The decision to construct rather than purchase a house is an easy part. Working with your builder to select blueprints, finishes, and an overall budget might push you to your limits, but you’ll get precisely what you want in the end. Of course, what makes sense on paper doesn’t necessarily translate to reality when it comes to breaking ground. Even the best-laid new build budget can be derailed by unanticipated setbacks, abrupt adjustments, and market volatility.
Start preparing before you spend a cent if keeping to your new construction budget is a worry. With a little clever planning and preparation, you’ll be building a dream home without going bankrupt. Here’s how to do it.
Begin by classifying
Simply neglecting to plan is one of the simplest ways to waste a budget. While your contractor can help you figure out the statistics, educating yourself will help you stay in the ballpark. Begin by categorizing the most significant expenditures, such as land, exterior, and interior costs. Then, for each heading, create a spreadsheet to keep track of the many subcategories. This can assist you in identifying prices that may have slipped your mind (don’t forget the cost of relocating!) as well as determining the bulk pricing for each main category.
Make a rainy-day fund
Never before in the history of construction has a project been finished exactly as planned and for exactly the budgeted money. Speed bumps in the road slow you down and might be costly. Time is money, whether it’s due to an unanticipated land issue, terrible weather, or a change to some of your initial finishes. Always preserve reserve money for situations that you couldn’t prepare for. A decent rule of thumb is to double the budget your contractor offers you by 1.5 and preserve the extra as a safety net for the duration of the project. Getting a new construction loan to make this happen is relatively straightforward thanks to banks, people, or whichever source of funding you opt for. The actual job begins after that.
Keep a “functionality first” approach in mind when deciding where to spend your money. Investing in a high-quality water heater, for example, may not seem thrilling at first, but it’s an investment in your home’s future. Keep in mind that while trends come and go, the quality of your walls will always be important. You can always repaint your living room or change the cabinet hardware, but a cheap furnace will cost you thousands of dollars in maintenance over the years.