If you have the needed amount of cash to build the small, starter part of the house, you could go the traditional route with bank loans during construction. Then, as soon as you’ve closed, you could pay it off in full. In this way, for the price of closing costs you’ve got all the benefits of the traditional method but no loan.

Thanks for all of your input. Would getting the bank loan and paying it off immediately after closing allow me to avoid the interest?

And how much would you all say would be the costs for completing the foundation and closing up the house so that it doesn’t get messed up from weather? How much should I plan to have saved to complete the whole house all at once?

What about completing the exterior or the shell of the home and completely closing it insulation, hvac etc all complete but working on only the interior in phases?

Is it possible to build our home in phases would it be significantly more costly to go about this way?

Thought it's not the norm, it's totally possible. Yes, it will be more costly -- in terms of both time and money -- to do it this way.

I live in a neighborhood of large brick ranches built in the late 60s/early 70s. Quite a few of my neighbors are the original owners. At least half the houses in this neighborhood have been "added onto". Some are very successful ... I only know they're additions because I've lived here so long /have seen the work going up. Others are poorly done ... for example, one small ranch house neighbor added an attached two-story garage. It doesn't mesh well with the original one-story, especially since the original house is brick and the addition is yellow siding.

My first house was a 1400 sf 3 bed /2 bath ranch house, and once we had two children it was small. The person who bought the house added a two-car garage connected with a breezeway. It added a ton of function for a relatively small addition and looked like it had always been a part of the house.

The big difference is that I don't think most people BEGIN with the idea of building in phases ... they just needed space later and figured out how it was possible. You're talking about planning ahead for an addition.

Would a builder go for this? So start with a smaller home 1600sqft 3bd/2.5bath and add more sqft later 2500-3000sqft total.

A builder is going to want to think about what you want TODAY. If you want to add on more later, that'll be a whole new conversation /a whole new cost.

YOU, on the other hand, may want to make long-term plans. At a glance, it might make sense to build a two-story house with a living room - kitchen - dining downstairs and two bedrooms /one bath upstairs. Later, when you're able, you can add a "wing" for a master bedroom on one side and a "wing" for a garage on the other side.

This is such a complicated, complex and potentially disastrous situation that only the very experienced or very inexperienced would even consider it.

Disagree. People add a bedroom, a bathroom, or a family room to their houses all the time. Doesn't take a rocket scientist.

I love the actual process so it’s a fulfilling hobby

This is a whole different thing from designing a house with the intention of adding on.

Especially when it is about something unusual (prime example is cost of structural steel - that seems to be *the* overcharge item of choice).

If you're reading the news, this has to do with tariffs.

And how much would you all say would be the costs for completing the foundation and closing up the house so that it doesn’t get messed up from weather? How much should I plan to have saved to complete the whole house all at once?

No one here can answer that for you. Your location is going to change that number significantly and in parts of the country permitting requirements and costs make multi-stage building practically impossible.

However, I would say you need $75,000 in liquidity to start the process of building a 1,600 square foot house with a bank loan. That is using $120 per square foot at 1,600 square feet, 20% down and 20% contingency.

Without a bank loan and doing the build in stages I would think you will want at least a $100,000 to dry the house in, but that is a very uneducated guess based on prices in my area and using many assumptions. However, I suspect that magnitude of savings is correct in most areas, meaning if you have $120,000 saved then start the conversation, but if you have saved $12,000 it is time to come up with a different plan.

Would getting the bank loan and paying it off immediately after closing allow me to avoid the interest?

No. You will still have some interest during construction, but you will avoid most of the interest.

Mrs P wrote: "...Disagree. People add a bedroom, a bathroom, or a family room to their houses all the time. Doesn't take a rocket scientist..."

Well...the OP wrote that he wants to initially build a 1600 SF 3 bedroom, 2.5 bath and later increase the overall size to 2,500-3,000 SF (without specifying what the additional area will be used for).

Almost doubling the size of the initial house is much, much more than simply adding "...a bedroom, a bathroom or a family room..."

If you think it is simple, give it a try.

Ignoring the formidable issues of financing and construction phasing techniques, designing a functional home which is desired to be nearly doubled in size at a later date is a significant design challenge. It's not one that most first-time home owners (or even more experienced home owners) will successfully complete on their own.

It may not be rocket science, but it will challenge many experienced architects. For a homeowner, working alone, it's climbing Mt. Everest.

We choose to do it this way for personal/religious reasons.

If your reasons are faithful, then follow your faith. My faith often "costs" me more. Find a way to do it. :-)

Thanks for all of your input. Would getting the bank loan and paying it off immediately after closing allow me to avoid the interest?

Why would you want to pay off the interest?

And us working with a bank saved us a lot of headaches because the bank refused to just hand over money to the builder without checking the build and then checking with us.

And how much would you all say would be the costs for completing the foundation and closing up the house so that it doesn’t get messed up from weather?

That depends on the size house, what you're planning on using (I hope it's block construction and not wood since you're in FL!) and lots of other factors. No one can give you a concrete number. Not even a builder, unless you have complete plans for him/her to spec out.

Where in FL are you as that will drive costs too. I'm in SW FL and building where I am is not inexpensive.

We are building a house and paying cash, sort of. We have a lot of money saved up for the build, and a current house that we will sell after the new house is finished. Once we've used up the money we've saved, we will borrow against our own retirement savings, from the investment company holding those funds. We will repay that loan after the build is finished and our current house is sold. We have an agreement with Land Title, that company makes sure the subs are paid and gets the lien releases from them. Another option (one to consider very carefully) would be to borrow from your 401(k), if you have one. It is possible that borrowing from your savings, even if you have to pay interest, may fit within your religious beliefs.

We would want to avoid interest for religious reasons.

We are looking to build right outside of the tampa Bay Area.

Alex do you already have a house plan?

My brother in law is. In fact, my husband and I are headed to him for a 2 week visit to work on phase 2. He expects it to take 5 years total. Before they started, they bought the land and built a shop with a kitchen and bath. They are living in that while they build the house. He has definitely tailored his construction methods and materials with the timeline in mind.

Fannie Mae and Freddie Mac both allow lease to purchase type arrangements for Islamic non-riba mortgages, allowing some banks to make loans without interest. However, I am not sure if they do construction mortgages.

I am not presuming you are Muslim but hoping one of those products may work for you.

One thing to consider is working with an architect to plan the phases carefully ahead of time.

We built our own house, and it took four years, in part because my husband, who's a builder, was doing construction projects for clients the whole time (and we also farm), and also because at the start of the project he had cancer surgery and at the end he had a heart attack. So we worked at our own speed. It was a very individualized project : ) .

What do your family, friends, and acquaintances do? Is buying a house a possibility, rather than building? What about non-interest financing?

https://www.facebook.com/MyISCF/posts/bring-halal-banking-to-your-communitygo-to-wwwislamfcuorg-find-out-how-you-can-b/705735609473746/

https://www.devonbank.com/faith-based-financing

https://www.learnreligions.com/where-to-find-an-islamic-mortgage-2004115

https://www.lariba.com

https://www.deseretnews.com/article/700172147/Free-from-debt-Faithful-Muslims-live-full-life-without-paying-any-interest.html

We would want to avoid interest for religious reasons.

We are looking to build right outside of the tampa Bay Area.

Housing prices outside the Tampa area are expensive right now because as mentioned, it's almost impossible to get subs to work. Good builders are also at a premium.

In your other thread you mentioned about the land. Maybe the thing to do is first make sure the perc test is good and then figure out the rest. I'm wondering if after you get the perc test and buy the land if your best next bet is to work with someone like Architectrunnerguy to create a house plan that can grow the way you're hoping it can.

If you did do a conventional construction loan, you would be paying interest during the loan period.

Designing a house which can later be expanded as the OP desires is a critical step. It's a challenging and difficult step, but the best approach is to work with an experienced and talented architect to create a design which meets initial needs and is capable of being expanded as desired with minimal demolition and new construction.

Agreed, with the right plan, it could work. I saw a house in Hawaii that was a series of “pods” connected by breezeways. One pod was the living/dining/kitchen, another was the master bed/bath/office, guest suite pod, etc. Adding additional pods only required connecting the breezeway to an existing pod or another breezeway. Obviously not for everyone, but it worked really well in that landscape.

Is this land special or sentimental? What is the reason for wanting a new build?

taking A bank loan and intending to pay it off without interest is a gamble. are you ok if that gamble fails?

also a partially built house is a bigger risk if something happens and you need to move.

finally, Will your insurance cover it? Can you insure a partial house for potentially years on end? builders carry insurance during projects, and insurance companies are ok with having a policy during construction but when construction is not active you will be In a different situation

Learn HOW a house is built and go O/B!! Make 'sure' you get GC pricing from the subs. Go around where houses are being built and talk to the different subs and learn from them. It sounds like you have the time that the subs can work you into their schedule.

Robin in our hot market in FL even the builders can’t get the good subs worked into their schedules and they give their subs business over and over again. What makes you think they would want to work with an owner/builder?

robin0919 know all, you should know that by now cpartist.............................

Learn HOW a house is built and go O/B!! Make 'sure' you get GC pricing from the subs. Go around where houses are being built and talk to the different subs and learn from them. It sounds like you have the time that the subs can work you into their schedule.

Basically you are saying: Educate yourself on a brand new career until you are competent enough to do it yourself and then go out there and do that one time only. If we are spending massive amounts of time and effort educating ourselves, how about we just go to Med school and not worry about the amount the G.C. wants?

Additionally, how does one make sure they get GC pricing from the subs? Having worked on and looked over hundreds of bids for my father's company, I don't know what G.C. pricing is. We produced a bid that reflected all the information we had available at any one time, including the size of the contract, the potential for future work, the amount of alternate work available, the general price of the market, etc. There was no magic discount for G.C.'s... Some G.C.'s were a pleasure to work with and even though they represented fewer jobs in the future, they got a great price because we knew everything would go smooth when we got there. Other G.C.'s were a massive headache to do business with, changing their minds half a dozen times, nothing similar to the plans, etc. and they got PITA pricing even when they had major jobs coming up.

In the end, if you are an owner/builder you are paying based on all the other owner/builder experiences that sub has had. You are likely to get a good price if those jobs have been easy and painless, but you are likely get a PITA price if those jobs have been problems. Guess which one happens more often...

robin0919 know all, you should know that by now cpartist.............................

Of course I do but I posted for lurkers. :)

I knew that and the only reason I still reply (well, that and the humor factor).

I love this idea of going around to where the sub-contractors are working, and asking them to give you a teaching lesson in what they are doing. I’d like to have that response on video!

Realistically, OP, if you want to build a house without paying interest, you'll need either one of the specialized loans Bry mentioned, or a very substantial wad of cash (ideally, both). You will also need a comprehensive plan for a staged build, and the capacity (financial and physical) to complete it within whatever time frame your permits allow.

You might be able to reduce costs a little with "swear equity" if you have DIY skills, but I can't imagine any GC allowing you to waste his subs' time and slow down his project to give you lessons in building. If you want to learn about construction, volunteer for Habitat.

We are building without a loan. But are using insurance money and savings. Lots of sweat equity - a pace as slow as molasses and some hard lessons along the way. I don't know that I would have changed anything though. Do what is right for you - everyone's situation is different.

Jmm, I know that’s a typo but I had to laugh at “swear equity”. I’m pretty sure that’s the equity I have in my house! Why do I always think my projects will be so much easier than they really are?!

If you think it is simple, give it a try.

Been there, done that. Survived ... no, thrived.

Learn HOW a house is built and go O/B!! Make 'sure' you get GC pricing from the subs. Go around where houses are being built and talk to the different subs and learn from them. It sounds like you have the time that the subs can work you into their schedule.

This may be the most ridiculous statement ever made on this site, and that's saying something.

Specifically:

- I don't want strangers coming around my build, slowing down my workers, trying to get free lessons in various trades. They'd better not work strangers into their schedule ... not when I'm paying for their time.

- No one is going to give GC pricing to random people just for the asking.

At one site, a polite older gentleman would come around pen and pad in hand to quiz us on the cost of this and that. My building partner had a black sense of humour and would feed him absurd information with an absolutely straight face just to watch him scribble away.

Cash build is the best. As long as you have the cash. A staged build could work if it's designed by an experienced architect. (But since this idea seems always to come up with penny-wise first timers, colour me sceptical.)

I’ve read this thread with interest. I don’t have the financing constraints that OP has, but I’ve been wondering how feasible it might be to build a one-story addition and, later, add a second story on top (if the first story were built to accommodate this). Obviously there would be additional costs in that approach. My imaginary home addition is simple 100% fantasy (at this point) but I’ve still been curious, so this is all very interesting.

apparently adding on to houses in days past was a normal thing. your family got bigger, you added on to the back. it got bigger still and you added a wing. rinse repeat.

There's a lot more to future additions than many on this thread seem to understand.

Virgil, I freely admit that’s the case for me. I’m glad so many pros and others are here on Houzz and so generous with their knowledge and experience.

"There's a lot more to future additions than many on this thread seem to understand."

like what?

I'll wait

Kmarissa03 - some neighbors of ours that are much closer to the creek chose this route when their house flooded. They built a new house as a second story on the existing, leaving everything below unfinished. If you did it intentionally you would have to build a roof twice - which could get pretty costly. Not to mention not being able to live in the first story while the roof gets pulled off. Sounds pretty unappealing to do it that way actually.

On the West Indian island where my parents used to live, many folks planned to build two-story houses but usually stopped for a considerable time after the first story was completed, with the rebar poking out the top, to wait to save more money to buy building supplies and to pay the workers, and also because property taxes weren't due until the roof was on. We knew several families whose "phase 1" lasted about 10 years.

^^^^^

mrs. worthy, from JA, confirms!

In the Ohio countryside in the early '50s--yes, I do remember that--it wasn't uncommon to see tarred roof basements being used for accommodation till the homeowners could afford something more.

worthy, I recall we talked about this on another thread, too : ) .

There is a house (built in 1942) in a town near me that is the poured concrete basement with a low pitch roof on top. I always wondered why. My mom was visiting and commented on how people used to pour the basement, finish it just enough, and then move in. They'd eventually add the top floor later. Makes me wonder how many other half built houses are in Utah.

Cp. I KNOW what it’s like in this area, Charlotte, NC. I DON’T know what it’s like in the entire country obviously.

Mill. ….what can I say…….

Bry……It’s NOT rocket science to build a house which GC’s TRY to make it!!!!!!! I built my first spec house in a neighborhood where the houses ‘started’ at 600k and went for over 1.6m at the time. At Least 6 couples were O/B at the time. My neighbor was an O/B as a pilot for US Airways, another was a Sheriff in the county, another was an optometrist…etc….etc…..they ALL SAVED 10’s of thousands by being O/B!!!!!!!

NOT a new career but learning something ‘different’. Do you NOT like to learn something different?

‘Having worked on and looked over hundreds of bids for my father's company, I don't know what G.C. pricing is.’

You have NO IDEA what you’re doing. You’re in the WRONG business!! Period!!!!!!!

"You have NO IDEA what you’re doing."

Took the words right out of my mouth......................

You claim to have this extensive business education but you constantly demonstrate a lack of understanding that should have been corrected in a formal education.

It’s NOT rocket science to build a house which GC’s TRY to make it!

Every single thing on the planet, other than rocket science itself, isn't rocket science... That doesn't mean that a rocket scientist would make a good carpenter. My best friend is a cardiologist who doesn't understand a single thing about plumbing, and you can argue that the two have certain similarities.

The basis of specialization and trade is to do the jobs that you do best. Suppose you are a lawyer who is excellent at plumbing, this doesn't mean you create value by doing plumbing. Because while you may be a great plumber, you create excess value as a lawyer paying a plumber.

I have been my own G.C. several times. I enjoy it, but to say I saved money doing it would be an error and I have a lot of connections in that industry. G.C.'s add value to the value chain, the average person isn't going to create value by simply eliminating the G.C. There is a chance at some small monetary savings, but if they considered the time invested most would quickly realize they were creating value well below minimum wage.

You have NO IDEA what you’re doing. You’re in the WRONG business!! Period!!!!!!!

I don't know whether to laugh this off or respond. I assure you that there is no straight pricing for G.C.'s versus retail in a non-merchandise exchange. There is unit pricing for some G.C.'s but even unit pricing is reflective of the experience working with that particular G.C. and is somewhat individual.

In the end, we had between 60 and 100 employees that needed to get paid. Sometimes work was plentiful and we could be selective sometimes we took jobs at a loss because even at a loss they had a positive contribution margin. I assure you that our bid, along with the bids of our competitors reflected our economic reality at the time and one part of that reality is a chance at repeat business. To think that I am going to give some Joe Blow owner builder the same price that I am going to give a guy who will keep 10 guys working an entire year is the MOST IDIOTIC THING I HAVE READ IN A WHILE. Sorry for the rude caps and bold, but I just want it to stand out. You might get discounts in material accounts, but you are not going to match the price on subcontractors that a G.C. gets. You are not, so stop telling people that it is there for the asking.

If you want better pricing the real keys are flexible schedules, cash payments, and large down payments. However, there are discounts for those things because you are absorbing almost all of the subcontractor's risk, which just moves the risk premium from him to you.

I’ll add that for various home remodel/addition projects in the past I hired my own subs. We did save the small GC overhead.

However:

1. We were the bottom of the pile, and got Whatever time the sub had leftover, which meant our jobs dragged on.

2. The subs are notoriously bad at communicating. Our sheet rock guy would randomly show up with no warning, work for a bit, and leave without any indication of when he might come back.

This makes keeping projects on schedule very difficult.

3. You are so desperate for quality work that you cannot risk upsetting a sub. For example, I couldn’t make any demands on the sheet rock guy to finish by any date or call me with updates or anything. I was just so so thankful when he did show up at all. Our mason did some work I wasn’t thrilled with and we had to approach it so carefully because there was no backup option if he decided to walk and not fix it.

We had no allusions about our small projects being leverage because we knew that if we became difficult they could walk in a heartbeat even without payment and be hardly worse off.

Eventually all our projects got finished and looked beautiful, but it’s not for the faint of heart.

If you get such a massive “GC pricing“ on all of your DIY jobs, why aren’t you setting up shop and turning that into a massive profit generating business? Heck, if you can beat the roughly 5% profit margin of all the national builders, then you hold the secret of making a ton of money in a very successful business. Why aren’t you doing that instead of just bloviating with all hat and no cattle?

Cp. I KNOW what it’s like in this area, Charlotte, NC. I DON’T know what it’s like in the entire country obviously

Well since the OP said he lived in the Florida area near Tampa, why would you comment since YOU DON'T KNOW!

CP - to be fair, "not knowing" has never stopped robin from commenting on a whole range of issues...

to be fair, "not knowing" has never stopped anyone from commenting on a whole range of issues...

We are building with cash but we have lived in an 80s double wide/modular for 8 years with three growing children; while we saved up enough money to build. It takes sacrifice and patience. We are building a 2200 sq ft home with a full basement in the Midwest . We are in around $50,000 and have yet to add the trusses, shingles, Windows, ext doors, house wrap and siding. I am sure we will spend at least $35,000 on these items! So I think it is pretty accurate to say it will take $100,000 to weather the house. It rained on our t&g subfloor and I about died. I was immediately out there with a floor squeegee. I hope they get a roof on soon! Doesn’t it rain a lot in Florida? I’ve visited there several times and I remember it raining almost every afternoon! I think if you don’t want to borrow money you should wait to build and save your money. You can still plan your build. Good things come to those who wait and better things come to those who work for it.

slightly different method - a friend had purchased land, water was available but needed to do septic. He sold previous home, moved family into rented apartment, used funds from home sale to build new home - entire interior except for bathrooms, sheetrock and wood cabinets needed to be finished by him and his wife after they moved in - paint, flooring, etc. He told me they lived on concrete for three years! He is an electrical engineer and the house was wired but he purchased and installed all the lighting, flooring, wife painted (and wallpapered!). Now this was some years back, land, septic and structure was done for $150K. Two story, about 3500 sq ft. One thing he did incorrectly was modifying his purchased plans to raise the downstairs ceilings to ten foot without considering what that would do to the stairs! (They ended almost in front of the front door!) So perhaps building the 'shell' up front and then finishing the interior as funds permit would be something to consider.

KH - We got rain on our subfloor several times before the roof went on. It was engineered (advantech) tongue and groove, but we were still out there with push brooms and shop vacs mopping it up when the rain stopped. My kids have seen and helped with most parts of our build so far. I think it is good for them. We joke that this is the summer of 'construction camp', lol.