Author Topic: Building a house?  (Read 7527 times)

WageSlave

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Building a house?
« on: May 31, 2012, 08:37:04 AM »
Say you are certain about where you want to live for the long term (20+ years).  What are your thoughts on building a brand new house versus buying an existing one?

Now, when I say "build", I mean paying a contractor to do most of the work.  :)  I think it goes without saying that self-building (i.e. no contractor) a house from scratch is Mustachian.  This is from the perspective of someone who lacks the skills to go from empty plot of land to fully livable house.

My thoughts are: initial costs will almost certainly be higher.  Materials, labor, permits, etc.  However, with careful house design, I think in the long-term, these costs would be offset.  I'm not thinking of anything "extreme" like solar panels, just simple things that are easier (and cheaper) to do when the house is being built (as opposed to being done after the fact).  For example:
  • Geothermal heating/cooling system
  • Icelene insulation (spray-in foam) and/or insulating concrete walls
  • White and/or metal roof
  • Precision shade/wind placement (relative to trees/other structures)
Not to mention, there are a lot of non-monetary benefits.  Such as: every room can be the exact shape/size you want, you get the exact number of rooms you need (meaning optimal space efficiency), perfect layout, amenities, etc.

Besides the luxury of having an ideal layout, the main motivation for me would be to build an energy efficient house.  In other words, pay more up front to have (hopefully dramatically) lower monthly utility bills.

I don't think my wife would ever go for this, but my grandpa's neighbor built a geodesic dome house.  It basically looks like a giant concrete igloo.  It has few windows, and supposedly amazing energy efficiency, and (according to my grandpa) can withstand a tornado.  He also put up a windmill generator.  I consider all this "extreme", but the ideas are certainly inspiring.  I'd like to be somewhere between ordinary house and what this guy did.

Thoughts?

MMM

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Re: Building a house?
« Reply #1 on: May 31, 2012, 09:07:54 AM »
Definitely sounds like fun, and right up my alley from the days of designing and building a couple of custom houses.

The pros you list are definitely real. The cons are that custom construction is SO much more expensive than buying an existing house (especially today, with building commodities at high prices and existing houses priced below replacement value), that it might cost you 2-3x as much for a similarly-sized house.

A couple of ways to bring the price down: use a stock home design, a pre-fab, or a really cool kit home such as the ones available from Viceroy homes. I helped coordinate a Viceroy build just two years ago and it went well, saving a load of time and money compared to the experience of using an architect.

Do-it-yourselfers (or finding an unusually cool contractor) can build custom houses for much less by doing most of their own design work and using reclaimed materials from the surplus building material store. It sounds chintzy, but actually you can often find really high-end materials there from commercial buildings, so you can still get a nice house.

There's also a weird paradox with some of the advanced technologies like geothermal heating and spray-foam insulation. Depending on the climate and your solar gain, those can be unnecessary as well. For example, the best quote I could find for spray foam on the ceilings of one of my custom houses alone, was higher than the price of insulating the entire house with fiberglass batt insulation and blown cellulose ceiling cavities. ($5600). Yet even with the cheaper insulation, the house uses almost no energy to heat or cool, so there would be no savings from better insulation. The best thing you can do in a northern climate is huge South-facing windows that you cover at night. In a hot climate, it's big overhangs, very few Western windows, a reflective metal roof, and a HUGE amount of attic insulation.

Anyway, just be sure to run the numbers before diving in - many custom house projects never get out of the architecture stage as people realize only then how expensive everything will be. Then they've wasted $15-30k on an architect, with only a roll of house plans to show for it.

grantmeaname

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Re: Building a house?
« Reply #2 on: May 31, 2012, 09:08:17 AM »
This thread over in the Real Estate forum discusses the very issue. IIRC the consensus is that houses right now cost less than their replacement cost in most cases.

Many of your energy-efficiency ideas have counterparts that can be done to built houses. You can add more or better insulation to the attic, reshingle the roof, and put awnings outside the windows.

If you don't love the layout of the house you're in, it's apparently relatively simple to take out walls and open the space up more (probably not so simple to put walls in in a different place, though). Search through MMM's construction posts for his take on that kind of work.

igthebold

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Re: Building a house?
« Reply #3 on: May 31, 2012, 09:38:51 AM »
I can avouch the expensive nature of construction. By far the worst financial decision I've ever made has been to have a house built.

WageSlave

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Re: Building a house?
« Reply #4 on: May 31, 2012, 11:26:52 AM »
A couple of ways to bring the price down: use a stock home design, a pre-fab, or a really cool kit home such as the ones available from Viceroy homes. I helped coordinate a Viceroy build just two years ago and it went well, saving a load of time and money compared to the experience of using an architect.

Interesting.  I'll have to look into Viceroy Homes.  In my mind, I had never considered a truly custom home, and have always assumed using a stock design.  There are free home plans on the 'net, and, at least a few years ago, you could buy books or CDs with 100s of plans... I would assume you can still do the same (or pay a fee to get 'net-access to a boatload of plans).  The library might even have such books or CDs.

There are specific things I want, but I'm sure there exists at least a few stock designs that meet my requirements.

Do-it-yourselfers (or finding an unusually cool contractor) can build custom houses for much less by doing most of their own design work and using reclaimed materials from the surplus building material store. It sounds chintzy, but actually you can often find really high-end materials there from commercial buildings, so you can still get a nice house.

I believe you, but you have to be careful... my wife found a place that deals in that kind of stuff, and we went there thinking we could find some cheap but also unique items to use as gifts.  A lot of it was very expensive.  We saw a doorknob for $600!

There's also a weird paradox with some of the advanced technologies like geothermal heating and spray-foam insulation. Depending on the climate and your solar gain, those can be unnecessary as well. For example, the best quote I could find for spray foam on the ceilings of one of my custom houses alone, was higher than the price of insulating the entire house with fiberglass batt insulation and blown cellulose ceiling cavities. ($5600). Yet even with the cheaper insulation, the house uses almost no energy to heat or cool, so there would be no savings from better insulation. The best thing you can do in a northern climate is huge South-facing windows that you cover at night. In a hot climate, it's big overhangs, very few Western windows, a reflective metal roof, and a HUGE amount of attic insulation.

I get the impression that your neck of Colorado has relatively mild weather.  My long-term plan is central Illinois, where we have the privilege of both hot summers and frigid winters.

Many many years ago, I went to a home show, where they had a demonstration of that spray-in foam.  It was basically three chambers, one each of standard "pink" insulation, cellulose, and spray foam.  Additionally, there was significantly more pink insulation than cellulose, and more cellulose than spray foam.  At the bottom there was a hair dryer blowing up into the three chambers, and at the top of each chamber was a thermometer.  In decreasing temperature was the pink stuff, cellulose and spray foam.  (The implication, obviously, is that that spray foam lets the least hot hair pass through.)

Anyway, just be sure to run the numbers before diving in - many custom house projects never get out of the architecture stage as people realize only then how expensive everything will be.

I definitely wouldn't start spending any money until I had run the numbers, no doubt about that.  This is a long ways off, but something I find fun and interesting to think about.

Perhaps the smart move is "retire" into the construction business (like you (MMM) basically have).  Spend some years working with local contractors, carpenters, roofers, painters, HVAC guys, etc, until I have enough experience to DIY.

WageSlave

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Re: Building a house?
« Reply #5 on: May 31, 2012, 11:29:51 AM »
This thread over in the Real Estate forum discusses the very issue. IIRC the consensus is that houses right now cost less than their replacement cost in most cases.

D'oh, I missed that one!  Sorry for the dup.

grantmeaname

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Re: Building a house?
« Reply #6 on: May 31, 2012, 12:08:32 PM »
That's okay, we're hitting a couple topics here that didn't get covered there.

The used building materials store that we have here in Columbus for cheap is called Habitat for Humanity ReStore, and the prices are stunningly good on almost everything... no $600 doorknobs, that's for sure.

sol

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Re: Building a house?
« Reply #7 on: June 01, 2012, 11:59:09 PM »
My parents recently had a house built in a new 55+ development.  They were offering like three preset designs, and you had the option to tweak them a little but not change anything dramatically.

For example, they opted for heated floors and wider doorways to accommodate wheelchairs someday, a bigger but shallower pantry, devoting part of their garage to dedicated storage, and relocating the laundry into the master bathroom.  And of course they got to pick all the fixtures and colors and roof type and insulation values.

They definitely spent more than an equivalently sized house would cost used, but feel like they got a good deal because they got exactly what they wanted and nothing more, in a layout of their choosing, and they don't have any "home improvement" projects to do, ever.  They were also downsizing from a larger house, so they ended up pocketing some money to get a smaller house that suited them better, in a place where no other such houses were available.

So in some cases, I can see how building would still make sense if you're unwilling to adapt to available inventory.

Sparky

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Re: Building a house?
« Reply #8 on: June 02, 2012, 08:53:28 AM »
This is my dream project of dream projects building my own home. I've been working on the design in my head for my adult life and I honestly feel in the next few years  I will actually do it.

To me, I hate just about every consumer good market. I am consistently modifying products to suit my tastes. Houses to me are the worst product of all as they are big, expensive and require huge amounts of sweat equity to modify. Not cool, and in part it keeps me off the housing market (I've owned one before). I hate with a passion having 'storage space' outside of a kitchen. It invites excessive consumerism.

My dream home is roughly modelled off of a developing country's typical housing design: kitchen, bathroom, enough floor space to lie your bed on the floor and a place to park your motorbike/bicycle out of the rain. I figure about 400 square feet.

Those home plans that are available in a book or DVD or the internet are awesome. My parents home was built around one of them, modified to their tastes. The architect cost was extremely low (less than $500 in 1996).

seathink

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Re: Building a house?
« Reply #9 on: September 25, 2015, 04:45:14 PM »
Did this happen? I would be interested to know.

Tester

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Re: Building a house?
« Reply #10 on: September 25, 2015, 05:05:20 PM »
I "built" a house.
I started in 2008 by buying the land.
This year "I" will finish it.
Unfortunately/fortunately this year in February I moved from my country to USA...

Form my experience:
If you want to do it, have the money upfront.
If you want to do it, do whatever is needed to know in advance how much money it will cost (with a maximum margin of 10%).

Do not let the stress affect you. At one point I borrowed money from relatives for doing something to the house which had to be done at that time or else it would deteriorate. I relied on a bank telling me the mortgage process would take one month so I told my relatives I would give them the money back in 2.5 months.
The bank gave me the money after 3.5 months... That thing almost made me lose it. Fortunately, that made me finally decide I don't want a loan ever from anyone if I don't have the money to pay it right away.
Another stress is that I really viewed me living there for my entire life and then leaving the country even before being able to see if the house was fine...

I plan on sticking to the above for as far as I can.

EDIT: reading again, it might seems that the bank almost made me lose the house :).
The thing with the bank almost made me lose my mind (almost literally, at one moment after the bank requiring some other stupid thing they did not mention in the first 10 meetings I was talking to myself loudly on the exit that this is what I deserve for relying on banks).
I was stressed because I promised my relatives I would return the money in 2.5 months and I could not.
« Last Edit: September 25, 2015, 06:13:24 PM by Tester »

seathink

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Re: Building a house?
« Reply #11 on: September 25, 2015, 05:30:25 PM »
Ack, very stressful! Glad it's going well and will be done, even if you won't live by it.

I'm watching my parents go through similar stuff with their river property: they didn't have all the cash, zoning laws were changing requiring a structure to be assembled ASAP before no more building can happen, so they took out a building loan to get a structure up.

I'm looking to do this in 5 years, and pay in full without loans with at lease a 20% contingency slush fund. Thanks for the info, it definitely helps to know other people are doing this without loans as much as possible!

Kroaler

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Re: Building a house?
« Reply #12 on: September 26, 2015, 03:26:07 AM »
Ahh yes. I'd like to build a small simple house as well one day. Preferably when I don't have a job any more.  I actually volunteer with habitat for humanity,  learned alot more then I knew before I volunteered.        Hopefully one day I can buy a lot with good biking options and construct a small 600 sq ft. Energy efficient House on it.  My current 1200 sq ft place feels huge for 2 people.
« Last Edit: September 26, 2015, 03:28:15 AM by Kroaler »

Rural

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Re: Building a house?
« Reply #13 on: September 26, 2015, 06:58:36 AM »
We built ours (2009-2013), DIY and using cash flow, and it has worked out wonderfully. But to pull that off, it definitely becomes what you do for that time period. Our two full time jobs were the side gigs, not the house...


Oh and it would have taken a couple of years longer without hundred of volunteer hours from my father.

Spork

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Re: Building a house?
« Reply #14 on: September 26, 2015, 09:44:11 AM »
We built ours in 2011 (with some stuff dribbling into current day).  But to be honest, we really started in 2006.  We bought the property, which already had a small outbuilding on it.... and we moved into the tool shed.  We lived there on the cheap for 5 years while we stashed money for a real house.

Our philosophy was "cash up front."  This really forces you to think about every decision.  When a little upgrade here or granite counter top there is quoted to you as $1000... and you rationalize it as "oh, that's only $3 a month".... you start stacking stuff in left and right.  On the other hand, when you cut $1000 here and there and actually knock $10-20k off in one fell swoop -- it starts being real money.

We designed ours with the idea that when the builder walked away, it was about 1/2 done.  We had a 2 story house, but left the upstairs completely unfinished.  This made the initial cost/sqft pretty high, as we effectively had a one bedroom house in a 3 bedroom footprint.  We had builders bid the house, then went back and said "We are going to do these items ourselves".  I'll mention here: You really need to find the right builder for this.  One builder just turned bug-nutty and stopped returning our calls altogether.  The guy we ended up with was awesome.  He promised to move as slow or fast as we wanted him to move while I did my subcontract parts.  He gave us monthly statements (to the penny) of what we had spent and hit his budget to the penny.   He would front us about $30-40k at a time, then when it ran out, he'd ask for a money draw to re-fill his coffer.

For our part, we did:
* daily site cleanups - This was $500 right off the bat.  Contractors can be really messy and will just throw their lunch trash on the ground.  When they see the home owner policing the area and pushing a broom once a day, they actually start being neater.
* final site grading
* all interior paint - We let a pro paint the outside, just so it got done fast and did not leave things unprotected to the elements.
* all finish carpentry - trim, closet/pantry build outs, interior doors, the "cat house"
* all tile
* some drywall upstairs - some done by builder.  In retrospect, we should have at least had the builder purchase the drywall and deliver it upstairs.  Carrying 4x8 sheets up a tight 180 degree turn stairwell was not my best judgment call.
* all wood flooring upstairs - actually reclaimed gym flooring, re-milled, sanded and stained by us.
* all plumbing/electrical finish work upstairs - everything was stubbed out by plumber/electrician.
* fencing
* tongue and groove wood ceiling in one room
* low voltage wiring - coax, ethernet, stereo wiring and laid conduit in the dead spots to be able to fish future wires from anywhere back to a central location.
* restored an antique stove for the kitchen

I would love to have built it entirely myself, but I'm pretty sure that would have caused my wife to hit me on the head with her prized 100 year old cast iron frying pan.

We've hit a point where we're > 90% done (almost 4 years later).  I have only one room incomplete, and I'm not in a huge hurry to finish.  We finished the downstairs at a lightning pace -- though the builder said we pretty much added 2 months to his timeline.  That was done pre-FIRE and I literally spent from "get home" to "bed time" + all days on the weekends working on it.  The upstairs was done at a sloth's pace.

Snags we hit:
* as mentioned, some builders are not going to want to work with you doing the work.
* insurance: It never occurred to me that it would be hard to insure a partially built house.  I figured it was replacement (and if it burned down, they'd pay to partially build it again.  That turned out to be not so true.)
* we should have worked with the initial draftsperson to make the house simpler.  The result we have is very pleasing... but we ended up with a really complicated roof line and lots of corners.  Those all cost money.
« Last Edit: September 26, 2015, 09:49:01 AM by Spork »

Rural

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Re: Building a house?
« Reply #15 on: September 26, 2015, 11:40:12 AM »
^ What he said on insurance. We were only able to insure ours this summer, two years after getting the certificate of occupancy.

Dee18

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Re: Building a house?
« Reply #16 on: September 26, 2015, 12:43:05 PM »
Do think ahead, as mentioned, to old age to avoid retrofitting.  Some items that are inexpensive upfront but more costly renovations include doors wide enough for wheelchairs, laundry on main floor, fewer steps,  and grab bars in showers.  Some friends I know even designed their shower to accommodate a wheelchair, though you would never notice that.  They figured if they never needed it they would be grateful and there would be plenty of delighted older buyers if they wanted to sell.

Jon_Snow

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Re: Building a house?
« Reply #17 on: September 26, 2015, 03:34:16 PM »
Will be embarking on this journey soon(ish). Have the funds set aside to take the project to completion (300k?). The real trouble we are having is making a FINAL decision as to what we want to build. Classic analysis paralysis. We have dreamed about this for so long...it's somehow hard to make the transition from DREAMING to DOING.

The potential is there for something really special. This really is the biggest project of my post-FIRE life.

iris lily

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Re: Building a house?
« Reply #18 on: September 26, 2015, 03:40:08 PM »
It's not, in the long run, an ecologically positive action. New construction eats up so much resources

But I say that as a house hugger and proponent of renovating old houses. You can do a cosmetic rehab if you like and bring it "up,to date." That's easy, and not what I mean.

But if you want to spend your  money, do take on an old house and make it Eco friendly. In a complete renovation. We call them gut rehabs. Very expensive! But you will have the moral upper hand.

People here have been rebuilding shells for 40 years. ita always more expensive than building new.
« Last Edit: September 26, 2015, 03:46:35 PM by iris lily »