Building Your Dream Home: What to Expect and How to Plan

Building a new home is an exciting venture that allows you to create a space tailored to your unique needs and tastes. However, the process can be complex and requires meticulous planning. From cost considerations to sourcing tradespeople, understanding the various facets involved can help ensure a smooth and successful project. Here’s a comprehensive guide to planning and what to expect when building a new home.

1. Cost Considerations

One of the first steps in building a new home is establishing a budget. This includes:

• Land Purchase: The cost of purchasing a lot varies significantly based on location and lot size.
• Construction Costs: This includes materials, labor, and any additional features you want in your home.
• Permits and Fees: Building permits, inspection fees, utility connection fees and all the other regulatory costs can add up.
• Contingency Fund: Set aside at least 15-20% of your budget for unexpected costs.

It’s important to get detailed estimates and be prepared for price fluctuations, particularly in materials.

• Taxes and GST

In Canada, the Goods and Services Tax (GST) applies to new home construction. The GST rate is 5% of the purchase price, but you may be eligible for a partial rebate, if the home will be your primary residence and fits the other rebate criteria. Additionally, property taxes will vary based on the value of the home  and the tax rate of the municipality you are building in.

• Loan and Mortgage Considerations

Securing financing for building a new home involves different considerations compared to buying an existing home. Options include:

• Construction Loans: Typically, short-term loans used to cover the costs of building the home. Once construction is complete, the loan can be converted to a mortgage.
• Builder Financing: Some builders offer financing packages which can be convenient but might come with higher interest rates, some other builders may include the cost of financing in their total quote for construction.
• Mortgage: After construction, you’ll need a mortgage to pay off the construction loan. It’s important to shop around for the best rates and terms. In some cases, the construction financing package includes an automatic rollover into a mortgage when construction is complete.

• House Plans

Selecting or designing house plans is a crucial step. Options include:

• Pre-Designed Plans: Available from builders and online, these plans can save time and money but will still need to be reviewed and revised to fit the land
• Custom Plans: Working with an architect to create custom plans tailored to your specific needs, preferences and the property allows for complete personalization but takes time to complete

Ensure the plans meet local building codes and zoning regulations.

• Sourcing Tradespeople

Building a home requires skilled tradespeople, including electricians, plumbers, carpenters, and more.

Consider:

• Recommendations: Get referrals from friends, family, or your real estate agent.
• Credentials: Verify licenses, insurance, and reviews to ensure quality and reliability.
• Quotes: Obtain multiple quotes to compare costs and services.

• Hiring a General Contractor vs. DIY: Making the Right Choice

One of the most critical decisions you’ll face when building a new home is whether to hire a general contractor or manage the project yourself. Each approach has its own set of advantages and challenges, and the right choice depends on your experience, time availability, and budget. Here’s a detailed look at both options to help you make an informed decision.

Hiring a General Contractor

A general contractor (GC) oversees the entire construction process, from planning and permitting to sourcing materials and coordinating tradespeople. Here are the benefits and considerations of hiring a GC:

Benefits:

1. Expertise and Experience: GCs bring valuable knowledge and experience to the table. They understand local building codes, regulations, and best practices, ensuring that your home is built to the highest standards.
2. Time Efficiency: A GC manages the schedule and coordinates various trades, which can significantly speed up the construction process. They handle day-to-day oversight, allowing you to focus on other responsibilities.
3. Network of Tradespeople: GCs have established relationships with reliable subcontractors and suppliers. This network can lead to better quality work and possibly discounted rates for materials and labor.
4. Risk Management: Building a home involves numerous risks, from construction delays to unforeseen complications. A GC can navigate these challenges and provide solutions, minimizing stress and potential cost overruns.
5. Permits and Inspections: GCs handle the paperwork for building permits and arrange for inspections, ensuring that everything complies with local regulations.

Considerations:

1. Cost: Hiring a GC typically adds 10-20% to the overall cost of the project. This fee covers their management services and profit margin.
2. Less Control: While a GC handles the details, you may have less control over the day-to-day decisions. It’s important to communicate your vision clearly and choose a contractor you trust.
3. Finding the Right GC: Not all GCs are created equal. It’s essential to do your due diligence by checking references, verifying credentials, and reviewing previous projects.

DIY: Managing the Project Yourself

Taking on the role of the general contractor yourself can be rewarding and cost-effective, but it requires a significant investment of time and effort. Here’s what to consider:

Benefits:

1. Cost Savings: By managing the project yourself, you can save the 10-20% fee that a GC would charge. This can be particularly advantageous if you’re working with a tight budget.
2. Full Control: As your own GC, you have complete control over every aspect of the project, from selecting materials to choosing subcontractors. This allows you to ensure that every detail aligns with your vision.
3. Personal Satisfaction: Successfully managing a home build can be incredibly satisfying. It’s an opportunity to learn new skills and be intimately involved in creating your dream home.

Considerations:

1. Time Commitment: Acting as your own GC is a full-time job. You’ll need to dedicate significant time to planning, scheduling, and overseeing the construction. This can be challenging if you have other work or family responsibilities.
2. Knowledge and Experience: Building a home requires understanding construction processes, local building codes, and project management. If you lack experience, mistakes can lead to costly delays, and quality issues.
3. Coordination Challenges: Managing multiple tradespeople and suppliers requires strong organizational skills. Delays in one area can impact the entire project timeline.
4. Risk of Increased Costs: Without the expertise of a GC, you may encounter unexpected issues that lead to increased costs. Properly estimating materials, labor, and contingency funds can be challenging for first-time builders.
5. Permits and Inspections: Navigating the permitting process and ensuring compliance with inspections can be complex and time-consuming. Mistakes here can lead to significant delays and fines.
6. Warranty: In BC, Home Warranty is mandatory. If you aren’t a licensed builder, you will be personally responsible for the warranty as an “Owner-Builder” and there may be consequences if you decide to sell the home.

Making the Decision

Choosing between hiring a general contractor and managing the project yourself ultimately depends on your circumstances. If you have construction experience, ample time, and a desire for hands-on involvement, the DIY approach can be rewarding and cost-effective. However, if you prefer a smoother, more efficient process with professional oversight, hiring a general contractor is likely the better choice.

• Timelines

Building a home typically takes several months to over a year, depending on the complexity of the project. Key phases include:

1. Planning and Design: 1-3 months
2. Permits and Approvals: 3-6 months
3. Construction: 6-12 months
4. Final Inspections and Move-In: 1-2 months

How nest Real Estate Group Can Assist You

At Nest Real Estate Group, we understand that building a new home is a significant investment. Our team is here to assist you every step of the way:

• Property Purchase: We help you find the perfect piece of property that meets your needs and budget.
• Financing Assistance: Our connections with financial institutions ensure you get the best construction loans and mortgage rates.
• Reputable Contractors: We can recommend trusted contractors and tradespeople to ensure quality construction.
• Marketing and Selling: Should you ever decide to sell, our extensive marketing services ensure your property gets maximum exposure.

Building your dream home is a journey, and nest Real Estate Group is committed to making it a successful and rewarding experience. Contact us today to start planning your new home!