Building a house on an empty lot - how much?

[Table 5]

So my wife and are looking to buy a new house, but we're also toying with the idea of buying some land and building something on it, so this way its to our tastes.

The issue is I have no idea how much it costs to build a house in Calgary. What's a realistic range? Can you build a house for 300-400k (all in, construction, design etc)? Is it more? We're not looking for anything huge, just something boxy and efficient. (ie, something that looks like those boxy infills that you see everywhere).

I'm not even sure where to start. Do you talk to an architect? Any recommendations on builders?

[Red]

400K will surely build a nice house.

Here is what used to be a problem. Perhaps it's changed, but banks don't like lending money for land. So you'd need to buy the land cash and then finance the house with a builder the bank feels comfortable with. Or something to that affect.

Again, that may have changed recently with all the loosening of loan rules.

[Table 5]

Hmm, that's a good point...I would need to look into this. I definitely don't have the cash to buy the land without any financing.

[Husky]

So my wife and are looking to buy a new house, but we're also toying with the idea of buying some land and building something on it, so this way its to our tastes.

The issue is I have no idea how much it costs to build a house in Calgary. What's a realistic range? Can you build a house for 300-400k (all in, construction, design etc)? Is it more? We're not looking for anything huge, just something boxy and efficient. (ie, something that looks like those boxy infills that you see everywhere).

I'm not even sure where to start. Do you talk to an architect? Any recommendations on builders?

What sort of sq footage are you looking at? That will greatly impact the overall price.

[core_upt]

You can build 'semi-luxury' with a reputable builder for around $275 a sq.ft; basic would be closer to $200/sq.ft. This will differ greatly on the types of finishings, who the builder is and what you're getting for your money (i.e. does it include design fees, permitting, etc).
Payment structure is also a factor to consider - are you paying every two weeks? Down payment and subsequent draws leading to completion?
Also, depending where you buy the land may factor into what you can and cannot do with it.
My suggestion, talk to a few home builders and see what information you can get. PM me for more info.

[DFO]

There is a spectrum of options for a development. On one hand you could work with an architect to get drawings and then shop them to a smaller custom builder (essentially acting as your general contractor). On the other end is the 'custom' divisions of the big box builders. They are more of the one stop shop for design & build.

I went through the first option - it certainly adds to the time spent dealing with the project.

[Table 5]

Thanks for the insight, guys.

Ideally, we're looking at something in the 1500-2000 square foot range (3 bedroom + office), with a 2 car garage. Both my wife and I are designers (her interior, me graphic), so we have a good idea of what we want, so ideally it would have some customization. Looking at land, we'd probably have to stick to a 32' foot lot in our price range, considering all the areas we like, the lot seems to be in the 300-400k range.

Do you have any builders or architects (with a more modern bent) that you recommend looking at? I saw Alloy's website and they have some great stuff, but I have a feeling they are a little too rich for our blood.

[missdpuck]

I've been looking into custom designed modular homes, like the ones you might see in Dwell magazine. It seems like you can save some money that way. There are some cool examples on freshome.com. Maybe they have suggestions for up there.

Modular homes appraise just like site-built homes, btw.

[jdso]

I was going to bring up the modular option as well. I like the Karoleena ones. They might appeal to you as well.

http://karoleena.com/

[kermitology]

I just went through this, so heed my advice.

1. Make sure you understand that you need to basically have a float of about $100k. If you don't have that, you're going to have a bad time.

Also, you're likely going to want to buy a house fit for demolition, since if you want to buy land, you have to buy it outright. You can't carry a mortgage on land without a structure for "housing."

Get a contractor you can trust, and keep on him about things like budget. I tried to keep my contractor on a tight line, but he got so swamped with projects all happening at the same time that we ended up about $40k over budget, which is unacceptable, and I'm still fighting with him about it.

It is one of the most stressful things you can go through, especially when things aren't going according to plan. For example, with my project, we ended up having to dedicate a corner of our lot to the city, which meant that everyone on the mortgage had to sign off on the subdivision.. Including the mortgager, which, when they found out we had knocked down the house, demanded payment in full within 30 days, so I had to scramble to find bridge financing of $300k.

If you do a semi, you can probably get away with $350k in construction costs plus $200k or so in land investment, but that's more complicated and expensive if your carrying both sites. In my situation we built with friends, so the burden was halved, but the ability to turn around and sell the other half wasn't there. But again.. Stress city.

PM me if you want to know more. But I strongly caution you that doing this kind of thing where you're in charge is really hard on the body and mind.

[Deegee]

Also, you're likely going to want to buy a house fit for demolition, since if you want to buy land, you have to buy it outright. You can't carry a mortgage on land without a structure for "housing."

Our Credit Union does it all the time. Table you can feel free to PM me. You aren't obligated for anything, but I can spare some time to chat with you.

[kermitology]

Our Credit Union does it all the time. Table you can feel free to PM me. You aren't obligated for anything, but I can spare some time to chat with you.

Not as an individual according to my mortgage broker who specializes in these kind of projects. You cannot carry a mortgage without a structure on it.

[calgarywinning]

Not as an individual according to my mortgage broker who specializes in these kind of projects. You cannot carry a mortgage without a structure on it.

I think in many times where a structure is being demolished, it depends on the value of the lot as it stands without structure. Many times a lot with an older building will be valued just the same as without structure.

However, you will need a line of credit which requires a higher down payment. Then when a new structure is being built you will need a builders mortgage. Finally, when the construction is complete you will receive a regular mortgage. Mortgage is latin for death loan.

Caveats are there are a lot of expense that you need to take into account. You need to deal with the insurance company and have builders insurance which is 4 to 6x more expensive that homeowner insurance. Carrying costs, city tax cost.

Also, the cost and expense of having to live elsewhere while the project is underway.

So I agree, it's an arduous task and being hit in the the face constantly by the 2 x 4 of expense is stone cold.

[Deegee]

Not as an individual according to my mortgage broker who specializes in these kind of projects. You cannot carry a mortgage without a structure on it.

We do it all the time. Your mortgage broker is wrong.

[kermitology]

I think in many times where a structure is being demolished, it depends on the value of the lot as it stands without structure. Many times a lot with an older building will be valued just the same as without structure.

However, you will need a line of credit which requires a higher down payment. Then when a new structure is being built you will need a builders mortgage. Finally, when the construction is complete you will receive a regular mortgage. Mortgage is latin for death loan.

Caveats are there are a lot of expense that you need to take into account. You need to deal with the insurance company and have builders insurance which is 4 to 6x more expensive that homeowner insurance. Carrying costs, city tax cost.

Also, the cost and expense of having to live elsewhere while the project is underway.

So I agree, it's an arduous task and being hit in the the face constantly by the 2 x 4 of expense is stone cold.

You can certainly speak with the mortgagee and be upfront about what you're doing, but you're probably going to pay as much as bridge financing in interest.

Course of construction insurance isn't really all that bad as I experienced it. But with the draw schedule not always lining up with your invoicing, that's why I say you should have a float of around $100k, especially if you happen to be operating as your own general contractor, which some people do.

I don't know Deegee.. seeing as how you almost never see individuals, but rather developers (small or large) buy empty lots for development with a mortgage, I'm going to have to say that we might be talking about different things.

[Deegee]

Typically, if we finance land prior to a building we'll finance 50% of the lot value, regardless if you are a developer or an individual. If we're doing the build, we'll typically finance more. Depends on borrowers overall strength.

As kermitology mentioned, your draws don't always match to the invoicing. It's incredibly important that your builder understands that your progress draws happen based on progress reports that indicate the percentage of building complete.

You can use Genworth/CMHC to help finance a higher percentage of your build (up to 95%), but that adds to your borrowing cost.

I will say in many times when cashflow is a challenge in parts of the build, we have setup people with a Line of Credit to help pay for things while they wait for their next advance. So you don't necessarily need to have $100K as a float, but the more you have the easier the process is.

I've done several builds in my time. If you have any specific questions about the process I can elaborate on details. I've offered many CPers information, and I never expect any business in return. Just want to help.

[kermitology]

Typically, if we finance land prior to a building we'll finance 50% of the lot value, regardless if you are a developer or an individual. If we're doing the build, we'll typically finance more. Depends on borrowers overall strength.

As kermitology mentioned, your draws don't always match to the invoicing. It's incredibly important that your builder understands that your progress draws happen based on progress reports that indicate the percentage of building complete.

You can use Genworth/CMHC to help finance a higher percentage of your build (up to 95%), but that adds to your borrowing cost.

I will say in many times when cashflow is a challenge in parts of the build, we have setup people with a Line of Credit to help pay for things while they wait for their next advance. So you don't necessarily need to have $100K as a float, but the more you have the easier the process is.

I've done several builds in my time. If you have any specific questions about the process I can elaborate on details. I've offered many CPers information, and I never expect any business in return. Just want to help.

I SUGGEST having around $100k in float. We didn't have that, but it would have made my life a hell of a lot easier.

[Table 5]

Thanks for all the opinions in here...Im trying to see what I can get by financially before I take any next steps. I had no idea though that the mortgage rules were different (although I can see why), and if that's the case, it pretty much puts a screeching halt to that idea. I don't have 300k sitting around.

[MrCallahan]

I was going to bring up the modular option as well. I like the Karoleena ones. They might appeal to you as well.

http://karoleena.com/


I know there are a lot of investors on this board, how are this modular options from an investment perspective?? Can these be cheaper to build, and resold with possible profit?

[nickerjones]

You can build 'semi-luxury' with a reputable builder for around $275 a sq.ft; basic would be closer to $200/sq.ft. This will differ greatly on the types of finishings, who the builder is and what you're getting for your money (i.e. does it include design fees, permitting, etc).
Payment structure is also a factor to consider - are you paying every two weeks? Down payment and subsequent draws leading to completion?
Also, depending where you buy the land may factor into what you can and cannot do with it.
My suggestion, talk to a few home builders and see what information you can get. PM me for more info.

Is the 275 sq ft without the land? The house prices are quite the shell shock for me. Moving from Oklahoma where 100/sq Ft is Brand new w/the lot price, 275 sounds crazy and even more so without the land.

[missdpuck]

jdso, those Karoleena homes are quite nice.