Our Million Dollar New Build Fixer-Upper
(Crucial and Costly Lessons Learned Building a Custom Home)
Chapter 1: Slow Down!
We just “finished” building our first house and we learned the hard way everything NOT to do, everything we SHOULD have asked, what kind of builder NOT to hire, and the list goes on. Our only saving grace is that another family out there thinking of building a home, will be spared the problems we had to face by reading our story. Our house building story will be broken up into a series because there are too many details to cram into one article. And just giving an overview won’t help YOU.
This won’t be your typical “Top 10 Mistakes When Building a Custom Home” blog post. This will be an opportunity for you to see our experience from start to finish without actually living it and without losing the money we did. It’ll include text, images and videos as needed. Whether you’re hiring a builder or doing owner build, our story is for you. We had a builder manage the first half and were owner builders for the second half.
Our house build tested our marriage like never before (even though we were certain it wouldn’t). The unexpected problems we had to fix along the way took so much time away from my work that my business and income dropped by 70%, causing months of recovery after moving in. The build also motivated my wife and I to start our own home building business, which will come to fruition at some point in the future. It obliterated our savings, and led to masses of debt in the form of an auto equity loan, and 2 personal loans just to finish the house enough to live in safely, but still not even fully finish it. We still have to sand and paint the baseboards, casings and doors, install the fence, and do all the landscaping.
When the house and basic landscaping is actually done, we will have gone $120,230 over budget. We’re currently at $80,230 over. The fence, additional dirt work, grass and sprinkler system will cost another $40,000. And this over budget number does not include the $66k of contingency that was used from our construction loan.
You would think that spending that much money would at least be made up for by us not having to spend much of our own time. Nope! We spent over 500 hours during the last 6 months of our house build keeping the project from total collapse. Some of that was spent managing sub-contractors because we did owner build for the finishing phase but a lot of it was spent cleaning up messes caused by our builder and doing actual work on the house ourselves, to save money and ensure it was done to our standard. For example, which you’ll hear more about in detail later, we spent a full week redoing the ductwork in our HVAC system because it was so horribly installed. If you’re curious, you can watch the video showing how we gave a massive upgrade to the HVAC here.
Because the original HVAC install passed local codes, we couldn’t force our builder to redo any of it. And don’t worry, the HVAC system isn’t the only thing we had to redo ourselves.
In addition to the extra money we had to spend, I experienced a big loss of my income because of the time I had to spend. I’m self-employed so I earned $50k less in 2023 because of the time spent on the house build and it took months to recover in 2024. This house became a huge financial strain that we’re still patching up. But it didn’t have to be that way.
And with all this we still had to sacrifice some things that we wanted originally. And the crazy thing is, it all could have been avoided if we knew what we know now. If we can save one family from going through what we just did, it would have been worth it. Our stress was through the roof over the last year because we had to deal with this in addition to being parents of 3 young kids.
I would have started this blog earlier, but we literally had zero extra time during the build as we were scrambling to keep it from totally collapsing.
The overarching lesson that we will keep coming back to throughout this series is to slow down! We were in such a rush, we didn’t even give ourselves enough time to do proper research to avoid some of the issues and hire better people. But even if we had slowed down, some of the problems were due to us not even knowing how to vet contractors before hiring them.
And just having hired a better builder would not have solved all of our problems, of course it would have helped, but there is still a lot of responsibility on our shoulders to have ensured the builder was following the best processes and if you don’t know what those are, you can’t know who to hire and how to vet them. We thought we were hiring a good builder but we didn’t do our due diligence in looking beyond the few Google reviews he had. We also made mistakes in our design choices and during the phase of the build that we managed without the builder.
You’ll hear about my experience, my wife’s and the turmoil our kids had to endure.
To date, if you include the mortgage combined with cash we’ve spent and other loans taken out at the end, our house will cost 1,004,186. And we don’t live in California. We built our house in a rural town in Southern Utah. Utah is one of the lower cost of living states in the country and we built in one of the lowest cost of living cities in Utah. And we did not build a mansion. Our million dollar new build fixer upper is only 3,100 square feet above ground, with an additional 1600 square foot unfinished basement. And the lessons we’ve learned are helpful to anyone building a house with any budget. If you’re building a $400k house, what we share will help you just as much as someone building a 2 million dollar house.
The mistakes made during the house build by us and contractors is why we went over budget but the broader economic problems are the reason why the house was so expensive to begin with.
And we’re still dealing with the effects of shoddy work. Our chimney has been leaking since we moved in and we are now dealing with water damage under the hardwood floor in our bedroom and tile in the bathroom. And it’s a brand new house!
This whole process has taxed our family greatly. Hopefully after reading our story, your experience will be much better.
Let’s now go back to the beginning; the pre-construction and design process. Our problems began there…
Phase 1: Pre-Construction
We’ve been planning to build a house for years and have drafted many many floorplans over the years. In the spring of 2022, we finally had the funds to start the process. Our townhouse that we’d been renting was getting smaller by the day once our 3rd child was born. Our small backyard cement patio wasn’t enough for our 2 boys’ robust energy and it was getting difficult to have to walk to a nearby park for them to play outside. We didn’t have the best neighbors and we were getting eager to leave. We let our impatience get the best of us though as we wasted no time to find a builder.
There was a builder in Southern Utah that I knew because I had done some marketing consulting for his business. I saw him as competent because he had a big following on YouTube teaching people how to build houses. So I called him to see if he was available to take on a new house.
Lesson 1: Don’t trust someone just because they appear competent on social media.
We also had family that knew him from work and also saw him as competent. This builder wasn’t a friend, just an acquaintance.
We met with him to “interview” him but I already had it in my head that I wanted to hire him so it’s not like I evaluated him with the right lens.
We had interviewed one other builder a year before but he died sadly in an accident. And due to our hastiness to start building in the Fall of 2022 we didn’t bother to research any other builders in the area. I did a quick Google search but didn’t give it enough time to find other alternatives.
We were convinced he was the best because he also taught people about home building which should hold him to a higher standard right? So we thought. After moving into our house, we found out about a local home builder that would have been so much better but did I bother to look at the beginning? No. Because we “HAD” to start building in the fall of 2022. No we didn’t, we were just desperate to have a house after 10 years of renting.
We won’t disclose the builder’s name in this blog series because my intent for sharing our story is not to seek revenge towards our builder, it’s to help other families have a positive home building experience. And I can’t speak to everyone’s experience with our builder, I can only judge based on our own. We realized a few months into the build that our style of house was way out of our builder’s comfort zone. That partly falls on him for not understanding his own limitations but it also falls on us for not asking. That aside, there were still some big missteps that weren’t related to the style of our house that you’ll learn about shortly.
Our builder took an upfront fee of $2500 to book him that was non-refundable. This also paid for him to be involved in the design process and to help us with planning. The extent to which he was involved during the planning process was simply forwarding the emails of the blueprint drafts from the architect. He didn’t ask us questions to help us consider this or that regarding our house design. Again, we’ve never done this before so we were clueless as to what pros and cons there are to certain design features. That’s why we hired him to educate us on that but he never did.
The mistakes we made in certain design aspects of our house will be discussed throughout the whole series, not all upfront. That’s because we’re telling our story in chronological order and many of our design mistakes we only discovered at certain points during the actual construction process. You’ll also hear from my wife on the pros and cons of certain finishing choices. And we’ll share as many pictures and videos as we can throughout our story.
Lesson 2: Don’t pay a builder a deposit unless you have in writing exactly how they’re going to help you during the planning process. They must quantify it and be specific about what help they’ll offer.
Now it’s okay if they want a deposit simply to book them and they have no intention to help during the design process but that has to be communicated clearly. Our builder told us his deposit would cover him helping during the design process but he didn’t.
We would have been better off just working with an architect directly. There are so many problems that came up later in our build that could have been resolved in the blueprints from the get-go.
One of those problems was not doing a mechanical plan. This plan includes a detailed drawing of where all the HVAC ventilation is going, plumbing and electrical. If you don’t do a mechanical plan, you could end up not having the right spaces to accommodate the system you want or need. Our builder said that type of plan isn’t necessary. It absolutely is. And yes, you’ll be spending a bit more money on that, but it will save you far more than you’re spending. Later, we’ll get into the costs we incurred by not having a mechanical plan.
Lesson 3: Wait to buy your lot unless certain conditions are met.
We bought a lot a month after we paid the deposit to our builder but we didn’t have architectural plans yet or a budget. And we ended up spending $15k more on the lot than we would have spent if we waited 6 months because the housing market dropped in value (which we couldn’t have predicted). So we’re not saying to try and predict house values to decide whether to buy your lot at certain times but we also spent a couple thousand dollars in extra interest to hold the lot for those 7 months before we started building. Some people will say that it’s easier to design the house when you know what lot you’re building on but for us, we already knew what type of lot we were looking for, which was 1/2-1 acre on flat land in a development where you could build a basement. That’s all we needed to know to design the house. But because of our hastiness, we jumped the gun on buying a lot too early.
Now if you fall in love with a property and you can’t imagine building your house anyone else, then it may be worth it to purchase the lot to guarantee you have it and you’re okay to pay extra interest to get it before someone else. But it‘s also important to have a real estate agent analyze the current market and whether there’s a lot of competition or not. So our advice here is not universal. We wish that we would have waited to buy our lot because it turned out that the competition was extremely low and we started building 6 months later then we thought we would but we don’t regret the lot that we did purchase. I would say, that you need to get more details about the development as well before buy the lot because we didn’t know the sewer lines were so shallow and so we ended up needing to install a sump pump in the basement for when we have a future bathroom down there. That’s extra cost that we could have used as leverage to negotiate a lower sales price on the lot.
Don’t let the fear of missing out cause you to make decisions too quickly.
Lesson 4: Before you approve the architectural plans (especially if the architect is paying by the square foot) get a detailed budget from your builder.
We ended up spending another couple thousand dollars for the architect to update our house design after we approved it, because our builder came back with a budget that was way too high. Our builder told us we needed to review the architectural plans and approve it if there were no more changes. Then he was going to do a full budget. Do not let your builder do that! Get the budget from him before you approve the architectural plans.
In our case, the budget came back not $100k over, not $200k over, even more than that, which you’ll read about shortly. We ended up needing to pay the architect extra money to shrink our house because we had already approved the plans before getting our budget from the builder.
Then this is where this whole situation gets really funny, not…Our builder proceeded to update the budget based on the smaller house and when we got the updated budget back from the builder, it was the same!
Let’s take a step back so you can understand all the details regarding the sequence of events that took place during this part of the design process.
On August 12, 2022, our architect sent us the final drawings, and on August 16th our builder emailed saying, “As soon as you approve, I can send to engineering asap.” We approved it 1 hour later like fools. He was going to send the drawings to the engineer to do the engineering blueprint which was another several thousands dollars. At this point, we still had no budget from the builder, we were just hoping it would come in under.
A competent builder can drum up a good estimate with just architectural plans to know whether we are in the ballpark or not. And if not, then we continue to work with the architect until the budget is within range. Our builder did not want to take the time and we were too ignorant to know any better to ask for that.
So we received the invoice shortly after for the architectural plans for $5,729. I wish that was all we ended up paying.
For the next couple weeks, the builder proceeded to work on the budget, asking us some questions on finishing choices but overall not getting enough necessary details.
It’s now September 21, and this is the first time we received any message from our builder regarding the budget. He said this, “I noticed the basement is much bigger than original. I did not catch this. We need to reign in square footage. Right now you are just over 5,000 sq ft. I think we need to pull the basement and do a stem wall and then pull the single car garage.”
I’m thinking…we just paid the architect and approved his plans, and you’re now telling us a month later that our house is too big. And the engineer was already working on our engineering plans as well. You see how he said, “I didn’t catch this.” That’s because from the beginning he wasn’t paying attention. That should have been a huge red flag to fire him right then and there.
Over the next couple days, I was asking questions about what needed to be cut and pressing him for the actual budget. And one of his responses was, “I started doing takeoffs and I could not understand why things were so much and some bids came in higher than expected. I then looked at the square footage and added it all up and 5,000 square feet is too much to fit within your budget.”
I’m thinking, you just barely noticed the square footage of our house?? It’s listed on the first page of the blueprints! He didn’t have to add things up. Which means he really didn’t even look at our blueprints until the end of September when he was getting bids, a month after we had approved the plans with the architect. Remember, he was the one encouraging us to approve the plans, he never told us to wait until he created a budget. He wasn’t even going to start on the budget until we approved the architectural plans.
Going back to our annoyance with the $2500 deposit we made; that deposit was supposed to cover him being involved in the design phase but it was clear that he didn’t even look at our house plans, he just forwarded the emails from the architect.
On September 24, he finally sent us his budget, and it totalled $970k without land. Our budget at that time was $650k with land and the lot was $125k. So we were about $400k over budget. If he had created this initial estimate before we approved the architectural plans, we wouldn’t have spent a couple thousand dollars extra during the design phase.
And by the way, we were supposed to start building in early October to have the house dried in by Christmas.
Again, you might be thinking, well it seems like you just need to hire a much better builder and you won’t have to worry about any of these issues. While that’s partially true, if you don’t understand what to look for in the builder and what to vet about his processes, then you won’t be able to hire a better builder. You won’t know how to evaluate them. And you won’t be able to hold them accountable during construction to a certain standard. Because even the best builder can get lazy if he thinks you’re not on top of best practices and processes and checking in during the build.
So, what did we do next after receiving this insane budget? To be continued…