Author Topic: Building small home vs extra costs in a crazy market  (Read 540 times)

wealthviahealth

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Building small home vs extra costs in a crazy market
« on: September 07, 2020, 06:18:47 AM »
I have been looking to buy my first property and am living in an area where homes are relatively affordable, however due to the demand, they are going for far above the asking price. After speaking with many other first time buyers and learning about all of the extra expenses they hadn’t anticipated, I am back to thinking that buying some land that I love ( very affordable in my area, relative to cost of homes in general) and building a modest cabin style home to fit the woods/lake aesthetic.
Curious to know if others in a similar position have favored the build route considering the market insanity for homes in their area. I have read enough to learn that going the build route can often result in all sorts of extra costs that pile up, however I am hoping that taking the modest, “ zen-den” approach will help mitigate this and keep me out of the current climate where folks are paying $40-80k above asking price on homes.

GreenEggs

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Re: Building small home vs extra costs in a crazy market
« Reply #1 on: September 07, 2020, 06:59:56 AM »
Depending on what building restrictions there are you can build a simple home quite inexpensively.  I have an old Time/Life diy cabin building book that has a number of simple homes that you can build.  Of course if you plan to do the construction yourself you will need the skills & tools, but it's pretty simple to learn.  YouTube is great for learning new skills.


Also, I've found a few simple & affordable home designs on YouTube.  One is called "Barndominiums", which are simple open design covered with metal siding.  They can be configured however you like inside. 


If you decided to build something small, choose a design that will be easy to enlarge later.  Consider which direction the ridge runs, leave some open ground towards the side(s) where you might want to add a wing later.  For instance pay attention to things that you can't move, like property lines, large boulders or hillsides, or water (lakes, creeks, etc.)


If it's rural land you'll need to figure out where to place the septic system & drill a well.  So, do that before choosing the exact home site. 


If you're planning to build a workshop or garage too, it might be a good idea to build that before the main house.  That will give you a simpler & less important building to learn on and also a place to store tools & building materials while you build the house.  And you could sleep in it some in a pinch. 
Or you could attach the home onto the shop/garage, so it's all one building when you finish. 


Building a home can be a fun & rewarding process. 

Jon Bon

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Re: Building small home vs extra costs in a crazy market
« Reply #2 on: September 07, 2020, 09:42:53 AM »
yes YOU can build a RUSTIC CABIN in the woods and save a few bucks.

You however cannot pay a contractor to build a house in the wood and expect to come out ahead.

There is a reason why modern neighborhoods are built the way they are, they achieve economies of scale that are passed along to the end buyer.

The cost of materials right now is also insane. Sorry everything is expensive. Either pay the price or wait it out.

Good luck.


GreenEggs

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Re: Building small home vs extra costs in a crazy market
« Reply #3 on: September 07, 2020, 12:58:22 PM »
yes YOU can build a RUSTIC CABIN in the woods and save a few bucks.

You however cannot pay a contractor to build a house in the wood and expect to come out ahead.

There is a reason why modern neighborhoods are built the way they are, they achieve economies of scale that are passed along to the end buyer.

The cost of materials right now is also insane. Sorry everything is expensive. Either pay the price or wait it out.

Good luck.


Nobody is passing along savings to the end buyers.  Developers, builders, and realtors squeeze every penny of profit from each home that they can squeeze into a neighborhood.  That's not "economy of scale", that's  called "packaged and marketed".

StashingAway

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Re: Building small home vs extra costs in a crazy market
« Reply #4 on: September 07, 2020, 01:26:24 PM »
yes YOU can build a RUSTIC CABIN in the woods and save a few bucks.

You however cannot pay a contractor to build a house in the wood and expect to come out ahead.

There is a reason why modern neighborhoods are built the way they are, they achieve economies of scale that are passed along to the end buyer.

The cost of materials right now is also insane. Sorry everything is expensive. Either pay the price or wait it out.

Good luck.


Nobody is passing along savings to the end buyers.  Developers, builders, and realtors squeeze every penny of profit from each home that they can squeeze into a neighborhood.  That's not "economy of scale", that's  called "packaged and marketed".

A little of this, little of that. No individual could construct a contractor-grade house for as cheap as you could buy one, unless  doing a lot of the labor themselves. It is economies of scale in that sense. It's been that way for a long time in most areas of North America. Building code and all of that jazz just don't leave much wiggle room to try to cut costs. The margins that developers are scooping up are all but negated by the efficiencies and bulk product that they move.

A person could certainly sacrifice a lot of house and build something cheaper than you could buy. See the "tiny house" movement, or building off grid with fewer building codes (perhaps using an alternative building method). And a person could tailor their home to their needs to a more expensive custom home, and even could save money in the long run building ultra-efficient house. May get less square footage but a much higher quality house than you could from a developer. But contracting out the build your own house for the sole purpose of saving money is almost never the cheaper option.

waltworks

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Re: Building small home vs extra costs in a crazy market
« Reply #5 on: September 07, 2020, 05:30:36 PM »
It's easy to think about why StashingAway is correct here - my brother is a GC who does small/custom jobs and here's the process:

-Bid out 10 different jobs. Only get 1. You're going to pay yourself for your time, though, so all that bidding work is going to end up being part of the price of the job you got one way or another.

-Try to schedule your subs to show up at the right times/in the right order. Sometimes this works, usually it doesn't. Time is money, and nobody can start framing until the foundation is poured.

-If you have big equipment, trailer it to the jobsite and leave it there. If not, go rent it from Sunbelt. Sometimes they'll deliver it, sometimes not. More $$$.

-Try to schedule inspections to work with your subs, try to get friendly inspectors. Sometimes this works out, sometimes not. If you fail for one tiny problem, gotta get that sub back to fix... could be a while, and you'll pay to have them come back out.

If you're building spec houses, different story. You aren't spending your time bidding stuff out or walking around in some homeowner's backyard talking about their new sunroom. You own, or long term rent your big gear. No schlepping back and forth. You dig a foundation every day and keep the excavator busy. You employ the concrete guys, framers, plumbers, painters, etc directly and they only work on your jobs, so you can schedule them the way you want. City inspectors know the project and your guys know the inspectors and things tend to go smoothly. You can get a dozen 4-way inspections done in a few hours in one morning and have your guys standing by to make fixes immediately if needed, not 3 weeks from now.

I mean, it's WAY more efficient. There's just no way around it. Anyone who is even vaguely familiar with construction knows this.

I'm not saying that spec homes are inherently better or anything. But they're cheap vs custom to build for a reason.

-W

Jon Bon

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Re: Building small home vs extra costs in a crazy market
« Reply #6 on: September 07, 2020, 06:42:12 PM »
It's easy to think about why StashingAway is correct here - my brother is a GC who does small/custom jobs and here's the process:

-Bid out 10 different jobs. Only get 1. You're going to pay yourself for your time, though, so all that bidding work is going to end up being part of the price of the job you got one way or another.

-Try to schedule your subs to show up at the right times/in the right order. Sometimes this works, usually it doesn't. Time is money, and nobody can start framing until the foundation is poured.

-If you have big equipment, trailer it to the jobsite and leave it there. If not, go rent it from Sunbelt. Sometimes they'll deliver it, sometimes not. More $$$.

-Try to schedule inspections to work with your subs, try to get friendly inspectors. Sometimes this works out, sometimes not. If you fail for one tiny problem, gotta get that sub back to fix... could be a while, and you'll pay to have them come back out.

If you're building spec houses, different story. You aren't spending your time bidding stuff out or walking around in some homeowner's backyard talking about their new sunroom. You own, or long term rent your big gear. No schlepping back and forth. You dig a foundation every day and keep the excavator busy. You employ the concrete guys, framers, plumbers, painters, etc directly and they only work on your jobs, so you can schedule them the way you want. City inspectors know the project and your guys know the inspectors and things tend to go smoothly. You can get a dozen 4-way inspections done in a few hours in one morning and have your guys standing by to make fixes immediately if needed, not 3 weeks from now.

I mean, it's WAY more efficient. There's just no way around it. Anyone who is even vaguely familiar with construction knows this.

I'm not saying that spec homes are inherently better or anything. But they're cheap vs custom to build for a reason.

-W

Piling on....

Gotta find an architect to draw your custom plans.
City rejects your plans 3 times because they can.
Site Issues
Getting utilities to your cabin costs 10x as much as the electric company originally guesstimated.
Inspector does not like the look of the grade, requires more foundation/grading/concrete/retaining wall etc.
Site issues
Your remote site has been visited by some locals who have borrowed some material and equipment.
Did I mention site issues?

Building a house is hard man. There is lots of stuff that Walt and I have mention that a mass produced does for you. It gets you a somewhat basic house that might look exactly like your neighbors but its a hell of a value versus DIY.  Watch that grand designs show and see all the crazy crap that happens to them on that show.


Fishindude

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Re: Building small home vs extra costs in a crazy market
« Reply #7 on: September 08, 2020, 07:26:03 AM »
It's definitely doable and you can save a lot of money.
I've got a self taught handyman buddy that has built two complete homes by himself and remodeled a couple others.
It's not easy and not for everyone, but it's definitely doable and very rewarding.

The key to an economical house is to keep things moderately sized and simple.
Most of the new homes being built by builders and developers tend to be very large square footage and have things you could live without.

I hired a local contractor and built a very nice cabin that has pretty much everything you need, 1,400 SF living quarters two bedroom + 500 SF garage for right at $100k, everything included except the real estate purchase.   Everyone I've taken there rants about how nice it is and how they could easily live in something like it.