Hi

Welcome to the October edition of KHB Ezine.

This month....
The real cost of owner building a kit home

Early PS: if you are reading this on a phone, turn it sideways to enable landscape view, it's easier to read.

Well all of these beliefs are basically half truths. Kit homes are an efficient way to build, but did you know that builders receive materials in practically the same way that a kit is received? So firstly, don't be distracted by claims from builders who advertise using kits: they all do. There are many misconceptions about kit building costs that I will address in this newsletter. Knowledge is power, right?

Kit home vs pre-fab home
Let's clear this up first. A kit home arrives in pre-cut or pre-made bits. Frames, roofing, cladding, linings, doors, windows etc. It takes 4 to 6 weeks to be prepared at a kit home factory. It is then shipped in 3 or 4 loads to the site, ready to build.

On the other hand, a pre-fab home is completely built off site and is transported, sometimes in a few modules, at once. The provider usually puts it together on site. A pre-fab home will take much longer to build in the factory, but no time to set up on site, and is at least twice as expensive (per square metre) as a kit home.

Advertised kit cost vs purchased kit cost
All kit home providers have extensive web sites describing their kits. Plans, graphics, inclusions and prices can be found on most sites. There is usually a listed basic price and you can bet it will be for a very basic kit. If you have a price point, say $80,000, you need to look at kits priced at least 10% less. Why? Let's start with the windows. Most are too small to be useful, and you may need thicker glass if you live in a bush-fire zone. How about the bathrooms? Maybe you want a second one or at least a second toilet. If you want a raised floor, rather than a slab it will cost $10-15k extra. How about raised ceilings, or a carport? A change to the layout will add a $500 fee, and if you do specify a slab there will be engineering plans to purchase. And.. you did want it delivered right?

Kit cost vs established home cost
The final cost of the kit home has little relationship to the cost of establishing a home. In my experience, the kits I have bought were 25% of the total expenditure. This depends on the cost of your land and the cost of the chosen kit: both can be very expensive depending on your needs. But if an average regional block of land is chosen and an average 3 bedroom kit is chosen, the kit will indeed be about 25% the total cost or less.

Why the leap in costs? Add council DA approval fees, site preparation, surveying, fencing, soil tests, construction insurance, slab (plus engineering design) or raised floor, trade-work (plumbing, electrical, waterproofing, plastering, roofing) water tank and pump, kitchen, PC items (vanities, toilets, shower glass, dishwasher, stove, exhaust fan, lights, fans, A/C, wood heater, hot water) solar panels, flooring, landscaping, pathways, garages, driveways and paint. That list is longer if you chose not to take part in any labour such as frame erection, door hanging, architraves and skirts and painting. Are you getting the 25% idea now?

DIY (owner built) vs using a builder
This is a complicated comparison as there are many graduations from total DIY to employing a builder to oversee and enact the build. All of these graduations are assuming you are the owner builder and not contracting a building company to do it all.

Option 1: As an owner builder, completely self build with only electrical and plumbing trades input
Pros
Theoretically the lowest input cost, you have total autonomy, you will personally build your own home, changes can be made at will, you are your own contractor
Cons
No technical help (except from kit provider), much longer build time, lower quality build (unless you are in the building trade), no income while building

Option 2: Sub out all major tasks: foundations, electrical, plumbing, roofing, linings, cladding, flooring, kitchen, and you just do the finishing

Pros
Good quality build, major tasks completed by trade-workers, reduced build time
Cons
Major reliance on tradesmen, stress from facilitating said tradesmen, increased cost, you don't really build that much yourself

Option 3: As an owner builder, completely sub-contract all building and finishing to a builder

Pros
Better quality build, shorter build time, all tasks completed by tradeworkers, less stress, builder warranty a possibility
Cons
Highest cost, owner builder by name only, may as well go with a home building company

Time to build vs working income
I mentioned a loss of income while owner building a home. This needs serious thought in the cases of option 1 and 2 which are full time builds. The time it takes to complete the project may be up to 6 months or more. Consider the wages that could be earnt/lost while building.

Personally, I always chose option 2 by getting a construction loan with $30k leeway to cover living costs during the build. When it all added up, it turned out an even race between owner building with option 2 and going through a building company, even with lost wages. And I had the adventure of building my own home.

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warm regards
Michael
Kithomebasics.com