Turn Key Estimates vs. Actual Completed Price? HELP! :)

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Permalink Reply by Tom Ryan on March 27, 2009 at 12:11am

Colleen,

I must confess that I do have an "agenda" but it's not what you may think... I don't want yours or anyone else's dream of log home ownership become a nightmare. In addition to being an experienced log and timber home builder, I've also spent several years on the provider side working for companies like Kuhns. So, I've been through this process many times now and have worn just about every hat.

I've come to understand that proper planning and realistic expectation setting are the keys to a successful log home building experience. So, since there is no shortage of folks who will tell you what they think you want to hear, I will tell you what I believe you should know.

First, beware of cost/sf as a predictor of total project costs. More info:

http://dreamhomesmadeeasy.blogspot.com/2008/07/ugly-truth-about-squ...

What really matters are your site development costs relative to your design, your ratio of finished to unfinished space, and your fit and finish level. If your land is sloped, like it is here in Western NC, you'll face greater grading and foundation costs than on flat land. It's absolutely critical that you design your home to fit your property and not the other way around. Because all of the square footage is above grade (first and second floor), The Aspen Hills is most economical on a slab or crawlspace but this requires a relatively flat lot. If your lot requires a full basement, you may want to consider shifting the second floor bedrooms to the basement.

Second, understand (as it seems you do) that the information you receive from a providers, dealers, or builders will be bias and possibly unqualified. They all stand to benefit by making the project go but they may not have your interests in mind when they advise you. Also, remember that most providers and dealers do not build and, therefore, can only provide ballpark estimates. Their turnkey costs estimates are too often ambitious and can be downright deceptive. Be very careful not to purchase a log package before you have a realistic estimate of total project costs. I have received far too many phone calls from folks who've purchased a log package (and some who have a scheduled delivery date no less) from a provider who assured them they could "turnkey" their homes for half of actual market rates. Those are heartbreaking conversations.

Third, seek out an objective, trusted advisor who can help you navigate the process and avoid costly mistakes. Just like using a buyer's agent whose duties are solely to you when purchasing real estate, having someone on your side who understands the process and can help you work through it can be a lifesaver. We started offering a log home project planning service about a year ago and the response has been great. Our process takes you through several stages, beginning with an initial feasibility study that uses conceptual designs, preliminary finish schedules, lot evaluations, and current construction costs to calculate an estimated total project cost. If this fits our client’s budget, we proceed to subsequent phases that include such things as comprehensive provider and builder evaluation and managed RFPs (request for proposals), design and value engineering, financing plan, detailed project schedules, and more.

As you can see, there's not a simple answer to your question. I wish there were. We've only really scratched the surface, which may be why folks spend years planning their projects. Lots of questions. I would be happy to provide you more information if you'd like. Please feel free to reply or email me at tryan@dreamhomesmadeeasy.com.

Best of luck!

Tom Ryan

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Permalink Reply by Brad on March 27, 2009 at 6:23am

Tom is right - it all depends. You can get ballpark estimates - then add 30% and maybe you will have a good guess. But, that is all it is. You need to get down to a detailed spec list and get bids, not estimates, from at least 3 builders. I can tell you we built for $85 a sq foot - then that number went to $100 a sq foot when we finished off the bunkroom and some other things a few years later. But, that answer does not help you at all since it was 16 years ago. It could easily be $200-$250 per sq foot today or more.

Hmmm, we did major landscaping work 14 years after construction. If done at construction, it would have raised our costs. So, it all depends. Estimates are good as they will tell you if you are even close to being able to afford the project. But hard bids with a very detailed spec list will give you a real answer. Yes, it will take time. But, you have to do the spec list once. Each builder does their thing and many of them are looking for work. So, your timing might be very good.

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Permalink Reply by Randy Esposito on March 27, 2009 at 9:09am

Being nearby, I can say that $185 is probably pretty close as that is what it cost here in CT. I am a dealer and a builder and Tom is right, beware of some of the prices you may get.

While I do give out sf estimates at the start to give clients a ballpark feel for what it may cost it does have a lot of wiggle room. Keep in mind, no matter what size house you build your excavating and well are pretty much going to cost the same, so if you build a small house your SF cost will be higher than if you built a large house. When it comes down to it, items like flooring and interior finish won't bring down the SF cost very much. The big bulk of cost is in excavating, log package and most of all labor.

I think the worst thing anyone can do is go with a company because they like a floor plan that they offer. Talk to as many companies as you can, ask for prices, most will have a same style floor plan already. Then be sure to compare all of the prices together. For instance, some companies offer pine, some cedar, some don't include interior trim, some do, some do not include roofing, some do. So while one company may be lower, it may be for reason and cost you more in the log run.

Then once it comes down to signing a contract, you should have a firm estimate from a builder even before you have put down any deposits with a builder or supplier. You should know your finished cost before you get started.

And of course, get pre-qualified with a mortgage company before you get too far into the process to be sure you have the budget to build the type of home you want.

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Permalink Reply by Colleen ONeill on March 28, 2009 at 8:42pm

Thanks for everyone's replies! I can use all the advice I can get. I'm trying to learn as much as possible. But I'm finding the closer I get to each step the more anxious and nervous I am about it all. Mostly because I'm stepping out of my comfort zone here. I have zero experience with new home building and construction and land; besides the many years of clipped articles from all of the log home magazines. Its very daunting to make the leap towards actually doing it...dreaming and planning was easy and fun, but now actually considering costs, land, etc., there is just so much to worry about! Not only because its a huge investment, but because I feel like I am out of my element and trusting others with my future! I feel so uneasy when I think about that aspect of it. I'm used to being on top of everything and knowing exactly what I'm doing and knowing where my money is, SAFE! :) Letting a producer and builder juggle my life savings and my life, for that matter, is a very scary prospect. I'm just starting to look at land, and that is something that is making me nervous too, trying to get land that is in good shape or somewhat prepped for building is my goal. But I'm worried about spending a lot just to make my land buildable too. I didn't expect to be this nervous about it all, rather than excited. There is just so much involved, and trying to make sure I do this right is an overwhelming feeling. I don't think I'll have fun until I actually move in and realize it all went ok! :) To be honest, I'm just hoping I'm able to follow-through with building a log home. But I don't have the luxury of an unlimited budget where I can have little or no worries about issues or over-runs that may come about. That is what weighs heavily on my mind. I have a lot to think about......

Colleen

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Permalink Reply by Chris Wood on March 29, 2009 at 7:50am

Have you thought about buying an existing log home to eliminate the anxiety? I'm sure there are some great homes needing a new soul. And you might qualify for the $8k tax credit.

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Permalink Reply by Tim Bullock on March 29, 2009 at 9:39am

Colleen, You have received some really great advice and I agree with Chris.......buying raw land and developing it can be expensive.......ie. driveway/electricity/septic/well.....you could spend 50k without even batting an eye and you still have nothing to live in. The first person you have to dodge is the realtor......they may or may not give you any good advice as they just want to make the sale.....Good luck.

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Permalink Reply by Randy Esposito on March 29, 2009 at 10:23am

As someone who has experience on both ends (my wife is a Real Estate Broker), buying a existing home is not going to be a perfect fit to your lifestyle. Considering how few log homes are on the market the odds are there is going to be something in the home that you just don't like.

My advice if you want to build. Wait on looking for land, instead interview as many manufacturers and builders as you feel comfortable with. Decide on who you want to work with then sit down with them and come up with a budget. A good builder will be able to provide you a free budget for what you want to build. Then you will know how much you have to spend on land in order to build. Now, SEARCH hard for a Realtor who deals with land (the builder can probably recommend someone).

Too many times have I seen people buy land before even talking to a builder only to find out they can't afford to build because they have spent too much of their budget on the land. They then end up feeling discouraged and give up entirely.

When I built my house, we never even started looking for land until we knew our total budget. It so happens the right piece of land was there for the price we were looking for. Patience and being prepared make the experience so much more enjoyable and easier.

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Permalink Reply by Ted on March 29, 2009 at 4:20pm

You have gotten some great advise Colleen and you should consider all that was suggested. I hope that my experiences will give you another perspective. I bought 3 plus acres of land near Waynesville, NC. I got a septic permit for a three bedroom home. The driveway was already in. The property is relatively flat so excavation is not a factor. The big unknown is the cost for drilling a well. I could go own a couple of hundred feet or a thousand feet or more.

I originally got quotes from a half a dozen log home manufacturers but found that their estimates differed so much that I decided to speak directly with a builder who could do the whole building job for me... from excavation to foundation to well drilling to purchase of the logs. And then build the entire building. So that I would have a closed in (locked) building, including all windows and doors. He would construct all interior partition walls but would not finish them. He would put on the roof sheathing and felt paper but not the roof shingles. His price included backfill, gravel driveway and basic grass seeding.

I would be responsible for all interior work including (but not limited to) closing in all rooms, electrical rough in and finish, plumbing rough in and finish, HVAC, cabinets, all appliances, light fixtures, interior doors, locks, flooring, water heaters, tiling, painting or staining, fireplace or masonry work. The furniture would come from my current house.

The bottom line. Here is how my numbers worked out. The house by the way is about 2000 square feet. The land cost $50k. The builder will do his share of the construction for approximately $200k. My share of the construction budget comes to $95k. That comes to a total of $345k ... $172.00 per square foot. Since I don't know how elaborate you plan to make your house, your costs my go up or down.

I hope that this information is helpful. It is fairly current so the numbers should be fairly reliable.

Personally, I found that dealing with a builder rather than with a log home manufacturer could save me a lot of money. On the other hand a lot of people feel more comfortable going through a log home manufacturer.

If you have any questions about my numbers or are not clear about something I said, please let me know. If it is helpful to you, my email address is tedsanko@yahoo.com.

Ted

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Permalink Reply by Sheds and Shacks on April 7, 2009 at 11:08pm

It really all adds up to how involved you want to be. We dried in our home in Florida (cypress logs) for $40. per sq ft and my brother's place in Ga for about $35. (pine). That included foundation thru roof with ext doors, windows and trim. We only bought logs from a manufacturer (not a dealer). Don't forget, a lot of dealers make 15-20% commission on top of what the parent company makes so that adds up.

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Permalink Reply by Ted on April 8, 2009 at 12:01pm

Wow! These are incredibly good numbers. You have to share with us your sources for lumber and construction. The best I have been able to do for a materials package is around $90 per square foot. The best I could do for a "dried-in" package was $180 per square foot. And this was for a 2000 square foot, pine log home with dove tailed corners. When you add in all your other costs, i.e. land, excavation, foundation, septic, well, plumbing, electrical, interior finishing, cabinets, vanities, painting, staining, interior doors and hardware, etc ... then, what does your square foot price come to? Ted

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Permalink Reply by Sheds and Shacks on April 16, 2009 at 12:55pm

With my brother's home in Georgia, I purchased the logs and siding from a company north of Atlanta with a builders discount. I only paid @.55 cents a sq ft for interior 1x6 pine siding. As I explained to my brother, that's alot cheaper from buying sheetrock and hiring someone to hang and finish it. I also went up there and laid out the foudation myself and paid a crew to lay the blocks only. We poured the lintel and used a couple of laborers to help put the house up. I also put in a pre-fab fireplace that will look great after the stone is completed. His completed price is @ $145k for a 2800 sq ft home with a partial basement that my nephew is going to use as his "man room." We didn't use a G.C. because face it, what do they do? Order cabs and countertops for you after they ask you the colors? As far as security with using one, there's so many going broke now-a-days that all you're really doing is taking a risk with a high priced babysitter.

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Permalink Reply by gatorgene on April 11, 2009 at 2:48pm

G Contractors costs are varied also. Did you compare more than one G Contractor "dried in costs" to be sure you really did get the best deal?
Gatorgene

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