I thought I had posted about the overall budget on this project way back in the beginning, but in reviewing our posts it seems I never did.  As I just filed the second loan draw and we’re now more than halfway through the total spending, it seems high time I rectified that.

When we started looking at this project years ago we had a proposal put together by the same GC who built my mom’s house.  He’s a design-build guy with an architecture degree and many years of GC experience.  Did a real fine job on her place.  Anyway, we did some creative accounting on his old proposal to estimate what the overall project would cost and how much house we could build.  Then once we had firmed up the design to about 95% we started collecting individual bids for each of the jobs.  My goal was to get at least 3 bids for anything we were actually considering contracting out.  But we also needed at least one professional bid for any job we planned to do ourselves, just so we could give an accurate total estimate to the bank.  In case I break a leg or couldn’t finish a job for some reason we needed enough headroom in our loan to be able to pay someone to come in and finish up.

This resulted in two different budgets for the house project: the bank budget and our private budget.  The bank budget has professional contractors listed for nearly every aspect, tied to a written bid I could produce for the bank.  Its offset somewhat by a bit more conservative estimates for finishes and such (simpler tile, more common hardwood floors, cheaper windows, doors, and trim, etc.)  Our personal budget on the other hand includes only material cost estimates for jobs we plan to do ourselves, alongside the professional bids for the jobs we are contracting out.  If all that goes well then we should be able to use the savings either on more distinctive fixtures and finishes or just on having a lesser mortgage.  Both pretty appealing, if I’m honest.

As collateral we started with the lot of land and the new garage on it, plus about $25K in cash.  The bank appraiser gave the final proposed house a valuation of $440K, which means the bank would give us up to $352K to build it (80% value).  This is how that $352K breaks down:

	Bank Estimate	Our Estimate
Permits, Fees, Surveys	$             1,500	$             1,500
Utilities	$             1,500	$             3,000
Demolition	$             9,500	$             9,500
Foundation & Flatwork	$          42,207	$          42,207
Framing	$          48,230	$          48,230
Windows/Ext.Doors	$          44,990	$          44,990
Roofing	$             7,834	$             6,000
Exterior	$          45,775	$          45,775
Plumbing	$          16,190	$             6,000
Electrical	$          15,775	$             6,000
HVAC	$             8,980	$             5,000
Insulation	$          17,126	$          13,275
Fireplaces	$             3,000	$             3,000
Termite	$                400	$                400
Drywall	$          13,200	$          13,200
Cabinets	$          18,967	$          18,967
Doors, Trim, Paint	$          18,000	$          15,000
Appliances	$                650	$                650
Flooring	$          14,483	$          12,000
Landscaping	$             6,300	$             6,300
Misc.	$             5,000	$             5,000
Contingency	$          12,000	$          30,599
Total:	$  351,605.71	$  336,592.97

We originally asked for a 10% contingency, but given where the appraisal came out, we had to cut that back to get under $352K, but I left it listed at 10% on our own budget.  That’s why it looks so much higher.  In general, things that are just materials or jobs that we are truly contracting out the two columns match up.  But for trades where we do the work ourselves you’ll see our estimate is considerably lower, representing our best guess at materials with $0 labor charge.

So far the demolition came in spot-on, and we still have a few hundred left in the permits line with just the electrical permit pending.  The foundation is going to come in slightly higher, but worth every penny as Dave Harmon (of Harmon Excavating) has saved my bacon several times on this job already.  For the record, he and his crew have been outstanding, from start to finish.  The framing and the windows should be very near spot-on the estimate, and the brick job is actually looking like it might come in a few grand less.  I have some fear that changes we made to the insulation design will cause that number to balloon from its already high estimate, but we’ll see.  Next we move into the major trades: HVAC, plumbing, and electrical, where we should make up financial ground.

If everything worked out stunningly and we didn’t burn the contingency, then we’d wind up with about $130K in equity when its all done.  That’s not too shabby since we bought the 2nd house for $160K.  If things go south and we spend every dime in this budget then we’ll own about $88K, putting us 8 years and $80K behind, but still living in our custom-designed dream house.  Either way, I’m cool with it.