Building the Sun Cottage Part II: Cost Control

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Since today's inflationary monetary policy means interest rates are bound to rise again, you should consider only a fixed-rare mortgage. Your bank should be willing to write one . . . but if it's not, find a mortgage broker. This person represents large investors (such as insurance companies) and writes either commercial or government loans, depending on your needs and qualifications.

Once you've arranged for a mortgage, many banks will lend you the majority of the money needed to build the structure. The funds don't come as a lump sum, however, but are paid for different completed stages of construction . . .and not until the lenders have inspected the work.

After you determine the total limit of your budget, you'll need to provide part of that for land development costs. These will vary with each site, but fall into four categories: access, sewage disposal, utility supply, and legal costs.

The access road to the site must be suitable for heavy construction vehicles, as well as for your own use. Get bids from grading and clearing contractors to find out exactly how much the work will cost . . .and don't be surprised if it's more than you expected (even the least expensive gravel drive and turnaround will run $1,000).

The cost of sewage disposal will depend on what the local health inspector requires at your site. Septic tanks and drainage fields may run as much as $2,000. At the less expensive end of the scale, even a municipal hookup will be accompanied by a charge.

Contact the power company to arrange for an electrical connection (which will be needed during construction), and notify the telephone company, too. If you'll be using a public water supply, that hookup will carry an installation charge with it. The price of having your own water source dug can be estimated by reviewing local well depths and applying the prevailing per-foot charge that your area's drillers ask.

I've lumped the construction loan interest, loan clearing costs, owner's liability and property insurance during construction, and building permits in the "legal" category. Don't forget to include the cost of the design itself (an architect's or engineer's fee). Your professional designer, the building official, and your insurance and real estate agents will be able to pinpoint these figures for you.

Now, add up all these estimated land development costs and subtract this total from your construction budget. The remainder is what you can actually spend to build the house. Knowing that figure will obviously help you determine what plan to select.

Of course, the method of construction that you choose will also influence the amount of square footage you'll be able to afford. As I write, fully contracted buildings run about $42 per square foot in my part of the country, but many owner-assisted construction jobs are coming in at between $18 and $24 per square foot. In fact, some owner-builders have erected their passive solar, earth-sheltered houses for as little as $10 per square foot! At the lowest of these costs, you could afford at least four times as much house as you could at turnkey prices! However, the amount of time and effort you can afford to devote to construction-along with your level of building skills-will govern your degree of participation (and the associated savings). Also, as you approximate those factors, bear in mind that it takes professionals about three months to erect a two- or three-bedroom home of between 1,000 and 1,500 square feet.

The number of bedrooms and baths-and the interior layout in general-will naturally reflect your current lifestyle, but it's a good idea to allow for some changes. If you have a growing family but a small building budget, for example, you should select a plan that will permit you to add on easily, and you'll want to position your home so that the addition won't congest the site.

Be certain that your plan conforms to local building codes and ordinances. The stipulations are numerous and-in some instances quite particular, so if you have any doubts, be sure to review the plans with your building official. (One provision that often affects earth tempered housing is that bedrooms must have emergency escape paths . . . in the form of exterior doors or operable windows.)

If your loan is through the Federal Housing Administration or the Veterans' Administration, you'll also have to conform to the Housing and Urban Development Department's Minimum Property Standards. To establish that your home will meet these requirements, you'll have to furnish these agencies with copies of your site plan, material specification sheet, and working drawings, plus "Manual-J Heat Gain, Heat Loss Calculations". Ask your agent for a copy of the VA's "Required Exhibits to Accompany Request for Determination of Reasonable Value, Proposed Construction Cases", Pamphlet No. 26A-3. The VA or FHA will review three copies of your completed submission and tell you the amount they'll lend you to build the house. This evaluation will cost about $75 and should be added to legal costs.

Once you've settled on a plan, calculate the amounts of all major materials and finishes. Make an itemized cost estimate for these materials in order to see just what you'll be spending for doors, windows, masonry, reinforcing steel, etc. (Your architect or builder may supply a list, upon request.) Parts of a solar-heated building qualify for federal and state conservation and solar tax credits . . . so such items as insulation and those pertaining to solar heating, storage, and distribution should be totaled separately to help you calculate your tax credit for the year when you build. Be sure to check your cost estimate for accuracy with suppliers and contractors, and don't sign any contract until you're satisfied that the total will be within your estimate.

When the time finally comes to build, purchase as many of the materials as you can in advance. Not only will this help you stay ahead of inflation, but it will also insure that built-in items fir properly. If the windows, doors, and other fixtures are stored in a shed or trailer at the site, workers can refer to them during construction for measurements and details. (Do, of course, insure everything you store at the site against theft and damage, and follow your insurance company's recommendations concerning security.)

Then, as construction proceeds, keep complete records of all purchases and labor payments . . . and compare those receipts with your cost estimate. Thus, you'll be able to nip cost overruns in the bud and complete your home within budget.

EDITORS NOTE: For our example in this series of articles, we've chosen the two-bedroom Sun Cottage, an expandable earth-sheltered, passive solar plan with 1,023 square feet and an estimated building cost of $20,625 (assuming some owner assistance in construction). Angus W. Macdonald has drawn this plan according to HUD's Minimum Property Standards and the Building Officials and Code Administrators' (BOCA) building codes. Complete architectural drawings, specifications, and cost analysis may be purchased from Survival Consultants, Dept. TMEN, P.O. Box 21, Rapid an, Virginia 22733. You can also receive Angus's catalog of 12 low-cost, passive solar, earth tempered homes by sending $5.00 to the preceding address

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