Below is the budget that I have developed for the construction of the Little Rental House. The lot was already paid for a long time ago (to help the community get the funds it needed for legal and infrastructure work) so that aspect is already known with accuracy.
When formulating the budget for the Little Rental House (#3, 992sqft, 2br 1ba), I used a combination of numbers from three homes previously built here at White Hawk: my own home (#6, 1536sqft, 3br 1.5ba), the home next door (#5, 1408sqft, 3br 1.5ba), and my parents’ home (#2, 1800sqft, 4br 2ba). Because #2 was built in 2014-2015, while #5 and #6 were built in 2007-2008, the former gives prices much closer to “current day” while the latter need to be significantly adjusted for inflation. However, #2 is a 4-bedroom home built with double-stud walls, so many of the architectural elements are very different. #6 is the only reference with a basement, but was built with a lot of extras such as oak trim and flooring, so those costs aren’t representative of what I’m building. And #5 is a good reflection of the trim level, but is larger and built a decade ago.
In all cases, I have the budgets (actual cost for #5 and #6, builder-estimated for #2) broken down into great detail, rather than just a lump sum total cost. Thus, I was able to pick and choose, taking for example basement costs from #6, flooring costs from #5, and roofing costs from #2, with appropriate adjustments for number of rooms, square footage, etc. Contractors often estimate construction costs on the basis of cost per square foot, and on that basis we find a range of $105/sqft for #5 to $124/sqft for #2 to $142/sqft for #6.
My basic budget (without the “extras”) has the Little Rental House just below the high end of the range at $136/sqft, even with almost no labor costs. With the extras, it pops up to $147/sqft, higher than all of the reference houses. There are several reasons for this. First, the actual living square footage of the house is the smallest, so even though it is the lowest total construction cost, this increases the cost per area.1 Second, the basement is adding a substantial cost (about 6%) to the total. Third, the additional cost of more heavily insulated walls adds another 6%. However, it’s also unclear whether it’s fair to compare 2008 prices to 2019 prices; perhaps the homes built back then would be substantially higher today. 2
The budget below 3 represents the baseline that I’m working toward, will provide the structure for reporting the actual costs as we go along, and also provides the initial basis for estimated return on capital.
|Budget Item||Est Cost||Basis for Estimate|
|Lot lease fee||$40,000||Contractual|
|Site preparation and excavation||$8,000||Assume same as home constructed on adjacent lot|
|Utilities||-||Oversight - was not budgeted|
|Foundation||$10,330||Assume: $4,000 for slab, $4,000 for ICF, 24.3cu yd concrete at $100/yd|
|I-beams||$2,084||Estimated based on weight of steel at $1/lb|
|Structural Insulated Panels (SIPs)||$14,118||$7.25/sq ft budgetary estimate, 1830 sq ft, $850 delivery|
|Framing material||$3,000||Detailed estimate from spreadsheet, rounded up|
|Framing labor||$0||Building it myself|
|Roof material||$2,178||Rafter framed, plus sheathing and steel roofing|
|Roof labor||$1,600||Assume same as home constructed on adjacent lot|
|Siding labor||$0||Install myself|
|Windows and exterior doors||$5,077||Detailed estimate from spreadsheet|
|Electrical||$2,250||$25x40 outlets, $50x25 light fixtures|
|Plumbing||$2,000||Assuming I hire someone for septic but not for DW/DHW|
|Plumbing fixtures||$1,700||Use numbers from adjacent home but refactor for single bathroom|
|Wall finishes||$7,000||Use 60% of number from adjacent house based on smaller area|
|Interior doors||$1,300||4 interior doors
2 closet doors
|Kitchen||$1,850||Detailed estimate from spreadsheet for cabinetry, plus kitchen sink cost|
|Insulation||$2,500||4" R-6.5 foam over 7.25" R-3.6 cellulose in cathedral ceiling|
|Deck/porch||$0||Not including in initial build budget|
|Contingency||$15,888||20% of sum of above (except lease fee)|
|Extras - solar||$6,718||Battery backup
|Extras - water||$4,000||In-basement rainwater collection and treatment|
- Some items, including the lot, have a fixed cost, so the smaller the home, the higher their impact. Others, including site prep, plumbing, electrical, and roofing, have a significant base cost even if they do scale with home size. Another important consideration is the fact that the home is mostly on a single story. While this helps with accessibility, it means that there is, for example, more roof per square foot of house than there would be for a two-story home. ↩
- One source suggests that this could have increased by as much as 50%, so that even the cheapest $105/sqft would really be $157/sqft, but I think that exceeds the construction cost people are seeing for other homes here, ones for which I don’t have detailed budgets. ↩
- I apologize for the somewhat awkward formatting – I was torn between using TablePress (which gives you content in a searchable text form but doesn’t let me control the layout at all); or alternately inserting an image (which would let me make the format more legible, but wouldn’t contain text that you could access). ↩