usually cheaper than pouring on site, and does not depend on the weather.
- Consider energy efficiency: Some upgrades may cost more up front, but will save money in the future. These are things like insulation, high-efficiency windows, and energy-efficient appliances. See these things as an investment, not a one-time purchase.
- External elements: Vinyl siding is usually cheaper than concrete or brick. Stone veneer or stone cladding, which uses a thin layer of stone, is more cost-effective than using whole stone.
- walls: Instead of drywall, you can consider using concrete panels, which are a mixture of concrete and cellulose fibers pressed into the panels. Also look at corrugated metal or bamboo.
It is important to know what is allowed and what is not. In many places, municipalities and building codes specify what materials you can and cannot use.
Also look for discounts and tax savings on certain items. This often costs more up front, but benefits you later.
Home builders like Cristo have done a lot of home building work already. They have relationships with suppliers and others which will save you money due to volume discounts.
They often also have design and package options to choose from that combine several cost-saving methods. Reducing the types of floor plans and finishes can also help you find the cheapest way to build a home.
Avoid These Two Home Building Mistakes
Whether you work alone or work with a construction worker, it is easy to make mistakes when building a home.
Rising Mistake #1: Too many changes
No matter how much planning you do, things will change along the way and you will make mistakes. This is part of doing a huge project like building a house. But, as Rothhoff warns, it’s important not to speculate on every decision you make.
The number of decisions you’ll make while building a home can seem overwhelming, but making changes can lead to a slowdown that costs money.
Rising Mistake #2: Overdoing it
Make sure your home stays within range of others around you. “People are over-spec,” Fletchers says, referring to the habit of increasing the cost of a home without adding to its value.
You may have the most expensive home in the neighborhood because you chose expensive finishes and custom lighting but, “Unfortunately, the appraiser doesn’t give value to many of these things.”
It is also important to monitor the award. This is your home and in the end it will be full of what you want, with the hope of saving money.
Fletcher gives advice to homebuilders who worry about “getting the best”.
“The best comes from perspective,” she says. “You have to step back and say, ‘Is this what you really want? “It’s okay to want a masterpiece as long as it fits your budget.”
Tiffany Sherman is a freelance reporter based in Florida with over 25 years of experience writing on finances, health, travel, and other topics.