How to Estimate New Home Construction Costs
Before applying for a traditional or stated income construction loan, you must accurately estimate construction costs for your new home. While the overall project may seem daunting, estimating construction costs is far simpler than you may think.
Select a Blueprint
Your first step to building a new home is to decide on the home you want. Be sure to include any architect or design fees into your budget as these are almost always the first set of building costs.
Select Materials
Your next step is to select building materials for all areas of the home. Will you be using brick on all four walls for both stories? Stone? Don’t forget to include your flooring materials as well as doors and windows.
Contact the Experts
Unless you are a general contractor yourself, you most likely aren’t already in contact with the many subcontractors you’ll need to complete your home. Visit with a general subcontractor or find subcontractors in all areas of construction (excavator, mason, carpenter, roofer, siding contractor, plumber, electrician, heating/AC contractor, insulator, drywall installer, finish carpenter and painter) to discuss the project.
Obtain Contractor Estimates
If you are going to work with a general contractor, he will use his contacts and expertise to obtain a total estimate for most construction – perhaps including materials. If you are planning to work as your own general contractor, you’ll need to obtain an estimate from each subcontractor.
Total the Estimates and Costs
Make a spreadsheet of all estimates and costs you have to date. Keeping track of estimates electronically should make the process less time consuming and allow you to keep track of your budget when construction begins. Then add in building permits, insurance, fees and legal costs. The resulting number is the total estimated construction cost.
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Posted in Business & Finance, Real Estate
