Dollars and Sense: Part 3 of 4: What your location will support
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Previously I’ve posted about Your finances and What you can build. This part is about what your location will support with respect to size and cost of your planned home. I’ve written about this topic before, so I’ll only summarize here and relate back to the spreadsheet I put together for the What you can build post. In short, it’s a good idea, as you design a house, to take a look at comps in the neighborhood on the size, total value, and price per square foot and compare them to your dream home (you’ll need to get these numbers from your favorite real estate agent or use tax assessment data [which is less reliable]).
If your planned house is a whole lot bigger and a whole lot more expensive than others in the hood, you might want to take a deep breath and reconsider. For one, the house may be a challenge to sell in the future. For two, if you’re needing to finance a substantial chunk of your project, you may not be able to find a bank willing to lend you the money (if the bank [or your mother-in-law] is holding the note, they’re at your side taking a risk on the project, so they’ll be looking at these numbers closely as well).
The spreadsheet I put together for the What you can build post includes the square footage of the house, total cost, and various flavors of price per square foot. For this assessment of what your location will support, I suggest you use the price per square foot (total)(includes everything) number. May you find the support you need!