What is the Right Amount of Money to spend on my house?

[John Raabe]

Here is a new article on the important issue of home building and costs...

http://www.countryplans.com/rightcost.html

Let me know what you think.

[glenn kangiser]

Good thought provoking article, John.

... of course that is from someone who could probably live in a hole in the ground...

It is just a bit of a hobby with me here to see how much I can make or recycle or have given to me to build with.  Lots of friends know what I am doing and constantly donate useful things to add to the house.  That helps to keep costs down.

[Jens]

In answer to the thread title, as much as it takes + as much as you can afford without going broke - however much you can actually spend = somewhere around half of what it will cost.

[phalynx]

Well, how much should it cost depends on who it is.....  Glenn how much is a new shovel?   

[rwanders]

John, I think you got it precisely right when you wrote about "expectations"----just what do we expect from our house?  If we expect to impress our neighbors, friends and relatives we may need to pay for a McMansion or even more. If we expect the warm feeling of security from one we can pay for and still sleep soundly it will probably not impress many others. I have tried both methods and found the latter much more satisfying. That lesson is one I have tried hard to pass on to my sons-----try to always live beneath your means----it will help fill your life with tranquility.

[MountainDon]

Well put, rw

[glenn kangiser]

Well, how much should it cost depends on who it is.....  Glenn how much is a new shovel?  

A guy felt sorry for me so sold me about 10 of them - used of course for about $2 each.  Always wear old cloths with holes in them when you go to yard sales.

[glenn kangiser]

John, I think you got it precisely right when you wrote about "expectations"----just what do we expect from our house?  If we expect to impress our neighbors, friends and relatives we may need to pay for a McMansion or even more. If we expect the warm feeling of security from one we can pay for and still sleep soundly it will probably not impress many others. I have tried both methods and found the latter much more satisfying. That lesson is one I have tried hard to pass on to my sons-----try to always live beneath your means----it will help fill your life with tranquility.

Dig a hole in the ground and move into it... you'll impress everyone for relatively little money...

[phalynx]

HOLEy MOLEy Glenn...  the guy with holes in his jeans to buy tools to dig holes in the ground.  This story is completely full of holes.

On another note, John's article is right on.  The cost of your house directly relates to your attachment to the "Jones's".....

[ScottA]

I got this theory about pride in ownership. It may or may not have anything to do with the Jones. The level depends entirely on the individual but there is a level of quality finish whatever you want to call it that each person sees as special and not just ordinary. The house need not be big to achieve this level it's more in the way it looks and feels. Also I've noticed, around here at least that is your place is well kept people are less likely to mess with you and your stuff. It kinda says the owner of this place might care about it enough to defend it.

[considerations]

"Also I've noticed, around here at least that is your place is well kept people are less likely to mess with you and your stuff. It kinda says the owner of this place might care about it enough to defend it."

The county mounties out here call that the broken window syndrome.

[Bishopknight]

Nice article John,

When I tell people my house will cost under $30,000, they're amazed. The best part is that I designed it, built it, its passive solar & energy efficient, I used the best quality materials, its brand new, I have intimate knowledge of its construction and its just me.   

[muldoon]

I agree that what you spend is directly proportional to what is important to you in a finished product.  That being said, I think it is important to have realistic expectations before you build.  In fact, that also includes the fact that many people simply can not afford to build their own house. 

A large percentage of people do not buy houses, they seek a mortgage for them.  And then they dont put down the 20%, they seek out the 5% or even no money down loans, or take out a second or third loan to pay the upfront costs.  The fact is they have nothing saved and nothing to work with.  For that huge amount of people, building their own house is a tough option.

Few banks are willing to extend a loan to someone who will not use licesnsed and bonded contractors.  I understand the position to some extent, it is quite risky.  Risky that the structure would meet code, would be structurally sound, that would be re-sellable, risky that an electrical fire would decimate the place, and so on.  As the house is the collateral for the loan they need some assurance that the house will be standing - and indeed sellable for the life of the loan.  That's why very few if any banks will do homeowner construction loans.

So if your out of pocket, what is a reasonable amount of money to have saved up before you start?  I dont know, that depends on what you want out of it again.  However, if the cost of basic framing is daunting, or if your looking to scrimp on day one then you likely are not funded enough to get the job accomplished.  Having some realistic expectations goes a long way to being successful.  To some extent it concerns me to see people try it before they have thought it through. 

30k for a house is a fantastic deal.  But if you only have 3k your no closer to it than if it was 300k. 

[ScottA]

I would say that once you figure out what you are going to build you go in stages. How much you will spend overall would depend on how much you can put in over the expected build time plus whatever you start out with.

For starters you'll need to buy some land. From there the next thing would be figure out where your water power and septic are going to come from. If those things are a sure thing then you can wait and do them later if your area allows it. Next build your foundation. Save enough cash so you can fast track to the dried in stage before you start framing. From there you can take as much time as you need to finish the house.

[soomb]

I would say that once you figure out what you are going to build you go in stages. How much you will spend overall would depend on how much you can put in over the expected build time plus whatever you start out with.

For starters you'll need to buy some land. From there the next thing would be figure out where your water power and septic are going to come from. If those things are a sure thing then you can wait and do them later if your area allows it. Next build your foundation. Save enough cash so you can fast track to the dried in stage before you start framing. From there you can take as much time as you need to finish the house.

I like this progression.  In fact, if you look at Glenn's tag line ".. general to the specific", and BK also posted about focusing on the parts and the whole will not overwhelm you.  You have to being willing to side step the Jones' and to a certain extent US culture that states I can not do this, now, this year etc, and so I take no action.  When if it took a few years to get land and few years to get structure and so on, you would still have all your years left to enjoy it after the persistence of a portion of time that may become a decade, but what does it matter if at the end you have several decades to enjoy it.  A fair trade in my eyes.  (stepping off soap box)

[Jens]

Nice one Soomb. 

I totaled up the costs for the 16x28 cottage to be built on the foundation of our outbuilding.  Not including electrical, plumbing, siding, trim (int and ext), cabinets or tile, it came to roughly $5300.  That did include the framing, windows, doors, metal roofing, drywall, insulation, and some other things too I'm sure, just can't remember.  The foundation is already there, but done post and pier it wouldn't be too expensive.  Oh, and there are no finished floors in that amount either, was just thinking about putting poly on the sub floor.  Now, the way I do things, the stuff that wasn't included would be somewhere in the neighborhood of $5k max.  Yes it is a small place, but no smaller really than some of the places here.  I think the Victoria's Cottage is somewhere around that size.  With well, septic, and electric hookup, that puts it somewhere in the neighborhood (as far as the amounts I've been quoted before) of $25000. 

Even if subs were hired, their labor, if done modestly, would be about $30k max in my area.  So adding $10k for land to that, it comes to about $65k.  That is still pretty darned cheap for most areas, and a bank would finance, unless it is too small for them to even think about.

[Okie_Bob]

I'm in agreement with Scott on this and that is exactly how I built my house. I didn't borrow anything but, it did take me over 5 years once I started the actual constructions. That was some four years after I bought the land which had a little, old, cabin already on it.
But, by building in stages and waiting on the next stage till I could afford to pay cash, I ended up free and clear when it was finished.

We also probably built a more expensive house than most on here but, we did that with the thought that if we have to sell, we will make a very nice profit on our investment. I am 65 years old and plan to move into the new house permanently and retire in the near future (would have already done so had it not been for the major downturn in the economy). I lost a little over half of my savings in the market crash the past 4 months.

The idea is that should I have to move back to a place closer to medical help or something like that, my wife can sell the house and have enough to live on the rest of her life plus pay for my upkeep if necessare. (another whole discussion there) We could have build a lot smaller and a lot less expensive but, this is an investment to us and I believe it is worth it. And so far, the market for houses here on the lake is holding up and sales are still good too. Hopefully, we haven't made a mistake.

My whole thing is....NEVER BORROW ANYTHING FOR ANYTHING...NEVER..if you can't pay cash, wait till you can and in the meantime, you probably will decide you don't need it anyway. And it's amazing how your spending habits change when you pull out greenbacks to pay for everything. Using plastic, it's easy, you can put off paying for another day..with cash, it's right now and you find you can get by with out so much. (Again, thank you Dave Ramsey.)

Okie Bob