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Budget

1. How do I know if I am buying the right block of land that I can afford to build on?

There are a number of tasks to be looked at when buying a block of land. Many things can effect the cost of construction, ie. soil types, slope on the lot, drainage, piering, and much much more. Check out the article on buying a block of land.

Before you buy the block decide if you are going to Owner Build or not. Additionally, decide if you are going to Owner Build a Kit Home. Prior to buying a block obtain the right advice from your elected service provider like UBuild Homes.

In costing out the total of a block of land plus the cost of building a home you have to consider the following:

1. The actual cost of the land.
2. All legal costs and stamp duties, etc.
3. The total cost of construction of a house on your land.
4. Holding costs and rental costs during the period of purchase and construction.

To give you insight into how much this will cost you really need to sit down with an expert. It can range depending on: Where you live, what access to project home builders you have, how much slope is on the block, and what cost challenges the block presents.

2. How big a home can I afford?

This question forms a very critical area of the building process. You will need to do many hours of research and estimating to complete this task accurately. Accuracy is essential to your building project as councils and lending institutions know only too well the dangers of entering into a building project that is under funded.

A kit home can alleviate some of the guesswork because this allows you to get a bulk purchase on a large amount of materials. But there is still much to be done after the kit home purchase to identify the true cost of building a house.

So unless you are an experienced expert in residential construction, you are more than likely not going to get this activity right. Even some licensed builders still get it wrong! Unfortunately that is why they often go broke. There are so many hidden costs that the inexperienced operator will miss. For example, ‘getting the house out of the ground’ is often the most difficult part of construction and it is also the area where many builders, in particular, Owner Builders lose considerable money. For instance most Owner Builders do not have a contingency allowance for unforeseen problems such as rock, unstable soil (soft soil where an old stump may have come out of the ground) and many other variables. (Experienced Licensed Builders normally have a rock clause in their contracts so they are protected.)

Now back to the question, how big a home can I afford? The answer is: you won’t know until the estimating is complete. However, a well organized professional building advisory firm can assist in this area without you having to do all the running around.

It is unwise to have plans drawn before you have the estimating done. This may sound like a catch 22 situation because unless you have a plan you won’t be able to access accurate estimating. But if you deal with an experienced organization they will eliminate the need to draw a plan to see how big a home you could build, as they have the experience to know from a set budget and design type how much a square metre your proposed home will cost. 

3. Is there a system available to have my home fully priced out before I start as an owner builder?

Yes there is. For instance once you have a plan, UBuild Homes will allow you to take advantage of the following services without committing to a contract:

  • Site inspection with you on site to gather all critical information to prepare site costs.
  • Completion of a specification guide indicating all required finishes and inclusions for the home, this is a 21 page guide filled in with your UBuild Representative.
  • Preparation of a comprehensive budget based on all site information and specified inclusions.

Once all of the above has been carried out a tender offer including the cost of the kit home package and a budget for all other buildin costs is prepared ready to go to a contract if you choose to do so. These services have a fee attached to them. However if you do proceed into a contract this fee is waived. So this is one way of getting a very accurate cost assessment prior to launching in.

4. What finishes can I afford in my home?

Once again you would have to go through the above exercise to find out or engage a professional to advise you. It is not difficult to add tens of thousands of dollars to a project with inclusions and types of finishes, for instance the difference between a roll form laminate bench top compared to Granite can be $3,000 to $5,000 difference pending the size of the kitchen.

Many Owner Builders come unstuck during construction because they do not have a system to work to, such as a budget vs. actual set of records. The consequences of this is usually an unfinished house, unimpressed council, an unhappy bank manager and worst of all, a very unhappy partner.

5. How much will my site costs be?

This all hinges on several factors. You will need to obtain a site contour plan or take the levels yourself. A contour plan will indicate the degree of slope on the block.

You will also need to determine the soil classification (soil bearing capacity). Once a soil test has been carried out the engineer can design the footings/slab, etc. If excavation is required you may strike rock, and there are so many different types of rock and degrees of difficulty in excavating this rock out. So this can also have an effect on your site costs. This is why we suggest having a good contingency allowance.

The following list of activities can have an effect on site costs:

  • Set backs
  • Slope
  • Soil types
  • Services into the house pad location from their existing termination point
  • Drainage
  • Retaining walls
  • Bored piers (where applicable)

So as you can see, getting a house ‘out of the ground’ to budget can only be done (without hitting rock) by using a good, accurate system and having the knowledge to know the pitfalls.

6. I’m on a tight budget. I need to get the biggest house I can for the cheapest price. Can you help?

OK, now here is the honest answer to that: The cheapest house you can build (including Owner Building) is through the large contract based project home builders. I’m sorry to say that even as an Owner Builder using a good Kit Home Company you will not get a cheaper outcome. So if cheap is what you want then you need to go to the nearest display village and drive a hard bargain with one of the large volume builders.

Now they may not want your business. Because of where you live, because of the type of block you have or because of the conditions you want to impose on them. If that is the case then you have a viable opportunity to Owner Build a Kit Home. But the cost of doing so could still be on a par with the project home builder depending on what type of home and what challenges you have with your block. Remember, if the project home company doesn’t want your business, that means it’s too much hassle for them and they work on very tight margins.

If you do get them to build your home don’t expect it to be a palace. Remember, you have set the expectations by trying to get the cheapest outcome possible. There is absolutely nothing wrong with that, but adjust your expectations accordingly.