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Regular Contributor
etnu
Posts: 51
Registered: ‎05-13-2009
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Any experience building a modern home on the east side?

My wife and I are giving up on tract housing and have decided that we want a modern home on the east side.

 

We're not entirely sure it'll be possible due to financing limits (lenders want 25% + 10% contingency funding)

 

We thought we'd be able to go to $1M, but based on the down payment requirements for construction loans, we think we have $900,000 as a hard cap. That seems like a lot to me, but:

 

- Property will be ~$200k

- Utilities, site prep, etc. will be $50k

- Architect fees of maybe $50k 

 

This means only $600k for building. 

 

We have a big family (4 kids, at least 5 bedrooms) We believe we need about 3200sf to accomodate everything that we want.

 

Is this completely unrealistic? $188/sf seems like a lot, but I've been told by some builders that it's probably not adequate and that I really need closer to $1M to do the project.

 

I'm only familiar with one builder that does the kind of homes that I have in mind -- BUILD llc -- but their stuff looks awfully pricey. Is $200/sf+ the best I can expect?

 

My income is high enough that a higher monthly payment doesn't bother me, but the hard financing rules get in the way. I've been looking for other options (HELOC on my current home, getting the land owner to carry the note, etc.) to close the gap, but that seems awfully convoluted. I have enough equity in my current place that I'll be made whole again when we move out, but I can't sell it until the new house is built.

Contributor
MM_Dollar_Prob
Posts: 14
Registered: ‎04-04-2011
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Re: Any experience building a modern home on the east side?

There is a really great blog that someone in Seattle created detailing almost everything about their building process.  Looks like the total cosst was $247/sqft, with construction costs being $209/sqft.

 

http://www.ahousebythepark.com/journal/

"If I owe you a pound, I have a problem; but if I owe you a million, the problem is yours."

John Maynard Keynes
Silver Contributor
bld999
Posts: 449
Registered: ‎04-15-2011
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Re: Any experience building a modern home on the east side?

Generally speaking, it is difficult to beat $200/sf on a crisp, well detailed modern style home. Many things can change that, site topography among the most dramatic. Steep sites often require 1 - 200k in foundation costs, while flat, easy to build on sites help the budget immensely. Juridiction can add cost, some places demand more than others, etc.

 

Owner demands and decision making also play a big role in cost: if you want expensive stuff, the house gets expensive.

 

Lots of considerations. One good thing is that there are lots of very capable custom builders who may not have the "brand" of the one you mentioned, but can do as well or better in execution.

Regular Contributor
Mtndude
Posts: 61
Registered: ‎11-14-2011
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Re: Any experience building a modern home on the east side?

http://www.ys-development.com/

 

Ask Yuval.  He has built in Kirkland and Bellevue.  

Contributor
EFArchitects
Posts: 29
Registered: ‎04-13-2011

Re: Any experience building a modern home on the east side?

It does sound like your budget is low for what you're looking for,, and you're right that construction financing is pretty tough these days.  That said, here are some points to keep in mind:

 

  • You can cut some of the development costs by looking for property for a remodel, or even a tear down.  There's often value in the utilities, driveway, site prep, and foundation.  Involve the architect in your property search and selection process.
  • In terms of construction financing, our clients seem to be having a better experience recently with Washington Federal than other lenders.
  • Spending time upfront to develop an efficient and compact design will more than pay for itself in reducing construction costs.  You won't be building unnecessary square footage.
  • There's a wide range of quality in modern design and construction out there (the same is true for traditional styles).  There is a different skill set involved in traditional vs modern designs, so working with someone with a strong track record on the modern side is recommended.  

 

If you're looking for a design/build firm, Build LLC has a great reputation.  If you want to go with a separate architect and contractor arrangement, AIA Seattle has an online portfolio of residential architects.  I don't think we'd quite meet your budget based on the assumptions you've made, but you can check out our website and reach me via our online contact form if you want to get in touch.

 

 

Regular Contributor
etnu
Posts: 51
Registered: ‎05-13-2009
0

Re: Any experience building a modern home on the east side?

I don't know that construction financing is "tough", they just want 25% if you're borrowing more than $600k :smileyhappy:

 

I spoke with some folks at BUILD and they seemed pretty confident that we could build the property for $1M if I can keep the land cost to around $200k (i.e. $800k for design/prep/build)

 

My problem is that, by the time we'd like to start construction, I'll only have about $200k in cash, and the bank wants me to have between $250 and $325! Given another year, I could come up with that, but who knows where interest rates will go by then (plus, I don't really want to wait another year to start building).

 

Is it reasonable to use a HELOC to cover the gap in situations like this? I have an untapped HELOC. Barring housing going crazy again next year, I feel pretty confidently that I have well over $100k equity in my current home so I don't think I'd wind up too bad from that.

Silver Contributor
bld999
Posts: 449
Registered: ‎04-15-2011
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Re: Any experience building a modern home on the east side?

[ Edited ]

etnu wrote:

"I don't know that construction financing is "tough", they just want 25% if you're borrowing more than $600k :smileyhappy:

 

I spoke with some folks at BUILD and they seemed pretty confident that we could build the property for $1M if I can keep the land cost to around $200k (i.e. $800k for design/prep/build)

 

My problem is that, by the time we'd like to start construction, I'll only have about $200k in cash, and the bank wants me to have between $250 and $325! Given another year, I could come up with that, but who knows where interest rates will go by then (plus, I don't really want to wait another year to start building).

 

Is it reasonable to use a HELOC to cover the gap in situations like this? I have an untapped HELOC. Barring housing going crazy again next year, I feel pretty confidently that I have well over $100k equity in my current home so I don't think I'd wind up too bad from that."

____________________________________________________________________________________________

You wouldn't be the first to use a heloc in that manner. I would be tempted to begin to draw on it to test it out. Rates are so low if it is a variable rate, the carrying cost is low.

 

I don't know if lenders would object to borrowed money for the 25%; I guess that's the question.


 

Regular Contributor
etnu
Posts: 51
Registered: ‎05-13-2009
0

Re: Any experience building a modern home on the east side?

An agent at wells fargo suggested that a HELOC would probably be fine, as long as I can prove that I can carry the cost of my current mortgage + HELOC + new mortgage (I don't think that'll be any problem). 

 

One thing that I thought was odd was that the guy at wells fargo was saying that I could get 4% even on a construction loan but the agent at Washington Federal said that anything below 5% was unlikely. The WF guys wanted me to have an extra 10% contingency fund but the Washington Federal guys did not. Both wanted 25% down for a loan in excess of $600k though.

Super Contributor
oddman
Posts: 295
Registered: ‎10-26-2009
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Re: Any experience building a modern home on the east side?

Getting a good site for a million dollar home is going to cost more than 200k. Well at least if you are planning to match location/ area with your building.

As to nine hundrec to build. Yeah its plenty. You can do a 3000 foot home for that. But be carefull when you buythesite sites tend to be cheap for reason. And often the savings made are spent on the exra site costs incurred.

Also yu can always design the home so as to make it bigger later and spend the money on better land ....

I know i could get someone to build me a good modern home inside your budget. Well apart formthe lot
Regular Contributor
etnu
Posts: 51
Registered: ‎05-13-2009
0

Re: Any experience building a modern home on the east side?

I've seen three lots for around my land budget that will work and won't be completely out of line with the area, price wise. We're only looking for half an acre or thereabouts.