If you choose to buy an existing home, be assured, someone else is making money out of the deal. It’s one of the major reasons people sell. But it doesn’t have to be this way. You could just as easily be the one making money. And if you build your new home, that’s exactly what should happen, right?
I was born into the building and construction business and for years I took it for granted that most people knew, that when using the right processes, you can usually build something for less than what it would cost you to buy it. In other words, with the right know-how, building can be cheaper. I know how that might take some of you by surprise. Let’s take a look at some examples.
There are three reasons why people choose to build a home:
- To live in
- To rent out
- To sell immediately
Considering the third point for the moment, it’s obvious that the main purpose of anyone building a house to sell is to make a profit. Why else would they do it? If you’ve ever thought to yourself, ‘I don’t want to be bothered with the hassle of building, but still want something really nice and new,’ remember this: no-one builds a house to sell to break even or lose money. They do it to make money.
If you buy a brand new home, it’s more than likely that someone is making money from you. If anyone is going to make money out of building a house, why not let it be you?
The cost of building
There are an enormous number of variables that come into play when we look closely at what it costs to build a new home. The most obvious considerations that determine cost are:
- The size, location, quality, and limitations and features of your land
- The size of the floorplan
- The materials used to construct the house, including the façade, porticos or pergolas
- The fixtures and fittings within the house
Just to give you an idea of the effect variations can have, I’ll share with you a couple of examples from my own recent builds. One is with a volume builder and one is with a custom builder. Both examples are based on present day costs.
The house in this example ticks all the boxes for excellent liveability for a growing family. It’s also located in a great family-friendly area dominated by owner-occupiers, in an estate with an all-ages playground and wide open spaces. The specs on the house are:
- 4 bedrooms
- 2 living areas
- 2 bathrooms
- double garage
- 700m2 block of land
Cost of block: $160,000 (including stamp duty)
Base price for house: $218,000 including site costs
Plus $45k of upgrades = $263,000
Plus $10k for basic landscaping and fencing = $273,000
Total cost to build house: $433,000
To buy this home brand new might cost you around $460,000–$480,000 in today’s market. Plus, if it’s not your first home, you’ll pay $19,570–$20,779 in stamp duty on top of the purchase (more about this later).
Total costs to buy house: $480,852–$502,098
By choosing to build this home a family could save $67,852–$69,098
Let’s now consider a house I built in 2016 with a custom builder. It was fairly basic, but very nice with a great floorplan, and was orientated to capture the light throughout the kitchen and living areas. As in the previous example, it had four bedrooms, two living areas, two bathrooms and a double garage. The land cost $120,000 and the final figures for the house came in at $250,000. We sold the house brand new for $410,000 with the purchaser paying an extra $18,558 in stamp duty. In this instance, the purchaser effectively paid $428,558 for a home that cost me $370,000 to build. These facts demonstrate how, when all things are equal, it makes far more financial sense to build rather than buy.
So, now that you have an idea of the real cost of building versus buying a similar house, what are you waiting for?
Our 5 step system makes it easy to get started on your home building journey today. Yep, right now. It’ll tell you exactly where to start, where to turn and what to look out for along the way.
There’s absolutely no reason why you shouldn’t be the one who profits from building a home?
Find out how to make the smart moves by taking the 5 Step Journey to Building your Best Lifestyle here.