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Tenders are in...

mike2016

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Background: I'm living in a house with a side garden I got planning permission on. Just purchased it a year ago so only 1 year down on the mortgage. 

 

Recap: I was going to wait a year to get my finances in order but the Architect talked me into going out to tender anyway to see what prices come back. We sent out 6 Tenders and 3 responded. I can go back to the cheapest one in a year they said and get it repriced accordingly. 

So i was rightly worried that prices in Dublin would be steep but didn't guess how steep! 

The prices I got back needed a bit of adjusting to add the banks 10% contingency to, plus development fees, professional fees, connection charges etc. I've reflected this in the figures below

Tender #1 €466k

Tender #2 €465k

Tender #3 €390k

The house on the open market in this area would be worth €350k and I'm ignoring the value of the land in my figures above which I own. Crazy, huh?! This is a 108 sq. meter house, box shape. My own max budget was €330k so way out! The bank won't lend me enough to get this off the ground. I wouldn't feel comfortable leveraging that much debt anyway.  

 

I'm glad I went to tender, the figures were an eye opener. But, where to go from here?! I'm mulling over my options: 

  1. Stay in the current house and make myself comfortable. Get new windows and doors, external insulation upgrades over the next few years. Pay off mortgage a bit earlier by renting a room or two. Sell site next door before planning expires. Possibly move elsewhere at some stage...
  2. Reassess in 2 years - I'll have 15 years until I retire then so if I knock down the mortgage a bit, the market holds and I sell up, see if I can then pull off a build, IF the figures look any better. 
  3. Save like crazy and in 8-10 years build the shell, get it watertight and finish over a few years. That's a longer bet and my figures say I'd need €200k to get to the shell, maybe more by then. I could sell the house and do a caravan and get a small mortgage to finish possibly. 

The gas thing is I'd be moving beds about 8 meters over if I pull off the build but the effort required...!!! 

 

So, on one hand I'm glad I've a reality check now and know exactly where I stand. I'm wondering about just paying off the current mortgage like mad to keep my options open or investing in the current house instead. There's probably some middle ground - I'd find it really difficult to sell the site right away and have someone else build on it but I'll get over that.....

 

I'll mull it over the next few weeks.....



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The cheapest quote is still some price for that small a build.  Over €3000 per sqm  is nuts!!!  

In a few years time your house will hopefully have gone up in value but that profit will be wiped out by the increase in labour and materials which will definitely rise. 

If it was me I would go for option 1. Put some money into your own house and sell the plot and use the money to take a few holidays and enjoy life a bit more the closer you get to retirement. 

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Am I understanding this correctly?

 

You have land and the house that you want to build on it has come through on the tenders as between. €390 and €465k.  If it was built and ready to sell right now, the local market price would be around €350k.

 

I can’t see really what the question is - why would you even consider doing the build (regardless of how you were going to fund it) when you are spending more than you are getting back.  The fact you own the land already actually makes it worse.  Your current home would surely be worth less than it currently is as it will have a much smaller garden.

I am not one to believe that self building is a cheap way to get your own home, or is a profit making scheme.  For me, self building is about getting the home you want.  However, a home that you want that you will never get back what you spend sounds like madness.

 

Hopefully I have totally missed the point and there is a cost effective reason for building.

 

So reading your post again, in your shoes I would make the house I own, the best home for me to live how I want to live now and see what happens in the future.  Renew the planning permission whenever you need to but put all those plans on hold until there is some sense to building.

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This is what drives me MENTAL about architects, why do most not have open conversations with the client in terms of their budget and use their commercial awareness to plan it accordingly. They must have added some pretty mental features to be getting that sort of price. I know they want to give the client all the features they like but they seem to forget the client has to pay for all of this at the end of the day. 

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You seem to be in a market where I believe houses are under priced. By that I mean if you build a house you would do very well indeed to sell it for what it is worth.

 

We are the same.  I am self building and expect to come in at an all inclusive £220K.  That works out at a build cost of about £1000 per square metre plus land plus fees.

 

By doing a LOT of the work myself I have probably saved £30K so if I had just got someone in to do it all, it would have cost about £250K, which I would be lucky to sell it for if indeed I wanted to sell.

 

Your only options seem to be project manage yourself and possibly do a lot of work yourself and hop to get the build cost between £1000 and £2000 per square metre.  Or just sell the plot.

 

I must admit I don't have a lot of confidence in this sort of "tender" bid.  The very first house we built, architects were telling us it would cost £300K to build (and based their fees on that price)  We built it for half that.

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This happened to us, we split the land belonging the cottage we had bought, we only lost 5k , we’d paid 250k for cottage and 2acres , we sold 18 months later retaining half the land which we’d got planning on and realised 245k so it doesn’t mean because you’re keeping some of the ground that you’re going to sell the house your in at a big loss. Anyway what I started off going to say here was that we put our plans out to tender with a local company to do the full job, we nearly fell off our chairs when the price came in at £350k , not including oak finishings or staircase and only allowing £8k for a kitchen, tiling only to showers and splash back, the plot had been valued at 125k so there was a total of £475k which the house would never be worth, however we have built the house, we do have an oak staircase and finishings , we have a bespoke kitchen and when we finish off the garden, drive etc we will be in line to have spent around £270k so just over £1k a square metre, it can be done if you’re very careful and we haven’t done a lot of the hard graft just bits and pieces and the drains.

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19 hours ago, Declan52 said:

If it was me I would go for option 1. Put some money into your own house and sell the plot and use the money to take a few holidays and enjoy life a bit more the closer you get to retirement. 

Yep, definitely an option. I'll probably hold the plot for a bit - I can extend another 5 years while I see how things develop. I like the idea of scaling back work and enjoying life more! 

 

19 hours ago, Sue B said:

Hopefully I have totally missed the point and there is a cost effective reason for building.

 

So reading your post again, in your shoes I would make the house I own, the best home for me to live how I want to live now and see what happens in the future.  Renew the planning permission whenever you need to but put all those plans on hold until there is some sense to building.

Thanks - There are two routes to build, an expensive way with an appointed builder, or direct labour and less regulation which removes a lot of the cost overheads. I need cash to go the second route though. So I think I'll look at feathering my nest a bit and sit back and enjoy the next few years in the current house but keep an eye out for an opportunity to re-mortgage to build a shell and finish it over a year or two and then move in and sell the old house. Anyway, I've a roof over my head currently and there are some good grants to improve the comfort levels that I'm applying for....

 

18 hours ago, iSelfBuild said:

This is what drives me MENTAL about architects, why do most not have open conversations with the client in terms of their budget and use their commercial awareness to plan it accordingly. They must have added some pretty mental features to be getting that sort of price. I know they want to give the client all the features they like but they seem to forget the client has to pay for all of this at the end of the day. 

It's a tricky one. We used a QS two years ago and I used an online one 6 months ago but nothing prepared me for the quotes I got back! I'm sure the Architect had other tender prices to hand and I was up front about my budget. It's a simple house but could be made cheaper if needed. I just needed to see what the range of prices was. Now I can go back to the cheapest bidder in 2-3 years and see where things are at. Failing that I've another opportunity in 7-9 years time to remortgage and build the shell and bypass some of the regulations driving up the price. Still, the state of building one off houses in Dublin has shocked me and those I've spoken to about it.

 

18 hours ago, ProDave said:

Your only options seem to be project manage yourself and possibly do a lot of work yourself and hop to get the build cost between £1000 and £2000 per square metre.  Or just sell the plot.

 

I must admit I don't have a lot of confidence in this sort of "tender" bid.  The very first house we built, architects were telling us it would cost £300K to build (and based their fees on that price)  We built it for half that.

Cheers, exactly the route I'm considering taking. I've met some great builders and am confident they can get me out of the ground and to a water tight shell before I take over and with some oversight finish the inside bringing in Professional help as required. Plus do it over a longer time. I've 17 years before I retire so I'll have to talk with the banks about re-mortgaging in 7 years time so I don't miss the window. I think the tender process was a risk but I've detailed building drawings I can use to good effect later on. Plus I've got accurate costs back from the builders who responded and can see where the breakdown is compared to QS figures. 

Definitely up for the challenge of doing this directly myself. But a lot can happen to the market in 7 years and my own circumstances so we'll see. 

 

Having thought about it over the last 24 hours I'm going to spend some money on the current house and set a timetable for accelerating the mortgage payments. I might contact the lowest bidder in 2-3 years to see how things look but in the meantime I'll be living in a much more comfortable and healthy house which was one of my goals. Then at the 7-8 year mark I might re-mortgage and start building before planning expires or sell the site at that point. In the meantime I can take on another lodger and boost my finances. 

 

Thanks all! One of the great things about Buildhub is the advice - both technical and personal. I've very grateful to all who helped me here over the years. 

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