Hello everyone!
There is one question that just won’t let me go, and that is about the budget.
It’s clear that you usually plan with an approximate amount in mind.
Since we are about to start building with an architect, I am often shocked when I read things like, “The budget increased from 400k to 800k”?! I wonder, doesn’t that mean financial disaster for some people?
You plan based on a certain amount that you finance, and if that amount suddenly doubles, won’t the entire financing collapse?
Sure, I mean exceeding the budget by 10% is still manageable, but doubling it?
So my question is: What options are there to actually cap the budget?
Put it in a contract? Not choose an architect at all, but rather a general contractor? Or what else is possible?
For me, it’s just hard to understand how a professional can misjudge construction costs so drastically, as described above – I do wonder if such a person shouldn’t have chosen a different profession.
Thanks in advance for your opinions on this.
There is one question that just won’t let me go, and that is about the budget.
It’s clear that you usually plan with an approximate amount in mind.
Since we are about to start building with an architect, I am often shocked when I read things like, “The budget increased from 400k to 800k”?! I wonder, doesn’t that mean financial disaster for some people?
You plan based on a certain amount that you finance, and if that amount suddenly doubles, won’t the entire financing collapse?
Sure, I mean exceeding the budget by 10% is still manageable, but doubling it?
So my question is: What options are there to actually cap the budget?
Put it in a contract? Not choose an architect at all, but rather a general contractor? Or what else is possible?
For me, it’s just hard to understand how a professional can misjudge construction costs so drastically, as described above – I do wonder if such a person shouldn’t have chosen a different profession.
Thanks in advance for your opinions on this.
H
HilfeHilfe20 Sep 2016 08:34alegend schrieb:
I
Regarding the general contractor (GC). I think somewhat like developers – they clearly want to cut costs everywhere for me, so I simply hesitate to build with a GC or developer because there is another party adding profit...You’re being trollish, you give the architect a small budget and he says he needs to save money, yet at the same time you think a GC is also cutting corners 🙄
Usually the GC has an advantage with a production house. The structural engineering, architect, etc. have already been resolved a long time ago :p
Regarding the hillside location and rocky ground. I would make sure you don’t end up with a basement and added fill. That can easily add 50,000 with no problem
S
Steffen8020 Sep 2016 08:46We have just completed the planning phase (which took over 1 year) with our architect. The initial cost estimate was 180m² (1,940 sq ft) × 1,600 EUR plus the garage (15,000–20,000) and additional construction costs (40,000–50,000). In total, around 350,000 EUR.
At that point, we took out a loan of 500,000 EUR, which was our personal limit anyway.
The final figures came to 220m² (2,370 sq ft) × 2,050 EUR plus the garage (40,000) plus 80,000 additional construction costs. In total, 571,000 EUR.
Why so much higher? The architect is not to blame—in fact, quite the opposite! He was always putting on the brakes… we wanted a bigger house, with a finished attic, a heated and insulated garage, and a thousand other small things that cost a lot of money. The thing is: with an architect, you have access to the ENTIRE market… he even drives you to 10 different tile showrooms 🙂 Plus, when building with an architect, there usually isn’t much time pressure. Try that with a general contractor. Our architect only designs "upscale" houses and naturally has great ideas. So you get inspired by them 🙂
We are now starting construction and are still short on a significant amount of money. I hope to save during the build phase or, if necessary, delay some landscaping work.
Best regards, Steffen
At that point, we took out a loan of 500,000 EUR, which was our personal limit anyway.
The final figures came to 220m² (2,370 sq ft) × 2,050 EUR plus the garage (40,000) plus 80,000 additional construction costs. In total, 571,000 EUR.
Why so much higher? The architect is not to blame—in fact, quite the opposite! He was always putting on the brakes… we wanted a bigger house, with a finished attic, a heated and insulated garage, and a thousand other small things that cost a lot of money. The thing is: with an architect, you have access to the ENTIRE market… he even drives you to 10 different tile showrooms 🙂 Plus, when building with an architect, there usually isn’t much time pressure. Try that with a general contractor. Our architect only designs "upscale" houses and naturally has great ideas. So you get inspired by them 🙂
We are now starting construction and are still short on a significant amount of money. I hope to save during the build phase or, if necessary, delay some landscaping work.
Best regards, Steffen
H
HilfeHilfe20 Sep 2016 08:53That’s how we know him, Steffen bigger bigger bigger :p
S
Steffen8020 Sep 2016 09:21HilfeHilfe schrieb:
so kennen wir ihn, steffen größer größer größer :pIt is definitely not good practice to constantly adjust your expectations to match your income. It’s better to stay grounded and appreciate greater security (such as shorter repayment periods, etc.). Unfortunately, I often lose the battle against my own lack of self-discipline 🙁
However, I believe things can’t really get out of hand that much when working with a general contractor.
Best regards, Steffen
Balance is probably important. What good are all the riches in the bank?
It's also perfectly fine to set priorities. If the house means that much to you, just invest more money into it.
@alegend
Your architect fees are not insignificant. Check online for fee calculators and how to input data for a standard single-family home.
Structural engineering costs also apply and are not negligible.
It's also perfectly fine to set priorities. If the house means that much to you, just invest more money into it.
@alegend
Your architect fees are not insignificant. Check online for fee calculators and how to input data for a standard single-family home.
Structural engineering costs also apply and are not negligible.
@HilfeHilfe
What do you mean by no basement? The immediate neighbor also has a basement, and according to the development plan, filling or excavation is only allowed up to 1.10 m (3.6 ft)... The slope isn’t exactly flat, so I don’t think the 1.10 m (3.6 ft) will make much of a difference (in my opinion).
@Steffen80
May I ask what equity you had, or the loan-to-value ratio? Feel free to send me a private message.
The thing is, we actually want to stay below the limit of what’s possible for us, but as I said, we don’t want to pay off the mortgage until the bitter end... The whole thing should be finished in a maximum of 20 years and with manageable installments, since I’m planning ahead and also considering potential income losses (death, disability insurance, etc.). I know you can’t plan and secure everything, but for a normal case, my approach works well.
Regarding the topic that it doesn’t add up that the general contractor cuts costs while I tell the architect to work with a small budget and he also cuts costs:
The difference is that I don’t have a general contractor in between who also earns from everything I install! So, one less party involved.
But basically, isn’t it the case that I actually have to give the architect a budget—let’s say the one I mentioned—because it won’t work otherwise, and I have to expect about 20% more, which means I also need to borrow roughly that much more?
What do you mean by no basement? The immediate neighbor also has a basement, and according to the development plan, filling or excavation is only allowed up to 1.10 m (3.6 ft)... The slope isn’t exactly flat, so I don’t think the 1.10 m (3.6 ft) will make much of a difference (in my opinion).
@Steffen80
May I ask what equity you had, or the loan-to-value ratio? Feel free to send me a private message.
The thing is, we actually want to stay below the limit of what’s possible for us, but as I said, we don’t want to pay off the mortgage until the bitter end... The whole thing should be finished in a maximum of 20 years and with manageable installments, since I’m planning ahead and also considering potential income losses (death, disability insurance, etc.). I know you can’t plan and secure everything, but for a normal case, my approach works well.
Regarding the topic that it doesn’t add up that the general contractor cuts costs while I tell the architect to work with a small budget and he also cuts costs:
The difference is that I don’t have a general contractor in between who also earns from everything I install! So, one less party involved.
But basically, isn’t it the case that I actually have to give the architect a budget—let’s say the one I mentioned—because it won’t work otherwise, and I have to expect about 20% more, which means I also need to borrow roughly that much more?
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