Saturday, September 8, 2018

Can I Build A Custom Home And Sell It And Make Money 2018?

In 2012 I wrote a blog with this same title that talked about building a custom home and if it was possible and do it and make money. Well 6 years later and 10's of thousands of people reading it, I find that it is still one of my most popular blog posts. The subject is current but there have been many changes in not only the residential construction industry but also in the real estate market in Ontario as well. Hence I have decided to rewrite this blog updated for 2018 and the current climate (construction and real estate) that we find ourselves in.

Can I Build A Custom Home and Sell It And Also Make Money?

Building it myself or hire a contractor?

There are a lot of dangers/pitfalls if you try to build a custom home without using a contractor to do it for you, you need to decide right away if you want to hire a contractor, if they can help you and if they can do things for you that will actually help you make more money when you go to sell them home that offsets the cost of hiring them;

  • Safety. One of the main jobs of a contractor is that they make sure that all the subcontractors are working safely with the proper safety gear and are in compliance with the ministry of labour rules. If you don't hire a contractor and someone gets hurt on your job site you the owner can end up fined or worse depending on the severity of the injury. Safety is a serious thing now on all construction sites.
  • Access to trades, A good contractor has access to the trades that are honest, good quality and are fair in price. The contractor also has pull with them, meaning that they can get them there in a timely manner because they hire them routinely.
  • Warranties. A good contractor will supply a warranty for the work and will be able to enforce warranties of the subcontractors and also suppliers. This is a big selling feature to potential buyers.
  • Knowledge. Contractors build homes all the time, they know what works and what doesn't. They also know the costs of things to help keep you on budget.
  • New materials and techniques. One thing that has really changed in the last decade or two is that there has been a ton of changes in the materials that are used and the way things are constructed. A good contractor will know these and know which ones to use.
  • Building Code Changes. There have been thousands of building code changes in the last 5 years. Every part of a the house has been affected from the amount of insulation in the walls to the kind of breakers that you have to use in the electrical panel. Not knowing these could cost you money as you end up doing things twice.
  • Access to wholesalers. Contractors have access to wholesalers from timber to plumbing fixtures. The savings actually will help pay for the contractors fee.
  • Time. Contractors can build the home faster then you as a homeowner can, in construction time is money. If your having the build financed the faster you can get the home built the less carrying costs you will incur.
  • Insurance. Contractors come with insurance, if anything does go wrong on the build site then you know that their insurance will help make you whole.
  • Reputation. You can use the name of the builder to help sell the home as a high quality item. This will sell it faster and raise the cost of the home.

Costs Of Building The Home 

The cost of building custom homes has risen a lot in the last two years, with the labour increase that has happened and the sky high prices of materials your going to have to make sure you have a big enough budget. It will cost you more right now to build any type of custom home no matter what style, type or finish the home will have in it then any other time in recent memory.

If you are going to build a custom home to sell and make money you better make sure that you have access to good cheap financing to help you carry the costs of everything until you can sell it.

The cost of the custom home is another reason to hire a contractor, they will create the budget for your home and then help you stay on it until the build is complete.

Costs of the Land

The cost of  the land could vary depending on where you want to build the home. Vacant land is becoming harder and harder to come by, but it still exists. In fact there are still custom home sub-divisions that are around and there are still more being created, these places are where you can buy the property and build a home yourself. These newer sub-divisions have their pro's and con's. The cost of your land will directly affect the sale price of the home. If you pay more for the lot because its waterfront or waterview then you will be able to charge a lot more for the finished home. Make sure that you don't over pay for a piece of property that will not add significant value to the end price of your custom home.

Permits and Fees

Depending on where you build and what municipality they are in your building and development fees will have a wide range of costs. From $15,000 to $50,000. This must be taken into consideration when you are budgeting your new custom home.

Current Real Estate Market

The real estate market in the last 3 or 4 years has risen at an unprecedented amount. Costs of all types, sizes, styles and location of homes has risen dramatically. The market is being pushed by people moving in from other area's. These people are coming in with large amounts of funds from the sales of their homes in area's where the real estate market is even higher then the current local one.

Like every real estate market there are hot and cold spells and sometimes the market goes down in the cost of the homes, but the overall aggregate sales of homes is ever higher with year over year prices steadily rising.

This fact means that even though the cost of building homes and buying land has risen the real estate market has outpaced them both.

The real reason for the rise of the cost of homes in the area is because there simply is not enough homes in the area for the amount of people that want to live and play in the area. People are even buying homes that they don't really want just because they are in the general area that they want to live and then after purchasing a home they are adding additions and also extensively renovating them to make them acceptable to the style they are us to living in. The influx of people is not slowing down anytime soon and the amount of homes that are planned to be built in the area is not nearly enough to accommodate them.

In summary, Can I Make Money?

The bottom line is that you can make money building and selling custom homes. In fact the market is so in your favor that you can do it right. You can hire the right contractor to build the home and use their name to help sell the home and you have a very good chance of having the home sold before it is even finished being built! This will save you money on your carrying costs.

You still have to make sure that you pick the appropriate piece of property, the appropriate design and style and you need to pick the appropriate price point that you want to sell at. The higher the price the higher the finishes that you will have to install but the higher the potential for profit.

Find the right custom home builder that will work with you from the start, someone that will help you through the entire process. You will also need to find the right real estate agent that can give you good advise about what property to buy and what the value of the homes that are selling in that area. You then will need to settle on a design that you are comfortable with and one that will make you money in this market.

With the real estate market the way it is, now is the time for you to build and make some MONEY!

Rob Abbott
Village Builders Inc.


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  4. Greetings Rob. You did a cool job here for your readers and followers. This was my 3rd time visit here in your super shaped resource zone. I always enjoy your age-worth contents and writing style. Just a few moment back I trailed into your five ideas to transform bedroom into a luxe den. That was totally an elegant and better feeling read and experience. And this post provided me a different taste I love to admit. The question you titled is perhaps most common to all. I think building home is very thrilling but time taking and also depends on how skilled and determined to do the job. Anyway I enjoyed your long inspiring details. By the way, do you think to keep home or any property safe, worthy and secured a property management company can play an important role?
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  6. I appreciate how you break down the potential challenges of Custom Home Building Plans and risks involved, like zoning regulations and market fluctuations. It's reassuring to see that you've provided practical tips and strategies to navigate these hurdles.