What will our project cost and how will we finance it?
The numbers below should help inform budget expectations when hiring Landis for a well-designed and well-built construction project.
Initial Consultation
The initial design consultation is free if you own or have a fully ratified contract on the property. If you are in process of buying a property, there is a fee schedule for the level on consultation you need to make an informed buy decision and or to help you negotiate the price of the home.
Design Fees
Design is, on average, an additional 12% in addition to construction costs. Additional design-related fees can include printing/copying costs, historic, 800 lot conversions (in DC), zoning and engineering if required.
$175 per hour
Project Pricing Guide
The below costs are additive (i.e. for a one-story addition that includes a kitchen, add the two budget ranges) and combining projects will typically incur cost savings. Projects can also be completed in phases.
These prices anticipate that the project is in an older home with aging plumbing, electrical systems, settlement, mud-set floors, and lead paint remediation. Projects in newer homes will be at the lower end of the range. Design services, painting and appliances are not included in pricing below.
ONE STORY Addition
Family room or bedroom type – no plumbing, on full unfinished-basement or crawl space.
$200,000 to $350,000
Multi story addition
Family room or bedroom type – no plumbing, minimal structural work.
$300,000 to $800,000
Add Story/Pop-Up
Remove the roof and add a level to your home or add dormers and renovate the attic.
$300,000+
Whole House Renovation
Whole house renovation. $450 to $600+/ square foot
Hall Bathroom
Renovate within current location. $50,000 to $90,000
Primary Bathroom
Current location /expansion/relocation. $75,000 to $175,000
Kitchens
Renovate within current location. $100,000 to $300,000+
Expansion/relocation $200,000 to $400,000+
Kitchen addition $250,000 to $600,000
New House
On your lot, or as a tear down. This includes kitchen and baths. $400 to $600+/square foot
Basement Dig-Out
Excavate the basement to lower the slab (8-24 inches), rework structure and finish as living space; add egress, windows, heating/cooling. $400 to $600/ square foot
Accessory Dwelling Unit
Within the home’s existing footprint: $200,000 to $500,000;
Detached structure $400,000 to $600,000
Roof Deck
Contingent on egress, zoning, historic, project size, etc.… $50,000+
Finish Existing Basement / AttiC
$300 to $500 /square foot
How do I finance our new project?
When you’re planning a remodeling project, start thinking early about how you’ll finance the project. The scale of the project that you can undertake will be directly influenced by the amount of money available. You can complete a Feasibility Study to see if the project can be completed within your budget. If your remodeling plans are ambitious or expensive, you can consider creating a Master Plan to complete your project in phases–perhaps over a period of years.
1. Cash
Cash is terrific, but even when you have the cash available, you should consider a few points before deciding this is the best option. Interest payments on a home improvement project are tax deductible, but the cost of a remodeling project paid for in cash is not. If you are borrowing money for 6% and are in the 24-35% tax bracket, you are probably paying only about 4.75%. A second consideration is whether you have other needs for the cash or if you can earn more on your money through another investment with a higher yield.
2. Home Equity Line of Credit
A home equity line of credit is a form of revolving credit in which your home serves as the collateral. They are sometimes called second mortgages and usually don’t involve closing costs. The amount of equity that you have in your home (the difference between the current appraised value of the home minus the amount owed) plays a large part in the bank’s decision on the amount approved for your line of credit. Like other loans, a line of credit has a term (an agreed upon period of time) that the lender will make that set amount of money available.
The borrower is not advanced the entire amount up front but uses a line of credit to borrow sums over time that total no more than the maximum credit limit set by the bank. With the newest tax laws for 2018, you can only deduct $750,000 of mortgage interest, so the equity loan amount would be added to a home mortgage if you have one. One of the differences between a Line of Credit and other loans is the interest rate is always variable, which means that it can change over time and is usually based on an index, such as the prime rate.
Often the payments required are only the interest due on the loan. The entire amount of the loan is due at the end of the term—like a balloon mortgage. A home equity line term ranges from 5 to 25 years. Ask your bank under what circumstances they may call back the balance of this loan (for example, in a recession.)
3. Cash-out Refinancing
A cash-out refinance is a replacement of your first mortgage, so this option does involve new closing costs. With this option, you refinance your mortgage for more than you currently owe and then pocket the difference. Let’s say your home is worth $750,000 and you current mortgage is $300,000. You want to remodel your kitchen and you also need some cash for your child’s tuition, so you’ve decided you need $100,000 for both. With cash-out refinancing you would refinance your mortgage for $400,000, taking the additional $100,000 out in cash and hopefully borrow the money at a lower interest rate than your original loan. With the newest tax laws for 2018, you can only deduct $750,000 of mortgage interest, so this refinance loan amount would be added to a home mortgage if you have one.
To decide between a cash-out refinance and a home equity line of credit, consider the cost of refinancing your house. The closing costs are usually several thousand dollars. And, it doesn’t make sense to finance a larger amount if the interest rate is higher. If your current mortgage is at a lower rate than currently available, it probably makes more sense to take out a home equity loan.
4. Loan to Future Value
A loan to future value involves making projections about the future worth of a property after improvements and adjusting the financing arrangement accordingly. The construction loan is converted to a mortgage loan after the certificate of occupancy is issued. The lender will evaluate the impact of property improvements on the value of the land and buildings involved. The extension of the mortgage will be based on whether the lender determines that the amount of the loan will result in a rise in value of the property that is at least comparable to the amount of the loan, including interest and fees. With the newest tax laws for 2018, you can only deduct $750,000 of mortgage interest, so this loan amount would be added to a home mortgage if you have one.
Once you have a schematic design and a preliminary construction estimate, then you can lock-in the loan amount and interest rate. The bank will pre-approve you for a loan and it is possible to purchase a rate-lock agreement valid through the expected completion of construction. You only pay interest on the construction loan as you make draws. You, the contractor and the lender establish a schedule for draws based on stages of construction. Construction loans are usually variable-rate loans priced at a spread to the prime rate or other short-term interest rates. The full amount of the construction loan is due on completion of construction. The property is refinanced on completion of construction.
So, the borrower pays two rates—one for the construction loan and one for the mortgage. During construction, the bank will send an inspector out to check the project at every stage of construction. There are fees for these inspections—usually in the range of $50.00 per inspection, that are paid for by the borrower. The major advantage of this type of loan is that you only have to make one application and have one closing and you can borrow more than would be available to you with a conventional refinance.