Building a home is without a doubt, one of the most exciting and nerve-racking adventures most people will ever go through in their lifetime. And for some, it will involve dipping into life savings. For such a huge commitment, making mistakes is not an option, especially when it comes to the budget.
The truth is, there is no single formula for setting your budget for building a new home. There are many factors that directly affect this, including location, choice of materials, building technologies applied, your personal preferences, and many more. So how does one prepare a budget for building a house?
One good way is to set a budget based on what you are willing to spend, then work backwards. We do it all the time when we make purchases, go out to eat, take vacations. We know the choices are plenty, and yet almost instinctively, we know what range we must use for spending. This should also be the case with building your dream home. Once you determine that amount, the next step is to decide what kind of house or building class you can build with it. Last but not least, the size of the house can be determined based on the cost per square meter you have set for yourself.
No Two Homes Are The Same (unless it’s a duplex)
Like most other commodities, homes come in all shapes and sizes. That being said, a small house can still be expensive. You must also decide if you are building low cost, low-mid cost, high-mid cost, or luxury (high-end). Most contractors speak of project costs based merely on labor and materials. While these two items cover a big chunk of expenses, several other factors are hardly ever absent in the final project cost. Below is a general list of typical expenses when building a home: (All prices in Philippine Pesos)
Congratulations! Your house is built! But do set aside a budget for the following as well, or you may end up with a house, and nothing else but a house:
Post Construction Expenses
1. Landscaping P1,000-5,000 per landscaped area
2. Interiors
Furniture 5-10% of Construction Cost
Appliances 3-5% of Construction Cost
Houseware 2-3% of Construction Cost
Other personal effects
3. Operational Costs
Connections to utilities: Telephone, Data, Electricity, Water, Cable TV
4. Maintenance
As an example, let us use the following parameters in estimating an appropriate budget for building one family’s dream house:
Building Class : Higher Mid-cost
Location : Premier Quezon City Subdivision
Lot Area : 800 sqm
Set Budget : P25,000,000 (including post construction expenses)
In closing: it is a must to be well prepared financially in building your home. The worst that could happen is you run out of funds, and you sink your finances into an incomplete house that you cannot even live in. Prepare well, and building your dream house would truly be a dream.
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