When building a custom home, budgeting is paramount. Given that the project is a significant investment, you need to ensure that every dollar counts.
The following are four common financial pitfalls to avoid during the building process for maximum returns on your investment;
Overextending Your Mortgage
Building the home of your dreams can be an expensive investment. Often, owners need to part with hundreds of thousands of dollars. While this is all fine, borrowing your max is never a good idea. A big mortgage can stretch your budget thin and leave you with little or no money for potential contingencies. So, as much as you want that fantastic home, keep your future financial health in mind. Experts recommend that your housing costs, including interests and other fees, not exceed 28% of your total income.
Forgetting About Resale Value
It doesn’t matter if you never envisage selling the home. When you finally pass it over to your children, they may have different plans – they may be open to selling. Additionally, your current plans may not stand 15 years from now. Perhaps you’re in a good financial position now and that’s why you’re focused on building a home to spend many years in. What if the financial situation changes? What if your lifestyle changes? You can’t predict the future, so you can’t know what will happen. For this reason, it’s critical that you build with return on investment and resale valued features in mind – just in case. Add personality, but in less permanent ways.
Building Too Big
It’s also important to resist the temptation to build a house too big for your needs. Big often seems trendy and might even seem like a good investment with resale value in mind. However, it’s not always the right decision. Consider how your family plans to use each space, and which spaces you actually need when planning the footprint for your home. More square footage will cost more money, but sometimes it does make sense. For instance, if you really need that home office or your lifestyle will be enhanced with the home gym, adding them will likely be of benefit. However, it’s important to weigh wants versus needs when considering how large of a home you actually end up with.
Going with the Lowest Bidder
You likely won’t save much. In fact, there’s a good chance the project will turn out to be even more expensive. Why? Because those low bids often come with a catch. Perhaps they’re charging a low price because they know that their services aren’t top quality. Maybe, they’re offering the low price because they’re going to use cheap construction materials. Or, perhaps there are hidden costs somewhere. This doesn’t mean you should pick the most expensive bidder; it just means you need to do your homework and find the right builder at the right price.
We Can Help
Need help budgeting for your custom built home? You don’t have to do it alone. Alair Homes is here to help. Contact us to discuss your project and schedule a complimentary, no obligation consultation.