What does it cost to design and build a remodel, addition, or custom home?
If you’re considering a remodel, addition or custom home, cost is probably front and center in your mind. If you’ve received a quote, you’re likely overwhelmed with thoughts and questions.
Here’s what you may be thinking in terms of effort and budget.
“My friend told me that projects can be built for $200 per square foot.”
For years, people have heard a general rule of thumb that houses can be built for $200 per square foot. If a 5000-square-foot house costs $1,000,000 to build that’s $200 per square foot, then a 500 square-foot guest house should cost $100,000. After all, 500 square feet x $200 per foot = $100,000, right?
The answer is sometimes but very very rarely. For the $200 per square foot number to be accurate, the project has to be large enough make it work. It’s all about economy of scale. Generally, the bigger the house is, the less expensive it is per square foot. That million dollar budget we have in this scenario was four floors which is a very efficient way to build – and a cheaper way to create square footate. The smaller a house is, the more expensive it is per square foot. Some small kitchen projects are $1,000 per square foot.
There’s more: When a builder gives a “per square foot” cost, they’re usually not factoring in design, engineering or permitting costs (which make up over 20% of the project). Location and quality may also be left out of the equation. The economy is another big factor. As home prices continue to increase around the country, the cost of building increases as well.
“I just want a simple house.”
That’s great. But even a simple house is complex.
All projects, no matter the size, are built using the same process:
Program Development: Figure out what you can build, including permit requirements.
Schematic Design: Work with a designer to draw up the size, look, and shape. Submit the design to the planning department to get planning permits.
Design Development: Determine all the “finishes,” which include appliances, faucets and fixtures, materials, tile, paint colors, landscaping, utilities etc.
Construction Documents: Have the designer draw up construction documents for a building permit. This often requires two or three engineers with different areas of expertise.
Bids and Construction: Work with builders to get bids, select one, sign a construction agreement, prepare the land, pour a foundation, frame the house, enclose the house, hook up water/electric/sewer, and install finishes.
The steps are the same for any structure, whether it’s 500 square feet or 5000 square feet. Complexity may have less to do with cost than you think.
“I’m thinking about a prefab house because it’s cheaper and easier.”
This depends on your site, existing home and personal goals.
Buying a home that is built somewhere else can reduce design fees, but it still needs to meet codes and be permitted. Then there’s shipping, which means even more expenses. There’s also the foundation and utility hook-ups, which will cost just as much as they would for a home built on site.
By the time all of this adds up, your cost in time and money will almost always be similar to building a custom house.
If you’re interested in prefab, it might be worth having a look. But if you want something tailored to your needs and location, custom construction is the way to go.
“I’ll do it myself” or “My uncle is a contractor and can build it for me for cheap.”
Doing it yourself or working with friends or family is a great way to save money, but it’s not for everyone.
Building a home yourself will take you a long time, and you will make mistakes, but it can be an amazing experience. One of our favorite projects is this Normandy-style stone house in Upstate NY. The walls on this thing are two-foot thick stone!
The owner spent seven years getting to this point. It’s a $1,000,000 home that will cost less than half that to build, and it is a work of art. But we’re not counting this husband/wife team’s 10,000 hours of labor in the costs.
If you have the time and want to try a DIY project, it’s important to know that construction is a LOT of work. And if you have a relative who is skilled, experienced and willing to work for free, go for it! However, it’s important to be mindful of the relationship. We’ve seen siblings stop talking to each other when the builder in the family is too slow or too expensive.
Not up for it? Another way to save money is to manage all the subs (electrician, foundation, framer, plumber, drywaller etc.) yourself. But be aware that the most skilled subs prefer not to work for inexperienced clients. That’s why owner-builders often get stuck with second-tier subs. That can lead to big problems.
“A builder I know says he can build for $X.”
Be very careful with this scenario. Builders often leave things out in their initial estimates. Permits alone can cost $15,000 to $100,000 or more. Designers and engineers are often 15% of the project’s total cost.
When you get a bid from a builder, make sure they give you a price for every line item that will go into the house from permitting to design to construction to cleanup.
Ready to talk custom construction with a real professional? Here’s how New Avenue can help.
If you’re looking for true professionals and advice that comes from years of real-world experience, we’re here for you. Here are some questions you may have about building with New Avenue on your side.
“What can New Avenue tell me about the cost of building?”
After working with many designers and builders on over 500 projects, we have a very unique data set that shows exactly what every component of building a house costs.
For example, we can easily pull up a project that we managed and show that a foundation for a home in a landslide zone with 12 piers going down 10′ each costs $40,000. Or we can pull up a sheet that shows a house with $7,000 allocated to Hardieboard siding and the fair change order to change that to cedar shingles (totally a good idea).
When you’re ready to move forward with the consultation and proposal process, our partner builders review a 200+ line spec sheet with every single part of building a house. You won’t hear things like, “We didn’t talk about having a sewer line for the house. That will be an extra $5,000.” Our quote includes it all.
“Can you give me a sample breakdown of costs to build my project?”
This is our specialty. Let’s say you wanted to design and build a 1000-square-foot project outside of any of the 50 largest cities in the country. We would start by showing you what a similar project cost. (This would include every detail.) Then we’d adapt that budget to meet your needs.
Here is a shortened example of a smaller project such as an extensive kitchen remodel, or master bed/master bath addition:
– Initial Assessment and Permit Research: $600
– Design Fees: $8,520
– Construction Documents: $7,830
– Engineering: $4,500
– City Fees: $6,535
– Survey: $3,335
– Construction Administration: $4,930
Total Design and Permit Costs: $36,250
– Demolition: $3,000
– Excavation/site work: $10,295
– Foundation: $17,360
– Framing & Carpentry: $34,360
– Insulation & Moisture Protection: $5,000
– Windows & Doors: $9,400
– Finishes: $20,000
– Plumbing: $20,000
– Heating and Ventilation: $4,900
– Electrical: $7,700
– Contractor Overhead and Profit: $21,900
Total Construction: $153,915
Total Project Cost: $190,165
We can show you this for $100,000 projects, $2,000,000 homes and everything in between.
“Do your clients ever get a good return on investment?”
Absolutely. The financial return is often excellent. More importantly, the real return is usually so much more valuable than any cash you might collect in a future sale. A creative space, family room, home office, guest room or anything that increases the value you and your family get out of your home can make the investment well worth it.
With the help of our designers, many of our clients create something that is worth more than the cost of construction. So their return is crystal clear.
Other clients find that their returns are not so straightforward but are definitely there. For example, you might spend $200,000 building a guest house that increases your mortgage payment by $1,200 per month. There’s a lot you can do with that:
Offer the guest house to a child or parent who would be living somewhere else at a much greater expense.
Use it as a home office and create a new business, working from home.
Move into your guest house while renting out your main house, bringing in a large amount of rental income.
Yes, spending the money to build or remodel can result in a positive return on investment.
Got all that? We’ve written a ton of information here because there’s so much to consider when it comes to cost. New Avenue is here to help you with your specific project.
No matter what you want to build, the New Avenue platform is the easiest way to get organized, get bids, hire a team and manage your project.
Have more questions? We are available to discuss your goals & ideas. There’s no fee or commitment. To request a time for a call, just click below and tell us when to call.
