The Battle of the Budget

by | Jul 9, 2021 | Financing, How-To, Planning

For those who embark on the journey of building the log or timber home they have always wanted, one point become clear early in the process. The dream may be realized only within the boundaries of what the budget will bear.

Finding the necessary balance between building and budget is a curious combination of art and science, aspiration and reality. Taking some time to consider the parameters that must guide the building process reduces stress while saving later effort and money.

“We suggest that the customer determine how much they can afford to spend in parallel with deciding the size and style of the home they want to build,” advises Rodney Robertson, president of International Homes of Cedar, Inc., “then, work with a company that will help them to converge what they want and how much they want to spend. When a customer asks what the cost of their new home will be, our two biggest questions are how large the home will be and what the level of finishes will be. Other significant drivers of cost are how many stories are in the home since it is less expensive to build up than out, and the complexity of the plans.”

Thinking big is harmless in itself, but the beginning is virtually always intertwined with the pocketbook. “Decide on a budget goal for the project or meet with your bank to get prequalified on the amount you can comfortably afford to spend,” urges Mathew Sterchi, vice president of sales and marketing with Stonemill Log and Timber Homes. “Be realistic, detailed, and specific to develop a set of plans with your budget goal in mind. With a detailed set of plans in hand, meet with a general contractor or subcontractors to determine a total cost for the building project.”

Armed with a dose of reality, homeowners can effectively determine those aspects of their new log or timber home that are “wants” versus “needs.” In terms of wants, these items can best be described as nice to include, such as a swimming pool, water feature, upgraded lighting or landscaping, or a central vacuum system, to name a few. Needs are components that are nonnegotiable—the absolute musts. These may include such functional elements as a two-car garage, handicap access, master bedroom on the main floor, or even an elevator.

“There are many important elements to budgeting for a log or timber home,” notes Laura Jamison, marketing manager of Precision Craft Log & Timber Homes. “Those elements are easily divided into two categories: fixed and variable. Fixed elements that impact the budget are those about which you cannot do anything, such as site constraints or engineering requirements. Variable elements, such as size of the home, architectural complexity, material choices, and level of finishes, are items over which you have control in order to meet your budget.”

Sterchi suggests that any serious budgeting effort should be detailed and precise. Develop that detailed set of plans to determine more accurate finishing costs, he says. Be as specific as possible on finishes to determine well-defined total costs. Remember to figure land improvements, such as roads, power, well, septic tank, and other necessities into the overall budget, or at least budget a separate amount for land improvements unless the site is already improved.

“Avoid spit balling estimates!” Sterchi laughs.

Of course, there is a litany of common mistakes and assumptions that would-be homeowners are guilty of committing. It happens, but minimizing the risk is the essence of proper, realistic budgeting.

“There are a few budgeting mistakes that people frequently make when constructing a log or timber home,” warns Jamison. “First, a log or timber home, with its large timbers or log walls, is a luxury home. Second, a log or timber home is not a stick-built home; therefore, to compare the cost of the two is like comparing apples to oranges. Finally, people need to consider the long-term costs of home ownership such as energy bills or maintenance when they are looking for places to trim their budget. The cheaper HVAC system looks good on paper, but if your utility bills are double the cost of a more expensive system, then you haven’t saved anything.”

The homeowner must maintain control of the project, according to Robertson. Allowing others to make decisions that translate into real dollar expense is a slippery slope and almost always an exercise that sucks savings out of the total project.

“Often people give an architect or designer too much control over the design process,” Robertson reasons, “with little or no focus on the costs of construction. We often get customers who come to us after someone has drawn a plan they love but which is hundreds of thousands of dollars out of their budget. This is why it is so important to have the budget in mind prior to doing the plans for your home. Make sure you finalize the specifications before construction. Most cost overruns come from costly change orders, which could have been avoided by better planning up front.”

Naturally, proper planning lines up with the level of anticipated finishes. For example, the cost of Viking and Sub Zero appliances is much higher than General Electric or Kenmore appliances, Robertson adds.

Change orders have put many a well-intentioned homeowner over the edge as a log or timber building project develops. Once a budget is determined, stick to it. Surprisingly at times, a little upgrade here or a small tweak there, a slight upgrade in the lighting or a bit of a boost to the cabinetry, will add up at incredible speed. An owner is sometimes left scrambling, crawling back to the bank to ask for more money or tapping a rainy day fund or retirement account for the absolute wrong reason.

Monitor the budget on the front end and consider some areas in which savings may readily be found without sacrificing quality. “Watch the roofing, flooring, fireplaces, cabinetry, and countertops” remarks Sterchi, while Robertson says, “The single biggest driver of cost is the size of the home, so try to design a home that is efficient in its use of space.” Jamison gives a nod to simplicity, commenting, “Architectural complexity has to do with how difficult the home is to build. For example, a 2,000-square-foot house with four corners and one roof ridge will cost less than the same size home with eight corners, two roof ridges, and a gable entry.”

Be realistic. Be aware. Be informed. Then, taking the log or timber home building plunge will result in a lifetime of satisfaction.