ᐅ Planning a Single-Family Home with a General Contractor, Architect, or Similar Professional
Created on: 14 Mar 2015 09:33
P
Payday
Hello,
after deciding against the half-finished house (shell construction with roof and windows – some will know what I mean), we have now reached the goal of having a new single-family home built.
We have already obtained some more concrete offers and know that we will manage with our budget.
The budget looks as follows (provisional bank approval, no contract yet, etc.):
€50,000 (approximately $54,000) own equity from €70,000 (approximately $76,000) available
€50,000 (approximately $54,000) KfW loan
€150,000 (approximately $162,000) mortgage
The plot costs €52,000 (approximately $56,000) for 580 sqm (about 6,240 sq ft) plus €4,500 (approximately $4,860) incidental costs (notary + property transfer tax) = own equity.
This leaves €200,000 (approximately $216,000) for the entire house including all incidental costs (including kitchen and carport) and €5,000 (approximately $5,400) special reserve (+€15,000 (approximately $16,200) additional own equity).
The plan is for a “turnkey” house priced at €155,000 (approximately $168,000) plus €4,500 (approximately $4,860) incidental costs (Note: property transfer and notary fees are not included here).
When I flip through catalogues, I hardly find any providers offering something at this price. The materials are not even the problem; it seems more about the enormous profit margins?!
We have also driven through the new development areas nearby and looked at the houses/signs. We have some smaller general contractors here (as in other places apparently). Some have been around for a long time, about 15–20 years. The management usually consists of two people (one practical, one theoretical), plus a bunch of craftsmen.
What do you think of such companies? The direct contact with the customer is probably much closer than with a large company, but what about price and reliability (completion guarantee/bond)?
after deciding against the half-finished house (shell construction with roof and windows – some will know what I mean), we have now reached the goal of having a new single-family home built.
We have already obtained some more concrete offers and know that we will manage with our budget.
The budget looks as follows (provisional bank approval, no contract yet, etc.):
€50,000 (approximately $54,000) own equity from €70,000 (approximately $76,000) available
€50,000 (approximately $54,000) KfW loan
€150,000 (approximately $162,000) mortgage
The plot costs €52,000 (approximately $56,000) for 580 sqm (about 6,240 sq ft) plus €4,500 (approximately $4,860) incidental costs (notary + property transfer tax) = own equity.
This leaves €200,000 (approximately $216,000) for the entire house including all incidental costs (including kitchen and carport) and €5,000 (approximately $5,400) special reserve (+€15,000 (approximately $16,200) additional own equity).
The plan is for a “turnkey” house priced at €155,000 (approximately $168,000) plus €4,500 (approximately $4,860) incidental costs (Note: property transfer and notary fees are not included here).
When I flip through catalogues, I hardly find any providers offering something at this price. The materials are not even the problem; it seems more about the enormous profit margins?!
We have also driven through the new development areas nearby and looked at the houses/signs. We have some smaller general contractors here (as in other places apparently). Some have been around for a long time, about 15–20 years. The management usually consists of two people (one practical, one theoretical), plus a bunch of craftsmen.
What do you think of such companies? The direct contact with the customer is probably much closer than with a large company, but what about price and reliability (completion guarantee/bond)?
The question is quite simple and can be answered with another question: What is your house worth to you, and how much are you willing to pay? You can spend months comparing offers, which often vary in price. The only important thing is whether you are satisfied with the final result. I find the quoted saying very accurate and truly advisable. Consider carefully whether cutting costs in certain areas is worthwhile and if all the effort and stress are justified by the savings in the end. If you get the house you envision for $150,000, then you have made the right decision!
I don’t want to say that $150k is a small amount of money, but turnkey construction at the size mentioned simply isn’t feasible with that budget.
According to the living space regulations, 120m² (1300 sq ft) translates to about 140m² (1500 sq ft) of total living and usable area, depending on the roof design. If you calculate the average price per square meter, you’d have to be over $200k, so the gap is quite significant. In my opinion, the only way to build in this range is either by contributing a considerable amount of your own labor or by building smaller. If you don’t have children yet, you might also consider a roof space designed for future expansion, which you could finish step-by-step yourself.
Potential savings for the builder naturally exist in their profit margin, but if they do this often, that margin won’t last long. Labor costs can’t really be reduced if we’re talking about a local company, since collective wage agreements apply equally to everyone. So, cutting costs is only possible by saving time or materials, and that always means a reduction in quality or performance.
Typically, cost savings occur in the following areas:
- Structure
- Thermal insulation
- Fixtures and technology
- Liability (yes, even here savings can occur through interesting contract arrangements)
An independent expert, someone who doesn’t have anything to sell you, can provide advice on all these points. Hopefully, you have or can easily get access to the contract documents and the specifications. You might spend a three-digit amount on their review and get some professional input. Since you don’t trust anyone in the forum (even though opinions are quite consistent), that is probably the only remaining option for you.
According to the living space regulations, 120m² (1300 sq ft) translates to about 140m² (1500 sq ft) of total living and usable area, depending on the roof design. If you calculate the average price per square meter, you’d have to be over $200k, so the gap is quite significant. In my opinion, the only way to build in this range is either by contributing a considerable amount of your own labor or by building smaller. If you don’t have children yet, you might also consider a roof space designed for future expansion, which you could finish step-by-step yourself.
Potential savings for the builder naturally exist in their profit margin, but if they do this often, that margin won’t last long. Labor costs can’t really be reduced if we’re talking about a local company, since collective wage agreements apply equally to everyone. So, cutting costs is only possible by saving time or materials, and that always means a reduction in quality or performance.
Typically, cost savings occur in the following areas:
- Structure
- Thermal insulation
- Fixtures and technology
- Liability (yes, even here savings can occur through interesting contract arrangements)
An independent expert, someone who doesn’t have anything to sell you, can provide advice on all these points. Hopefully, you have or can easily get access to the contract documents and the specifications. You might spend a three-digit amount on their review and get some professional input. Since you don’t trust anyone in the forum (even though opinions are quite consistent), that is probably the only remaining option for you.
Lars881 schrieb:
Labor costs cannot be reduced (when dealing with a local company) because the collective agreement applies equally to everyone.However, there is a difference between a master craftsman working with one journeyman, two journeymen, or one journeyman and one apprentice/helper when laying tiles/installing heating systems/etc. Our shell construction was built by the master craftsman and his helper. If he had employed two journeymen instead, it would have been completed in half the time.
Important for the homeowner: the longer the construction takes (due to fewer skilled workers being used), the higher the double costs become (rent plus holding interest).
ypg schrieb:
@Payday You should create a proper cost estimate. A kitchen should not be included in the ancillary building costs and is not financed.
Also, nowadays it can be difficult to find a bank that will finance a house without any outdoor landscaping. At least the access paths and border strips should contribute to the property value. Thanks for your answers.
Why shouldn’t a kitchen be financed? If I contribute €50,000 myself, I can also spend that on the "non-financeable" items in the end. That doesn’t make sense. Non-financeable costs are the property transfer tax and the notary fees, because both have no value.
I now have three quotes for the extra costs. These are quite easy to get—send an email, you get a call back, explain what you want, and 10 minutes later you have an offer in your mailbox with all the desired extras (the costs of the extras are listed separately). You can read a lot about the amount of ancillary costs in various blogs, and one provider even shared their breakdown of ancillary costs with us. We have already listed the ancillary costs ourselves, so I’m not completely new to cost calculations.
Where I still have absolutely no idea is the financing part with the bank. I have received offers from Interhyp (the interest rates are really ridiculous), but I don’t yet know to what extent they will provide the requested amount or not. The smart books don’t go very deeply into this either—only that the bank will, of course, check the final value of the property…
Payday schrieb:
What I have absolutely no idea about yet is the financing with the bank. I already have some offers from Interhyp (the interest rates are really a joke), but I still don't know to what extent they will actually pay out the desired amount.Long story short: you have doubts about whether the money will actually be disbursed.
A kitchen is considered furniture and... yes, sometimes there are banks that finance something like this (at least this is mentioned here, but I still don’t really believe it).
So: furniture is not financed because it is not part of the house construction!
Payday schrieb:
Why shouldn’t a kitchen be financed? If I contribute €50,000 myself,The difference is that if you take out the €15,000 for the kitchen, you only have €35,000 (instead of €50,000) in equity for the loan!
Edit: a kitchen is not part of additional construction costs (building permit / planning permission fees or other ancillary costs). It also does not count towards building costs, acquisition costs, or landscaping.
Unbelievable... the original poster clearly has little to no knowledge and seems barely willing to accept any advice. Instead, replies come across with an astonishingly clueless arrogance. Suddenly, however, there is a lack of understanding when it comes to loans at their bank... interesting...
Payday, you’d probably be best off taking the great offers that suddenly appear in your mailbox and just build or have the house built.
Maybe in about two years, roughly around (partial) completion, you can update us on how it all went eek:
Payday, you’d probably be best off taking the great offers that suddenly appear in your mailbox and just build or have the house built.
Maybe in about two years, roughly around (partial) completion, you can update us on how it all went eek:
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