Access-A-Hut's Blog

October 10, 2009

The three costs of a house

Filed under: Land costs,Uncategorized — by accessahut @ 11:02 am

If you build on new land in a city, there are actually three sets of costs involved. This is assuming you have cash on hand and does not include finance and interest charges:

Purchase price of land:

  • Land itself
  • Taxes
  • Closing costs
  • Inspection costs
  • Buyer’s commission
  • Seller’s commission

Preparing the land

  • Environmental Assessments (at least a Phase 1, which searches the history of the lot, and then a Phase 2, which tests the soils and determines the physical characteristics)
  • Building permits (electrical, mechanical, plumbing, construction)
  • Utility permits (Water, sewer)
  • Utilities themselves (Water, sewer, electric)

Building the house

  • Design costs
  • Zoning costs
  • Foundation preparation
  • Foundation and walls
  • House (plumbing, electricity as well)
  • Fence
  • Ramps
  • Driveway
  • Gutters

The land and the house costs are somewhat determined by the size of the house. But that middle category stays the same, no matter how small the project.

The economics here are like the cost calculations in buying a shirt. You take the price of the shirt and divide it by how many times you wear the shirt to get a relative cost per wearing. This allows you to compare thrift store clothes ($5 for 10 wearings = 50 cents a wear) vs new clothes ($50 for 50 wearings = $1 a wear). You could take the price of the land prep and divide it by the number of houses ($40,000 for 1 house = $40,000 a house) vs ($40,000 for 10 houses = $4,000 a house).

So… maybe our fantasy of getting a big lot and dividing it into little houses is not so far fetched as it seems. Instead of just building and designing for ourselves, we could build and design a whole community–say 6 houses on a 6,000 sf lot.

We don’t have the money, but I have good credit and could leverage this. And if we are doing accessible housing, we might be able to get a grant or something.

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1 Comment »

  1. Good list.
    Unfortunately, we’ve always found that with our building costs, they’re usually more than we budgeted.

    Comment by Kerri Fivecoat-Campbell — October 14, 2009 @ 8:36 am |Reply


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