The best way to think about a major investment is your monthly cost and the monthly value. One common question that people have about design and construction is “what does it cost per square foot?”.
Is the greatest kitchen you can ever imagine worth $500 per month in enjoyment? Or is it worth $100,000 more when you sell? If yes, then it’s worth $100,000.
Is a guest house for your kid or parent worth $800 to you? If yes, then that will cover a $200,000 mortgage.
People don’t usually think this way though. Many people ask us “what is your per square foot cost to build”.
At New Avenue we have found the “per square foot” estimate to be misleading. We do respect the need to answer this question though!
The problem with per square foot pricing is that it is easily manipulated. Kitchen and bathroom space is very expensive while adding an upper floor or lower floor is extraordinarily less expensive. By minimizing the percentage of your project that is kitchen or bathroom and maximizing the size of the living and bedroom space makes your project less expensive.
A single story 400 square foot guest house with a new kitchen, bathroom, and high end custom finishes will often cost around $200,000 or $500 per square foot
Making that same guest house 800 square feet by adding a second story will cost around $250,000 or $312 per square foot.
Lastly if you can add a walkout basement and count a basement floor then you will create a 1,200 square foot guest that will cost about $300,000 or $250 per square foot.
By making the project bigger we were able to cut the cost per square foot in half! The catch here is that you have to build bigger – and spend more money – to get the lower price per square foot.
We have completed a 5,000 square foot custom luxury home for $1,500,000. That cost $300 per square foot by using all three tricks above.
We have also completed 300 square foot guest houses for 90% less than that. They cost about $120,000 or $400 per square foot.
We provide the full budgets for every completed project so you can view these costs as a menu that you work off of.
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