Has anyone ever built their own home?

kelseyhh

So long story short, my DH found a piece of land for sale and really wants to buy it to eventually build a house on. The land is pretty expensive but is in a prime spot. This has spurred a lot of discussions; one being how much it costs to build a house.

My DH thinks that it would cost about half of what the house would be worth (Ex: $150,000 for a $300,000 home). That doesn't really sound right to me.

Have any of you ever built your own home? What was the cost to build vs what the home is now worth?

hbrockman01

I built in a neighborhood (on a lot the builder had) and the land and build of the house was all finanaced in my mortgage at $150k and 4yrs later my value is 185k. Not sure if that's what you are looking for, but that's my input!

Oohgurl

I have built in a subdivison so our cost was the value of the home that you would buy already built if that makes sense. I can't really see saving that amount of money unless you were physically building the house yourself. 

Here is the problem. You would have to rely on a private builder instead of a corporate builder like Pulte, etc. With private builders, you are taking a LOT of chances in my opinion. Warranties would be worthless in my opinion because in say 8 years if your basement wall caves in the builder would still have to be in business to honor the warranty and many of them are not or they file bankruptcy. 

I know several people that have had lots of problems with private builders. Major builders like Pulte are no picnic either but for the most part you can rely on them being around in the future. Most of the time larger builders will only build in their subdivisions that they own.  

memcgee1

We've looked into doing this recently, and the cost is usually based off of the square footage of the house you're building.  It can vary throughout different parts of the country, but in my area, it costs roughly $120-150/square foot (doesn't include the cost of the lot) to have a builder build a house for you.  If you were to act as your own general contractor and do most of the work yourself/get contractor (i.e., plumbing, electrical, etc.) bids yourself, you would save yourself about 30-40% of what it would cost to have a builder do all of the work.  At least that's what the cost estimates are where I live. 

Karicomo

Oohgurl said:

I have built in a subdivison so our cost was the value of the home that you would buy already built if that makes sense. I can't really see saving that amount of money unless you were physically building the house yourself. 

Here is the problem. You would have to rely on a private builder instead of a corporate builder like Pulte, etc. With private builders, you are taking a LOT of chances in my opinion. Warranties would be worthless in my opinion because in say 8 years if your basement wall caves in the builder would still have to be in business to honor the warranty and many of them are not or they file bankruptcy. 

I know several people that have had lots of problems with private builders. Major builders like Pulte are no picnic either but for the most part you can rely on them being around in the future. Most of the time larger builders will only build in their subdivisions that they own.  

I think this depends on what state you might live in because in our standard 10 year warranty, it is covered no matter if the builder goes out of business or not. We have a card that was filed with the govt with all the info. I actually thought it was a federal law, but maybe not.

I think you're talking about actually buildinf it yourself and not building it with a builder, if thats the case, you definitel can save close to half the costs. I have a couple friends that built their own houses minus foundation and they spent about half of what they were worth.

Blueyed228

The addition on my house cost almost $150k. That was adding a second level of 4 bedrooms and 2 bathrooms. My husband and his friends did a lot of the work themselves.

I think it depends on what you are looking for as far as size, and where you live/col will probably be a factor, but I think $150k for an entire house is a really low estimate. Probably too low. At least around here.

As far as increase in value, we renovated once a few years before the addition. It was a smaller renovation and it increased the value by a good amount. The addition took my house from a 3br 2 bathroom to a 5br 3 bathroom and almost doubled the square footage so it significantly increased the value of the house.

You should talk to a local Realtor about home values in the area you are looking at and builders about what square footage you are interested in. It will be hard to get a firm quote without plans from an architect, but they could give you a rough estimate.

emmy236

My husband works in this field so I can tell you at best what I know from him. You're husband isn't completely wrong or right. A lot depends on what kind of house you want, plans, etc. Example: if you pick a builder who has standard plans and if you do not deviate from those plans than you'll see the cost will be a lot less. Most builders charge anywhere from $200-500 just to change the plans. That doesn't count the cost of the change. Most people will have a few plan changes.

Second is materials. If you want top of the line, hard to install, labor intensive, or something he'll have to subcontract out that is more.

Generally the contract makes 80-100% profit. If the real cost to build your house is $100,000 you'll be charged $180,00-200,00. We are looking into this and I found plans from a big architect group which are $2,000 but it's a lay out we love. You can start at looking for builders that have a plan you love or find a plan then find a builder. I'd suggest going to look at new build neighborhoods and tour he models. Most large scale builders will do builds on your own lot. Lennar, Standard Pacific, and Orleans all do (these are builders my husband works with).

DiFazette

It depends on if the land is 'improved' or raw. Does it have sewer/water/electric, etc running to the property? If not, those things will cost you big money (even if you were to do a septic).

Building on raw land is VERY different than building a home on a construction owned lot. You'll need to pay a GC (general contractor) to manage the trades, deal with inspections and make sure your on schedule.

If this is truly a raw piece of land, you'd need a construction loan rather than a mortgage at first to get a draw schedule. They'll release money upon certain things being completed to pay your vendors ( your GC would handle this schedule as it can be a nightmare to handle on your own).

Construction loans are very , very hard to come by and must be completed quickly these days since banks are still holding lots of foreclosure debt.

My H wants to do this, but he would be our GC since he's built over 1000 houses and knows the permitting and codes. I'm not on board for the sheer work and stress of it all. Good luck!

kelseyhh

Wow, thanks for your replies ladies! You've all given a lot of good points!

@DiFazette, the land is raw, so we would have to put in all the sewer, water, etc. We knew that that would be expensive, but weren't sure exactly how expensive it would be.

We are also going back and forth on how we would have it built. My FIL is an independent contractor and built his own home. We've talked about paying him to build the house. However, I know that my DH and his brother (an electrician) would get roped into working on the house during all of their free time, and I'm not sure that's worth it. I feel like I hardly see my DH as it is.

The loan process also seems to be a nightmare, since banks no longer give loans for vacant land.

I think that we should just ditch the whole idea, but my DH REALLY wants to own a piece of land in the country, and really loves this area.

I foresee this becoming a potential nightmare...

emmy236

As someone how works in the mortgage side of a bank, banks will offer construction loans if you have the equity or liquid assets to cover I think 50% or more of the loan (don't hold me to that, I work in tech ops). Most will try and get you to do a HELOC though. Your best bet would be to try at smaller banks/credit unions. I work for a huge bank and we don't like them because of how hard they are to manage on a national level (like we've been having to use GPS coordinates to find some pieces of random vacant land that someone defaulted on in the Nevada desert). Smaller and local banks or CU are more likely to give the money. They will also want to know you're builder and his licensing info (if you're using FIL he'll probably have to show his licenses).

DiFazette

@kelseyhh - tie ins for a local neighborhood for sewer here were $15k... and that was only extending the drain 30 or so yards. Obviously the cost will depend on the cost of living in your area. Where I am (in a state capital) we estimated $40k in cost before the building began.

I think the biggest problem is doing this on a bank mandated schedule... unless you've got lots of cash on hand (if so... good for you!) It must move quickly. If you don't need the loan funds to do it, it would be a great move.

I also saw my husband spending every night/weekend building the house, and I don't feel that's worth the trade off. Maybe one day, but life is just too busy and our little is only a little once... I'd hate for Daddy not to be around so eventually we could have a sweet house. That's just me though.

Oohgurl

@Karicomo‌ If the builder goes out of business who fixes the house? That must be state specific because that is definitely not how it works in Michigan. Or a line they fed you.

snowgirl427

We had our home built last year. I don't think it's any cheaper. We purchased the land then worked with a few builders until we found one we liked with customized plans we wanted (they are a company like pulse who typically build in developments, but do build on own lot like pp said). We are also getting ready to do an addition (determined we need a little more space). We are in the country and have 5 acres, so just running the electrical underground cost us nearly $3k from the street to the house. We also had to do septic and dig the well. The cost will depend on part of the country, supply costs, builder markup etc. additionally - the type of materials you choose. For instance, we have the upgraded spray installation, upgraded windows, upgraded floors etc etc. we did some things on our own instead of building into the price like appliances, closet shelving, lights, fans etc. Here in Florida, I think the final spend was about $300k on a 2500 sq foot house (3 bed, 3 bath) including things we purchased on our own. This is a custom house though and we built smaller so that we could do all the finishes we want.

Also - there was tons of site prep that the builder managed. We just managed clearing of trees. They did all leveling. We also did geological testing on the land as part of our condition of buying the land because Florida has a lot of sinkholes.

Good luck!

TheFutureMrs.O

I husbands uncle bought land and had a house built. I know this isn't going to help because anyone in their right mind wouldn't do this but he was able to save money because he would go to the Home Depot down the street and pick up Hispanic guys that would stand out front and pay for cheap labor.

He had a contractor do the major building aspect of house (which they put a wall somewhere where it wasn't supposed to be either-I have a feeling he went cheap on that too) but most of the inside stuff was done by the guys he picked up.