Want to make a personal budget for building your dream home? You will need the help of a contractor who knows how to make a budget. A sample budget
form with a knowledgeable contractor is necessary.
So how do you ensure an effective budget, one that is in keeping with your estimates and incomes? We'll tell you....
Secure the assistance of at least 3 general contractors and at least one experienced subcontractor. Go about it in a professional manner. For instance, ask all three to put in an estimate for building your home. You should have a line by line estimate for the total job like shown here cost to build a home. The contractor should also inform you about who will do what job.
In order to secure the best bids, have the contractors go through your specifications first. The more detailed your plan and specs, the better an
idea you will get about your cost.
You should also insist on a time frame for your bids. Use these bids to form your budget because you most likely will not get a better idea anywhere else.
This is one of the most important ways in which you learn how to make a budget and guard yourself against overspending on your home building
expenses. How will you save money with a spreadsheet? Well, it helps you save by laying out the rough cost side by side, so you have a better idea
of your cost and where you can save a bit of money.
You also stand to gain a more realistic idea about the cost because construction experts will be preparing your cost estimates.
A good rule of thumb to follow is to use pen, paper, or a computer to compare each sample budget form submitted side by side. Calculate an average
of the prices and your starting off like a pro!
For instance, if insulation charges are $4,000, $5,000 and $4,500 respectively from the 3 contractors, you can safely average the estimate at
$4,500! Easy, isn't it?
If you learned how to make a budget from the estimates provided, you know that you will not be paying more than you need. You also know that you can get that insulation for $4000 with good negotiation on your part! Also, if a subcontractor offers you a price of $3000 after this, you know you've got a bargain!
Don't ignore subcontractors when you are trying to make a personal budget for your house building project. Call on subcontractors if you plan on
being your own general contractor hand hiring out all the phases of your project.
Have these subcontractors offer you separate bids for each phase of your project. You stand a good chance of securing bargain prices because you can evade the general contractor's profit (anywhere from 10%-25%) because you are the general contractor!
There is always a chance of overshooting your budget. In fact, almost 90% of budgets result in more expenses than originally estimated, no matter
how accurate a prediction you make. Have an honest idea about what you can and cannot afford.
While you are making your budget, calculate your total possible income, its source, and the time when you will need the money. For instance, if there are two sources of income, do they come in at the same time? These ideas are crucial to the success of your home building reserve capital fund, so give it some thought.
You cannot afford to compromise on quality. When you are considering the cost for your house, insist on a solid structure first, and then other
luxury aspects. Face it, decorative trims and luxury flooring can always be tackled later.
However, if you need to change the structure of your home later because you compromised on quality, it will not be as easy! We are not even
talking about the cost involved in making such changes!
Always remember that cost vary by your area of the country and the time you are planning construction. You don't want to form an estimate yourself and then realize that materials cost more in your area.
Once you have learned how to make a personal budget and the estimates in place, you will be able to understand whether you need a loan or not. You can opt for either a single close all in one construction loan or a double close construction loan. Look into each package in detail before you arrive at the right decision.
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