What does it cost to build an remodel, addition or accessory dwelling?

Many people who call us because they are interested in designing and building a custom project start with the question, “How much does it cost to build?” When people hear the answer, their next question is, “Why? I thought it’d be less expensive.”

Then come the following thoughts:

1. “My friend told me that projects can be built for $200/sqft”
For years people have heard a general rule of thumb that houses can be built for $200 per square foot. They think that if a 3000 sqft house costs $600,000 to build, then a 500sqft remodel or guest house should cost  500 square feet X $100 per foot = $100,000. But this just isn’t true.

The $200/sqft number can be accurate, but the size of the house has to be large enough to take advantage of economies of scale. Generally, the bigger the house is, the less expensive it is to build it per square foot. The smaller the house is, the more expensive it is to build per square foot. You’re going to have to build a 2500sqft+ house to be able to hit that $200/sqft number.

Also, when a builder says they can build a house for $100/sqft, they are generally only talking about the costs to build, and not factoring in design or permitting costs. These costs alone are often over 20% of the project.

And finally, the cost per square foot can change dramatically based on the location of the project. For example, costs to build in a coastal city can be as low as $200/sqft but fancy projets in Dwell Magazine are easily $500/sqft or even $1,000/sqft.  And as home prices continue to increase around the country, the cost of building increases as well.

2. “I just want a simple house.”
That’s great. But even a simple house is a complex feat of permitting, engineering and back breaking labor.  And these things take time and money.  It’s helpful to know that all projects are built using the same process:
a) Figure out what you can build, including checking on permit requirements in your city or county, if you do that kind of thing;)
b) Work with an architect or designer to draw up the size, look, and shape in a “schematic” design.
c) Submit the design to the planning department to get planning permits.
d) Once you have the planning permit, have the architect draw up construction documents for a building permit. This often requires two or three engineers such as structural, soils and civil.
e) Determine all the “finishes” which include appliances, faucets and fixtures, materials, tile, paint colors, landscaping, utilities etc..
f) Work with builders to get bids prepare the land, pour a foundation, frame the house, enclose the house, hook up water/electric/sewer, and install finishes.

Whether you build something 500sqft or 5000sqft, all of these steps are taken.

3. “I’m thinking a prefab house because it’s easier.”
This is possible but it really depends on your site,  existing home and personal goals. Blu Homes and Living Homes are the top of the line if you go this route.  Buying a home that is built somewhere else is a great idea and it can save time on design fees, but it still needs to meet your city and county codes and then be permitted. Then it needs to be shipped to your location, and if that location is in an urban setting, you’re looking at significant costs to shut down streets and possibly hire a crane to lift the unit into your backyard. Once it arrives you will have paid for the same foundation and water/electric/sewer hookups that you would need with a stick-built home. By the time all of this adds up, you’re looking at a similar price to building a custom house. And while you don’t have to spend time designing prefab, you still have to spend all the time getting permits.  And most importantly, a custom home allows you to design something specific to your needs and the lot in which it will reside.

4. “My uncle is a handyman and can build for me for cheap.”
The best way to save money is to do the work yourself. It will take you a long time and you will make mistakes, but it can be an amazing and fun experience. One of our favorite projects is this Normandy Style stone house in Upstate NY. The walls on this thing are 2′ thick stone!

Moriarty Farm House 1         Moriarty Farm House

The owner spent seven years getting to this point.  It is a $1,000,000 home that will cost less than half that and it is a work of art.  We’re not counting this husband/wife team’s 10,000 hours of labor in our costs too.  If you want to try this Just be really careful because construction is the definition of back-breaking labor.

The second best way to save money is to manage all the subs (electrician, foundation, framer, drywaller etc…) yourself.  The most skilled subs prefer not to work for inexperienced clients.  You will take 10X too long to make decisions and will call them back and they’ll end up making $2/hour working for you.  So you’ll get stuck with the second tier subs and that can be painful!

If you have a relative who is skilled and experienced and willing to work for free, jump on that and do it!

5. “A builder I know says he can build for for $X.”
Be very careful with this scenario. Permits alone can cost $15,000. When you get a bid from a builder, make sure they give you a price for every line item that will go into the house, from permitting, to design, to construction, to cleanup. At New Avenue, our process requires that our partner builders review a 200+ line spec sheet with every single piece of building a house so no one can say the dreaded phrase, “We didn’t talk about having a (insert whatever you like here such as “sewer line”) for the house. That will be an extra $15,000.”

6. “Where do you get your information about building?”
After working with many architects and builders on over 500 projects, we have a very unique data set that shows exactly what every component of building a house costs. For example, we can easily pull up a project that we managed and show that the foundation cost $10,775. We can then pull up another sheet that shows a house with $7,000 of Hardieboard siding and the fair change order (and totally a good idea) to change that to cedar shingles.

7. “Can you give me a sample breakdown of costs to build a small house?”
This is our specialty. Let’s say you wanted to 300-1000 square foot project in the San Francisco Bay Area where things are more expensive than other parts of the country. We would start by showing you what a similar, recent, project we worked on cost, including every single detail, and then adapt it to meet your needs. Here’s a shortened example of a small project:

– Initial Assessment and Permit Research: $400
– Design Fees: $5,880
– Construction Documents: $5,400
– Engineering: $4,500
– City Fees: $5,620
– Survey: $2,300
– Construction Administration: $3,400
Total Design and Permit Costs: $27,500

– Demolition: $2,100
– Site Prep: $7,100
– Foundation: $11,975
– Framing & Carpentry: $23,700
– Insulation & Moisture Protection: $3,500
– Windows & Doors: $6,489
– Finishes: $14,825
– Plumbing: $13,900
– Heating and Ventilation: $3,400
– Electrical: $5,300
– Contractor Overhead and Profit: $15,100
Total Construction: $107,389
Total Project Cost: $134,889

 8. “Can spending a ton of money  still give me a good return on investment?”
Absolutely. The financial return is often there but the real financial return is rarely the cash you collect. A creative space, family room, home office, guest room or anything that increases the value you and your family get out of your home can make the investment well worth it.

Financially, many of our clients create something that is worth more than the cost of construction.  So there return there is a no brainer.

Other clients spend $200,000 building a guest house that increases their mortgage payment by $1,200 per month. If they can rent the accessory dwelling out for twice their costs while paying down the loan.  Many people choose to downsize and move into their accessory dwelling while renting out their main house, bringing in even more rental income. Or by creating a second unit for your child or your parents you can avoid paying for many of the expenses of living separately such as rent to live elsewhere, maintenance and taxes of owning two homes, or the high costs of assisted living.

No matter what you are considering, the New Avenue platform is the easiest way to get organized, get bids, hire a team and manage your project.  It’s free to sign up and use New Avenue

 

The Inspiration Driving New Avenue

I was fortunate to have a research position in the tropical paradise of Bali, Indonesia when I was 22. Bali is known as a Paradise.  Most people consider sun, surf and white sand beaches to be the makings of a paradise.   I certainly agree and that certainly applies to Bali!

I was surprised by the beauty of the mountains, their surrounding rice paddies and the dense little neighborhood where I rented a room in a family compound.  The differences between a Balinese village and a typical American town give meaning to the phase “a world away”.  It turns out the paradise in Bali is the people and the communities.  The beaches are a distant second, or even third.

This is the view of the area surrounding the village where I lived.

Screen Shot 2016-01-05 at 12.20.51 PM

Beautiful, isn’t it?

This overhead view of the village shows a fascinating glimpse into this 1,000+ year old community.  You can see the density of the homes, the distinct line that our city planners would call an “urban growth boundary”.   There is a small park, temple and market at the main intersection in the middle of town.   Balinese Village

 

We might compare this nostalgic town to a Swiss or Tuscan Village too. This island village has attributes that are universally attractive to us.  A walkable community, local shops and soccer fields matter as much in Bali as they do in Los Angeles or New York.

My very rough sketch of a small home in Bali is far from architectural quality.  But you can see what is happenning on 5,000 square feet – the same space of a typical American suburban home.  There are two rental units in the front (the left), the apartment I rented (i.e., Airbnb in 2001), the owner’s home and an open space, which in the case of the Balinese is mostly dedicated to a family temple.

Balinese Compound

What sparked New Avenue is the reality that the wealthiest people in the US have had compounds like this for as long as we’ve had homes.  A compound is still what the wealthiest people today choose for themselves.  The CEO of Google, or Leonardo Dicaprio, or The Great Gatspy all choose a home with some form of carriage house, in law apartment or guest house.

When founding New Avenue we asked if farmers in Bali and billionaires in Silicon valley choose the same style of home, then can the rest of do the same?   Do we even want to?

Surveys across numerous cities found that over 30% of us want what the Balinese and the billionaires have – and the most shocking stat is that 100% of people who have an accessory dwelling would recommend others build one too.  That 100% includes families with in-laws living a few feet away.  I’m writing this just after the holidays and I find those results shocking.

For the farmers of Bali a compound may be out of necessity while for others, it might be a pure luxury. Either way, a more social, more secure, more flexible home makes people happier. So we set out to make it possible for anyone, anywhere, to maximize the benefits their homes creates.  That means we need to make it easier for owners to remodel their old home or build a new one – and that’s what we do.

 

 

 

 

Home Sweet Home

I recently thought to write about the home I grew up in.  Our business is about homes and families.  It’s all about people.  When we talk to clients, the first thing we ask about are your goals and the second thing we ask about is your family.  When we talk to potential architect or contractor partners, we talk about what we have created, why we created it and who it is for.

So, I’m sharing a small history of the place that I grew up. This defines home to me.  It defines why I started New Avenue and what New Avenue does.

ShovelingThis is a home on Harvard Place in Orchard Park, NY after a Christmas snowstorm. That’s me, and my wife Kristina.  Orchard Park is a “southtown” that was absorbed by the suburbs of Buffalo, NY.  Buffalo is a Rustbelt city that was the Silicon Valley of 1900, only we relied on the Erie Canal, not the internet.  It was fun while it lasted but our prime was over 100 years ago, so we’ve been sustaining ever since.   We have the benefit of some great work to sustain too.   People like Frank Lloyd Wright and Frederick Olmsted define the city.  Olmsted created the first parkway system which is part of Buffalo’s claim as “America’s Best Designed City”.

Back to the point – home sweet home started in a Sears Catalog in 1910.

Harvard

 

Not too much had changed by 2015.

We painted it red, and added a dormer off the back for my brother, the oldest of four of us. The home did have an interesting adolescence when it was converted into a duplex “during the war” which means WWII around there.  There was a manufacturing boom and housing shortage at that time.

The best parts weren’t advertised in the Sears Catalog.  This one came with a sled hill that could handle 10 kids with eash, a basketball court that worked on the day of your first communion and room for a Buffalo News paperbox.  Always hire paper carriers is a good rule to live by, but that’s obviously a line of work that’s harder to come by these days.

Sled Hill

Buffalo News, Basketball, Catholic Stuff

So without providing too much of a family history, that’s what home is about.

A few stats that are relevant about this home:

  • Distance to The Miller’s pool – 100 yards and one 4′ fence that is easily jumped.
  • Distance to South Davis Elementary – .5 miles
  • Distance to my father’s office: 100 yards
  • # Kids aged 5-18 living within one block ca.1988: 25

Oakland Accessory Dwelling Rules Are Changing Allowing Easier Parking – Finally!

Oakland city staff has recommended easing the rules for permitting an accessory dwelling.   There are several changes regarding setbacks, height, parking, rebuilding existing spaces and more.  Most importantly, Oakland has historically required two side by side parking spaces that would often times consume your entire yard.  This will no longer be the case.  Oakland plans to allow tandem parking (tandem means two cards parked front to back in a driveway).

Tandem parking has been the standard method of permitting accessory dwellings in neighboring city of Berkeley. Of nearly 50 New Avenue projects in Berkeley almost all of them utilize tandem parking in their permits.

Art Clark, one of New Avenue’s partner architect (and the designer of several custom homes, municipal projects and accessory dwellings) is participating in this dialogue.

See one example from Art’s Accessory Dwelling portfolio here: http://newavenuehomes.com/u/art-clark

Read more about the planning changes here: Oakland Accessory Dwelling Report – Planned Changes

Areas Near BART Stations in Oakland

 

Truckee CA / Placer County Accessory Dwelling Codes are Changing

One of our design partners, Michael Hahn is a timberframe specialist. As such he spends his time in mountain towns.  This August he’s in Truckee, CA.

Being new in town he’s poking around to get the lay of the land.  As part of this he attended a city council meeting – which sounds painfully boring, but none the less, he heard some good news about accessory dwellings for Placer County.

Here are some quick notes:

NTRAC meeting on Thursday 8/13/2015: 

  •  The last item on the agenda was to vote in new language for the secondary dwelling units allowable within Placer County.
  • The portion of the code currently being modified specifically pertains to all regions in Placer County, with exception of any land that falls within the Tahoe Basin (refer to TRPA boundary).  The code has a separate section specific to the Tahoe Basin, and Crystal Jacobsen of Placer County Planning hopes to amend this section as well in the future.
  • The county and committee both seem in favor of such changes, as this helps address changing trends in density, the need for supplemental income, families aging in place, and minimizing loading on existing utility infrastructure to name a few.  The proposed changes do encourage architectural continuity, though the wording leaves a lot on the table to be determined on a case by case basis.  The dwelling sizes can range from 240 SF up to 1,200 SF based on lot size.
  • Overall the amendments are going to streamline the process of getting permits for secondary dwelling units, and has opened up the door for many to pursue this direction.  We are looking forward to getting involved in more of these structures as the codes are changed to better address this type of building.

 

www.transverseBLDG.com

How to Interview an Architect

Try walking through these questions:
- Ask for his or her ideas about your project
- Ask what the biggest challenges for this job will be
-Get a feel for how receptive he or she is to your ideas
-Find out how involved he would be as the building progresses 
-Confirm what is included in the fee.  Are the following included:
  • Permit forms
  • Responding to city “plan check comments”
  • Recruiting sub-consultants such as engineers and surveyors
  • Reviewing contractor bids
  • Reviewing contractor bills
  • Approving/denying contractor change orders
  • Picking out finishes: Flooring, tile, paint colors, cabinets, counters etc..
-Confirm who will actually do the designing
- Ask for clarification about anything you don’t understand
- Ask if they can provide three dimensional drawings
- You’d want to see previous work
- Talk to clients 
Anyone who is part of New Avenue has the skills to get the job done.   So this is mostly about your feelings about who you want to work with.   Ideally like him or her very much and when you are talking it becomes quickly obvious that you are on the same page. 

Budget and Planning/Zoning Permit Drawings for a Backyard Cottage / Accessory Dwelling in Berkeley, CA

Here is a completed cost of a 640 square foot accessory dwelling with an additional 200 square feet in the upstairs loft.  The architecture and construction was all delivered by New Avenue via our online platform for design/build.

If you are looking for a design proposal or construction estimate for any addition, remodel, new custom home, or guest house, then this budget is a great starting point.  All the “hidden costs”, surprises and tricks that you don’t know (honestly, you don’t, unless you’re a contractor) are listed here.

The planning permit drawings are here:  New Avenue Planning Submittal

The actual budget is here: 640 1st floor 200 2nd floor

Client Quotes and Referrals

We’ve been fortunate to receive a lot of nice feedback from the clients, architects and contractors that we work with.   We typically share this list when a potential client asks for a reference in order to verify a construction budget, construction schedule, building permit process or costs.

Thanks for the kind words, everyone!

Our son, AJ joined our little family last Tuesday. Thank you for surrounding us with a strong team during all of this,it’s good to know that New Avenue, Mick and Robert have the house project under control while we’re ramping up on this whole parent project thing.

– Robert K (San Rafael Remodel, Addition, new master bathroom, seismic, 5/6/2015, 7 days after AJ’s arrival)

The very nice thing about working with you is that I don’t need to worry about the process and oversight, and vetting people to do the work.  That is a huge value for me.

Robert is a pleasure to work with.  He is very easy and has been responsive and flexible and understands what we’re looking for.  And he certainly knows his business and how to work with the City. So that’s great.

– Marian M (Berkeley master bedroom and master bathroom remodel, client note from 5/2015)

 Chris (The Architect) is designing such a nice cottage that I might just move in myself and rent out the main house!

– Ellen H (Albany, CA  client, detached music studio, guest house, landscaping, new bathroom)

Having a fully integrated way of controlling correspondence along with billing is nonexistent. Unless you’re really happy spending your day in front of a computer all day then this is really great

If you have a system that an average client can sign into and use then it has to be pretty user friendly.  If it’s good enough for them to use then I wouldn’t think that my learning is very difficult.

Hooking quickbooks up to microsoft office and getting four systems to work together just doesn’t work.  I keep one file with six different sub files for every job.  Subfolders are bidding, subcontractors, estimates, correspondence etc… and I just leave it on my desktop.  My wife has to call me and I guide her through each file until she finds what she’s looking for.

– Mike, General Contractor (Berkeley accessory dwelling, San Francisco Addition, San Francisco remodel, Oakland guest house, Berkeley addition, El Cerrito accessory dwelling)

“You are rendering a very valuable service to the families and communities for which we have great appreciation”

-Vijai Sharma, PhD, Oakland addition

If I could do 20 projects per year with New Avenue I’d be the happiest guy on the planet.”

-Mike, Contractor  

“New Avenue has helped to take the work of finding and attracting new clients off of our to do list, allowing us to focus on what we enjoy doing the most – designing for these clients.”

-Patrick, architect  5/2014

“Working with New Ave has been such a great experience! From the beginning, New Ave and Paks Builder have been cohesive partners and we look forward to working on many future projects together!”

– Robert P – General Contractor

“You certainly make it waay better than business-as-usual.  No doubt.”

– Prasad, Client 9/23/2014

“I’m tired of trolling Yelp and banging my head against the wall.  I just want someone to show up and do the work.”

– Bryndis T

 

How A Fixed Price Construction Budget Works



A client recently asked one of our architect partners the following question:
“Could you ask to see the receipts so we know they aren’t cheating me on the purchases? They are not supposed to make a profit on the purchases, but they do make a profit where it says profits on the budget”
If you want to compare a project budget to the actual cost, you will need a simple table like New Avenue uses in our Budget page.   Anyone can look at the budget tab on your project page by signing into newavenuehomes.com
To give an example of how budgeting works, I have attached two pictures.  One is for a roof.  This shows an original budget of $4,500.  In this example, the roof is already on.  The budget for the roof has not changed, it is now 100% complete and you can see that the client paid $4,500.  That is completed “on budget”.
 Shingles and Shakes Budget - Roof
The second shows the windows and doors.  This changed via a change order the client approved.  The client ended up selecting nicer quality windows that cost more than was budgeted for the windows shown in the architectural plans.   This is fairly common.
Windows and Doors Budget
You can review every line item in a budget.  To do so is a matter of reviewing the budget line by line to see what has changed.  Using our system, there isn’t any way for a contractor to charge you more than was budgeted unless the client approves a change.
Auditing receipts is not something that we expect any architect or client to bother with.  We realized years ago that tracking receipts is not helpful in getting fair pricing or  managing a budget.  A “time and materials” contract is one where the client pays for the receipts for labor and materials plus a markup for overhead and profit.  This markup is typically 15%.  We don’t do that type of contract because it consistently leads to 100% overages.
If anything, that type of “Time and Materials” contract moves the responsibility to track expenses and make sure to  hit the budget from the contractor to the homeowner.
Every contractor marks up portions of the materials and labor, that is simply how the industry works.  For example, a Time & Materials contract may have the contractor showing laborers at $35/hour when they actually pay them $20/hour.  The difference is a hidden markup that goes towards overhead, profit, insurance or anything else that the general contractor has to pay for.   Clients do not see this markup.
Auditing the materials purchased is nearly impossible.  Some materials are supplied by subcontractors, some are bought directly by the contractors.  If a contractor wants to cheat it’s impractical to follow this.
Instead, what we have found to be the best practice is a fixed price budget and that is what we insist on for any project where the owner has a budget in mind… and that’s almost every project.