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Some may be surprised to find that building a home is one of the easiest ways into the Auckland housing market.
That’s because when you are building you can apply for a five percent deposit, compared with buying an existing property which requires a 20 percent deposit.
But where do you even start? The first step might not be what you think. It’s money, and here’s why.
The amount you can afford is unique to you. Whatever it is, it lays out an entire landscape of opportunity through some very simple rules. Rather than start with dreams, and designing your perfect house only to have them dashed every time you find you can’t afford them, have practical dreams.
Let’s talk about $575,000.
Step one is to create your reserves. You will need to pay for building consent, resource consent, plans drawn, development contribution fees and landscaping. You may also need geo-technical reports, water and septic tanks and other options. Take $75,000 and put that aside for those things which will be needed depending on the section, no matter who builds your house.
You have $500,000 remaining, now halve it! That is $250,000 for your section and that is an extremely really useful piece of information. A quick search on any number of websites will reveal the size and locations of sections you can actually afford, in areas you like. You will quickly come to terms with what you want and what you can afford and your $250,000 “budget” will really speed things along. A good Real Estate Agent will be your eyes and ears and often know of sections before anyone else.
Let’s say you’ve found a few options. No matter which section you choose, your house will need foundations. Sadly, the cost of this can be the great unknown. It’s probably going to be straight forward but it wouldn’t be the first time that a builder has started the earthworks and discovered a buried car, filled in swimming pool or something requiring cold hard cash to fix it – and the amount is unknown.
Step two – your remaining $250,000 is for your house. The cost of building can be dramatically altered by adjusting what it contains – the cladding options, benchtop, fittings, floor coverings and the like. Factor in anything you can do to save money. Painting, landscaping, and uncle Bob is an electrician – would he be able to help?
Group builders often have a hard time with this (it’s their money/job so “stay away”!) but that’s far from the truth. It’s yours, and yours alone. You’re the customer – tell them what you want.
The end of this whole process is your new beginning. There is your new home, fully detailed in the lending, sale and purchase, plans and specifications documentation before you.
Nigel Kelly and Karyn Phillips are our new Building column writers. Karyn has been designing homes and helping clients through the building process (including finance, resource and building consents) for more than 10 years. She has also renovated and built new herself. Karyn has been living on the Coast for 15 years, currently in Red Beach.
She is an active member of the Orewa Surf Club, often found organising events, or holding the microphone at fundraisers and has two children at Orewa College. Nigel Kelly combines skills in the trades, business and residential finance. He has lived in Rodney for six years. The Building column will run bimonthly.
