ROI or Cost? Planning Your Custom Home Construction

Published April 16, 2020.
Est. Reading: 4 minutes

When you are planning a custom home construction, you may well fall within one of two camps. You either want to get the house of your dreams and are not primarily concerned with the cost (at least within certain limits) or you want to achieve the best return on investment or ROI.

In other words, if you come to sell your custom home construction, you want to make a profit.

A good few of our clients lie between these two camps. They want the home of their dreams, are planning to live in it for a long while but want to keep the costs under control so they have the opportunity to get a good return when they come to sell. With any construction project, that makes perfect sense.

ROI is usually expressed as a percentage. It takes the net return on the investment, in this case, how much you sell the home for, divided by the cost of building it. This figure is then multiplied by 100 to give the percentage. Anything over 100 means that you have made a profit.

While the net return on your home sale will be a single figure, in this case, the cost of our building may well be complicated and adding it all together to provide a true figure can be difficult. But here is where Sunset Homes can help, by using our budget estimate. Once the drawings are completed by using our online management system we can keep track of budget vs actuals.

The big benefit of ROI when it comes to custom home construction, of course, is that as a metric is fairly uncomplicated.

The costs of your custom home construction

On average, if you are intending to build an infill custom home construction in Calgary, you should expect to spend anything between $250 to $400 per square foot. This is a pretty broad-ranging estimate and if you are trying to plan in order to achieve a good ROI, it’s not really that useful.

Make the wrong choices and you’ll quickly see the cost of building your home construction rise. Even if you are not building the property as a specific investment to sell for a profit, you will want to make sure that you control costs as much as possible while still achieving your dream home.

It’s worth taking a closer look at the different aspects of a custom build and how these can affect the final cost of your home and the eventual ROI.

1. Location

This is perhaps one of the most important choices you will make. Where are you going to build your custom home?

It can make a huge difference to your return on investment. If you are looking to make a sizeable profit than choosing an upcoming area of Calgary will give you more scope and the potential to make a greater profit.

Check out our blog post: Why Location is Important For Your New Custom Home

2. Size of your lot

We probably don’t have to mention that the bigger your house, the more it is going to cost. A large plot can, of course, give you greater flexibility but it can present challenges if you are looking to make a significant ROI. The condition of the plot and how much work needs to be done to prepare it for your custom home construction can also make a difference.

This generally comes down to a judgment call based on how much you have to invest in your new property and what kind of building you wish to create. A large plot may mean, for instance, that you can build more than one property. However, a strong ROI is not always guaranteed.

3. Acreage vs infill

Infills are plot sites in the city of Calgary that have been built on in the past but are now available for redevelopment. The benefits of these sites are that they have the utilities connected and sewage outlets.

You may have to demolish the existing building, adding cost, but you have a prime inner-city location that is going to be in high demand once you have completed your home construction.

You may, however, want to go outside the urban sprawl and find a rural acreage to develop your project. Choose a desirable location and it can have a huge impact on your eventual ROI. There are added costs that you will need to take into account such as getting an electricity and gas supply to the property.

Check out our blog: What Does it Really Cost to Build an Infill Custom Home in Calgary?

4. Your selections

What materials you use for your property and which fixtures and fittings you want to include will all have an effect on the final cost of your build. There are ways to economize without skimping on the luxury feel of your custom home. For example, swapping real hardwood flooring for engineered wood will save you money but still look fantastic.

5. The construction team

Finally, the partner you choose to carry out your custom home construction is going to be absolutely vital. Ideally, they will be able to act as a guide, connecting you with the right services, helping you get value for money, assistance in choosing the best architect and delivering the build on time and within budget.

It’s important to choose your partner wisely and take your time to do your due diligence before you enter into any contract.

Why work with Sunset Homes in Calgary

We put our clients at the heart of our custom home construction operation and provide a full building service. Whether it’s finding the best plot, calculating the cost of your build or delivering sustainable construction and a green home, we’ll be with you every step of the way.

If you want to explore how to get the best ROI on your custom build, contact the team at Sunset Homes today.

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