When the idea of building a new home makes its way into your head, it is easy to get trapped into a fantasy.
In the very beginning, you most likely have no real plan and you have no clue how much you can afford to spend, neither how this dream house could look like.
You just like the idea of getting yourself and your family a new place, a better place.
But you know that starting this kind of venture without a sound plan is a bad idea.
So here we come in your help with the plan...
Did you think about this?
The things to consider when you start entertaining the idea of building a new home can be classified into 5 categories:
- Affordability of the investment
- Affordability of the running costs
- Architectural & design issues
- Know-how and budgeting
- Project management
This should give you a sense of the number of details you might be overlooking at the moment.
To make it even more clear, let's dive into each category and see the individual issues that require your attention.
1. Affordability of the investment
The issues in this category need to be sorted out with your bank.
This is - REALLY - the first thing you should do if you are serious about building.
If you do not do this, you have zero clues on what you can afford to spend... and it would make no sense for you to waste time browsing around or, worse, making price inquiries.
- what's the maximum amount of money can you afford to spend on the entire project?
This is your hard limit and you cannot allow the project to go past it.
The total sum you spend (including the cost of the land, the entire house with furniture, some landscaping works) shall be less than this limit.
It is the sum of:
- your savings;
- the money you can raise by selling other properties or assets;
- the mortgage you can get from your bank.
- if you plan to buy your house kit from a manufacturer located in another country, will your bank approve that and provide the funds?
This is something you should assess as soon as possible.
It is pointless to embark on the journey of sourcing a house from a manufacturer in another country if your bank won't support you with that.
Save yourself some time and frustration and ask this upfront.
Sidenote: by doing this before contacting a manufacturer, you also avoid wasting their time.
When you mention you cleared this out with your bank already, I can assure you they are going to love you for that ;)
2. Affordability of the running costs
The first issue in this category can be sorted out with your bank.
The second one is more tricky and you'll need an engineer to help you with that.
- what's gonna be your monthly mortgage rate?
When you max out on your bank credit with your mortgage, what is the approximate sum you'll have to repay every month?
Can you really afford to pay this comfortably?
IMPORTANT: keep in mind the house has also other expenses. See the next point.
- what's gonna be your monthly cost for utilities and maintenance?
Your answer to this question will basically set the bar for the choice of materials of the house.
You can easily imagine a monthly sum you are comfortable to pay for utilities and maintenance.... the lower the better, right?
But keep in mind that in order to send less in utilities and maintenance you are gonna need to use better materials, better technical systems, better construction technology... and this will translate into higher investment costs.
Sidenote: going for nearly-zero bills is possible (and highly recommended) but it needs a great deal of commitment on the project and it needs you gain the necessary clarity on all its technical aspects.
IMPORTANT: in the end, what you really want is to minimize the sum of monthly mortgage rate + monthly utilities and maintenance bills.
Spend time thinking about this. Hire a consultant if necessary.
It will save you tons of money down the road.
3. Architectural & design issues
The issues in this category come immediately after the money issue.
They mainly provide an answer to the question "what kind of house can you build on your land?".
Sidenote: if you do not own a piece of land yet, then you have some additional homework to do and find one.
Before purchasing it, make sure you are able to answer the 3 questions below for that specific location.
- which are the maximum measures of the building you are allowed to build on your land?
In 99% of locations in urban areas, there are restrictions on what you can build on any specific piece of land.
You need to investigate this issue before you make any other move.
- is there any restriction on what the house should look like?
In most urban locations, there are restrictions on the exterior look of the houses.
This might affect aspects like:
- finishing materials;
- size and colors of the windows;
- roof shape and pitch;
- many other aspects...
- is there any restriction on the size of the rooms?
Restrictions may apply to the minimum size of each room in the house.
Make sure you check this before you call your project "ready for construction".
IMPORTANT: To answer these 3 questions, you need a local architect.
You could try to figure it our by yourself with several interactions with the planning office in your Municipality... but, in some locations, they won't even examine your project unless it is presented by a licensed architect.
So, for the sake of saving time and avoiding mistakes (which will cost you dearly later), hire a local architect and agree just for a revision of your preliminary design.
The aim is to equip you with a floor plan (+ side views) that is going to be approved by the authorities when you decide to start the project.
This limits the scope of works of the architect and it should be a good ground for saving a considerable amount of money on the architect's fee.
4. Know-how & budgeting
Here we start to go deeper into technical things... and again, money things.
Before you make the call to order the house kit (or any other service), you should make sure you get a pretty good idea of the overall cost of the entire project.
To do that, you need to write down all the cost items you can possibly imagine and put a price on them.
These questions can help you get your priorities straight:
- how well do you understand the object you are going to build?
If you don't understand "how the building works", then you might overlook a lot of aspects that need your attention.
Even if the manufacturer will assembly the house for you, you'll generally get an empty shell (albeit finished from the outside) and you are going to have to budget separately everything that goes inside.
If you are not sure how the different components work together, you might miss several cost items.
- do you know how to put together a sound construction budget?
This calls for some spreadsheet mastery.
Ideally, for each item in the project, you want to list separately its supply and the cost for its installation.
You should really get some good template and practice with it...
- how can you be sure you are not overlooking important components (or services) that should go into your budget?
This again is just a matter of understanding the object you are building.
Can you describe the entire building process and all the components that go inside the house?
If the answer is "NO", then you have some homework to do.
- how do you plan to close your know-how gap?
The quickest way to get this sorted out is to use a consultant who has proven experience in building with prefabs and who can review your budget + give you advice on how to minimize costs and make better choices.
In alternative, you can invest some time in learning these things yourself.
...but you need to have a plan, you can't just wing it cause it will cost you dearly.
Important: the outcome of budgeting is the total cost of the project.
In case the sum you get is higher than what you can afford (as explained above in section 1), then you need to downsize the house.
Most probably you can still build, but you have to cut something off.
Think about that.
5. Project management
This is the last thing you need to worry about... but if your project gets started, someone has eventually to manage it and that someone needs to know what he's doing.
- how well do you know the process of building with wood and prefabs?
Whether you do the project managing yourself or you outsource it to a professional, you need to know something about building best practices.
If you are totally ignorant, it would be impossible for you to check on the work of your project manager.
Once more, it all comes down to getting the relevant knowledge.
- do you have the time to do it yourself?
If your job allows you a flexible time schedule, maybe you can take of project management yourself and save a good sum of money.
Anyway, if you take that decision, you accept the risk that comes with being 100% in charge of everything.
It is doable, but it ain't easy.
If you go down this path, you need to invest upfront in upping your know-how about every aspect of the construction process.
- do you have the "people skills" to do it yourself?
Project management requires to deal with contractors and workers... in other words, people.
If you have trouble making your point come across or you are kind of "shy", maybe it is not a good idea to put yourself in charge of project management.
Your project manager has to be charismatic and firm on his decisions.
IMPORTANT: you can't expect a manufacturer or a general contractor to do the project management for you. They have their best interest at heart, not yours.
You need to have your own project manager.
Either you do that or you outsource it to someone competent.
Building a house from scratch is a real quest.
It will take lots of your time and it will put your decision-making skills to the test.
Building a house, be it prefab or not, is an endeavor for people who can stomach dealing with details, planning, risks... and other people.
Building a new house requires YOU to be in charge of all decisions... and for this to happen, you need to acquire a certain degree of specific knowledge.
We are here to help you and guide you in your journey (we are working on courses to give you all the information you need).
Other than that, our suggestion here is simple:
do not take risks you can't handle.
If you do not have time to go deep into the issues described above,
do yourself a favor and just buy a ready-made house or an apartment.
If you want more information or you have any other kind of question, feel free to reach out to us.