Building Your Dream Home
Many people aspire to build a custom home so they can create their ideal residence and bring their vision to reality!
At the start of the planning phase, consider looking at developments with customizable pre-drafted and approved plans. If this isn’t possible or you want a fully customized blueprint, research respected architects that have completed plans for your area and that have experience working with your builder. The construction timeline from start to finish varies greatly. A common expectation is 6-12 months, but custom homes frequently take longer.
What’s a reasonable budget? This will vary greatly based on location, level of customization and finishings. In a recent Architectural Digest article, Alec Hartman, founder and CEO of homebuilding company Welcome Homes, states: “For a starter home without many bells and whistles, an average price per square foot could be in the low hundreds, though a more realistic estimate would be somewhere between $200 and $250 per square foot. For mid-market homes, expect to pay between $300 and $400 per square foot, and anything that’s more than $400 per square foot would be considered an upper-market, luxury property.” It’s important to also incorporate money for architectural designs, decorating, appliances, furniture, custom outdoor spaces (pools/patios/decks/landscapes/etc.) and anything else that’s not included in the actual homebuilding contract. Once your budget is determined, it’s advisable to set aside an additional 20-50% of the projected home cost to cover any unexpected charges or desired modifications during the building process.
Your sources of funding are very important. It’s essential to determine how much cash you will invest, how much will be financed, and the methods of financing.Construction-to-permanent loans provide funds for construction to contractors in stages based on percentages of work completed. Upon completion of construction, many of these loans generally become a traditional mortgage with monthly principal+interest payments.
Your dream home should also be viewed as an investment and it’s valuable to consider the neighborhood and long-term potential for appreciation. According to Coldwell Banker, “LOCATION, LOCATION, LOCATION!” is perhaps the most repeated phrase in real estate. Location can impact many things such as public-school access, taxes, neighbors, safety, noise levels, availability of strong cell service/high-speed internet, convenience to essential businesses such as grocery stores/restaurants/entertainment, etc. Lifestyle desires should also be considered.Factors such as indoor and outdoor space, weather, social and recreational activities can all impact the joy factor in your new home.
Setting clear expectations with your builder is imperative and gives all parties a formal reference. The written contract should detail key items that include (but are not limited to): permitting process and expenses, material costs, labor costs, upgrades/substitutions, who will be responsible for obtaining the materials and how price changes during construction will be addressed, frequency of communications/updates, etc. The construction process is a significant undertaking!
Hofer Family Wealth Advisors
Of Janney Montgomery Scott LLC
1551 Boston Post Rd 2nd Floor
Westbrook, CT 06498
CA Insurance License 0F52583
Janney Montgomery Scott LLC. Member: NYSE, FINRA, SIPC
References: https://www.architecturaldigest.com/story/how-much-does-it-cost-to-build-a-house; https://coldwellbankercaine.com/lifestyle-is-the-new-location/
The concepts illustrated here have legal, accounting and tax implications. Neither Janney Montgomery Scott LLC nor its Financial Advisors give tax, legal, or accounting advice. Please consult with the appropriate professional for advice concerning your individual circumstances. For more information about Janney, please see Janney's Relationship Summary (Form CRS) on www.janney.com/crs which details all material facts about the scope and terms of our relationship with you and any potential conflicts of interest.
