BUILDING YOUR OWN HOME - WHY NOT?
Category CONSTRUCTION
Building a house is an exciting venture when approached thoroughly.
KPS have options for owner occupied developments, buy-to-let solutions and those ever-popular speculative sales - the key is in the planning and the stakeholders involved.
Here are a few common tips to consider before you commit to this venture.
SELECTING THE LAND
- Determine your preferred budget and remember that ever important slogan of;
- "Location . . .location . . . location" - it still matters, more than ever before
- Ideally, your land cost should not exceed 15% - 20% of your anticipated total project cost
- Invest in an area sooner rather than later to avoid inflated prices for the last few stands in a popular, built-up area.
- Appoint a real estate professional with construction background to assist you in selecting the right stand, in doing so you'll eliminate many unforeseen costs
- Consider factors such as slope of the stand and logistical access to the stand - all of these factors influence construction cost
A FUN FACT - Land prices in the Garden Route has showed positive capital growth of up to 25% in the past year.
SELECTING THE DEVELOPER AND PROFESSIONAL TEAM
- Appoint a reputable architect - be sure to ask for references
- A poorly designed plan creates the basis of excessive overspending
- Pick the right builder. You'll be spending a lot of time with the builder therefore, avoid the situation of "My Builder becoming The Builder becoming That %&$##@ Builder" by;
- Checking references
- Taking the time to inspect past work
- If the project will be outside a security village with a specific aesthetic style, be sure that the builder's work is in line with the style you have in mind
- Be certain that the Builder's pricing is in line with your budget
- The cheapest builder is not always the best builder.
- Trust your builder and let them do what they do best.
DESIGN YOUR PLAN BEFORE YOU ASK SOMEONE TO QUOTE
It happens ever so often that builders get asked, what are your rates? Reputable builders will be able to provide a guide price but won't be able to give you a quote or estimate if they don't have a plan to work from as construction guidelines contained in the architectural drawings will dictate the rates applicable to the project.
It is therefore important to obtain a guideline in pricing to ensure that your design size is not excessive to your allowed budget for construction.
Other pointers;
- Make a list of design ideas and keep them together to present to your architect
- Decide on the flow of your house, the number of rooms, the extent of lighting used and valued extras you'd like to incorporate into the design
- Visit sites such as Pinterest or Houzz.com for creative ideas
BE SURE TO HAVE A CONTINGENCY FUND - BUDGETS ARE OFTEN EXCEEDED
One thing you can almost always be certain of is that the initial budget and the eventual budget could be two entirely different conversations.
Construction projects normally have unforeseen expenses and often, expenses such as;
- NHBRC enrollment fees; Home Owners Association Fees and Building Deposits, Landscaping Fees and respective connection fees are forgotten about and not factored in by the home owner to be.
- The weather could play a roll and as with most industries, if you loose time, you loose money as there will always be underlying expenses such as plant and tool hire, labour forces etc.
- Changes in plan sometimes occur- the later in the process the change occurs, the more expensive the implication and ripple effect thereof.
- Budgets are often exceeded when the finishes are selected as most people buy emotionally as opposed to being cost sensitive.
- That other saying, "Happy wife, Happy Life" - eish Eina!
- Ensure that the building agreement and the parameters contained is properly understood by all parties
APPLY FOR FINANCING
One of the main benefits of a new development is the massive saving on transfer duties.
If you will be building your house out of own resources as opposed to a building loan there will be a slightly different approach to the project yet, if you intend raising a bond;
- Liaise with a capable mortgage consultant to guide you through the process of a building loan - typically a finance specialist at Greendoor Homeloans Garden Route could be a valued addition to your professional team.
- Remember that when you finance the building package there will be progressive payments and resultant interim interest payments payable - these are ever so often forgotten about and creates a dispute on final draw
- The structure of land and development loan would cause you a smaller outlay than financing the land and the building package independently at different times.
- Most of the banks currently lean favorably towards development loans thus plot and plan is the way to go with selective loan-to-value options by the respective banks.
- Be sure to set some funds aside for Phase 1 of your project
COMMUNICATE CONSTANTLY BUT DON'T INTERFERE
If a project plan is presented with specific milestones, consensus on expectations from either side and agreement of channels of communication and importantly timelines the project should run smoothly.
Frequent updates from your builder and tradesmen should be received and progress pictures can be taken or sent.
Avoid interfering on site all the time, much rather set appointments for site meetings at key intervals of the project.
Cherish the experience, other than the blessing to have and raise children, the creation of something from nothing is extremely rewarding. From vacant land to a home full of memories to come - simply priceless.
LOOK FOR WAYS TO SAVE
Avoid being penny wise and pound foolish.
Be sure to obtain more than one quotation for specific things especially if your builder allocated PC amounts to commodities such as tiles, kitchens, taps and sanitaryware.
You'll have the benefit of choosing the trimmings therefore, shop around a bit - do it with your partner - it will be a trial for your relationship if nothing else.
Your builder will generally know which commodities can be bought where. If you spot a bargain or a special, share it with them - you'll be the financial benefactor.
CONCLUSION
The information above represents but a few aspects relevant to a building project.
It should not be necessary for you to compromise on the wish list of your home's features if you could have a say in the design and development thereof.
Statistically, the closest most people would ever get to that perfect house when buying in the open market is 65%.
The moment you design and build your own, the strike rate is better and generally, you tend to stay in it longer ultimately saving you even more on those never to be recouped SARS related costs of replacing your home.
At KPS we'd be willing hosts to your first or next successful project - be sure to call on us for a discussion about your specific development need - we're currently active in the Garden Route.
Author: Johann Cronje - Principal
