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Creating a Budget

The first step toward building your dream home is to create a realistic construction budget based on what you can comfortably afford. In some cases, this may require modifying the floor plan or the overall design of the home to meet your limitations. Keep in mind that your budget needs to be a realistic. When creating a realistic construction budget, consider the following strategies:

Set a top-end cost: This is the amount of dollars that construction costs cannot exceed. By setting a realistic top-end cost you will save yourself time and aggravation by only considering options that fit within your budget. It’s important to speak with your construction lender at this time to establish precisely how large a loan you can qualify for. 

Subtract 15 per cent from your top-end cost: Most construction projects have an over-expenditure rate of 5 per cent to 10 per cent. By proactively subtracting 15 per cent  from your top-line cost, you will improve your chances of not experiencing a cost overrun. For example, if your top-end cost is $200,000 you should subtract $30,000 and adjust your construction budget to $170,000. 


Create a priority list of “must haves”, “nice to haves” and “could haves”. The simplest way to complete this exercise is to mentally visualize each room in your new log home and take note of what you see and in what order. When faced with trimming your budget, look first to your “could haves” list, then your “nice to haves.”


Now that you have a budget number in mind, it is time to decide which type of log home fits within your means. There are two main categories of log homes: milled and handcrafted.


In general terms, handcrafted log homes are typically the more costly of the two, normally costing from $150 to $200 per Sq. Ft. Milled log homes, on the other hand, range from $85 to $125 per Sq. Ft. on average. (Note: These prices are only estimates and may vary depending on such factors as location and the particular amenities that you would like in your home.)


For illustration purposes, suppose that you elect to build a 2000 Sq. Ft. milled log home and your cost is $100 per Sq. Ft. Using these two variables (total square footage and cost per square foot) you can quickly calculate a rough estimate of what your total project cost will be; in this example you can approximate your total costs at $200,000 less land. The same formula applied to a comparably sized handcrafted log home, using $150 per Sq. Ft., will increase your cost estimate to roughly $300,000 less land.


Once you’ve arrived at a realistic construction budget, your next step is to refine your estimates into hard numbers by proceeding with a detailed project plan. Your project plan includes all the elements needed to manage the construction of your new log home, whether you hire a licensed builder/general contractor, or you do much of the building yourself.