Building a Luxury Home Comes with These 7 Hidden Financial Aspects that You Must Consider
‘Living the dream’ cannot be manifested more clearly than in the confines of your dream home. Building it? Even better. Just like an artist manifests their thoughts into the canvas, you too can ensure your dream home can be made apparent in tangible forms.
While you should dream big about any aspect of your life, you also have to keep in mind the caveats associated with it. When it comes to building your own luxury home, the associated caveats mostly border along the lines of financial pitfalls.
Keep the following financial aspects in mind in order to ensure maximum efficiency of being able to build your own luxury home.
1. Mortgage—Just Because You Can, Does Not Mean You Will
This is a rather simple proposition to consider. Your bank will ideally give you a great stretch when it comes to determining how much you can spend on a monthly basis to build your luxury home. While in some cases, it might be as high as 35-37%, ideally you should not even consider that as a window to spend.
The main reason here is that while building your home, you will come across tons of other hidden expenditures that will be bound to pile up. While you might be elated to see the stretch from your mortgage loan that your bank is willing to provide, do not succumb to the pitfall.
Ideally, as a general rule of thumb, you should under no circumstances spend more than 25% on housing costs. This should also place under an umbrella the other aspects such as homeowner’s insurance and other property taxes.
Obviously, you can spend less than that (the lesser, the merrier?), but this is one of the most quintessential monetary make-or-break elements that you must be aware of.
2. Easy on the Emergency Fund
The other hidden financial aspect that you might not be ruminating well on is your emergency fund. Ideally, folks refrain from keeping such a said untouched fund, but you should avoid making this error.
Building your luxury home can be arduous, and financial stringency becomes pivotal. One of the hidden financial aspects that people usually do not talk about is segregation—especially for an emergency scenario. While this might range from an immediate medical expense, to something like miscellaneous repair—keep it hidden.
3. Avoiding a Realtor While Selling Your House
Before you start making your own luxury house, you ought to look for ways to sell your current one. When it comes to selling your current space, keep in mind that one of the greatest punches you will financially receive is the cost of a realtor.
In these cases, you ought to learn the art of self-reliance. Consider selling your current property under ‘House for Sale by Owner’ and avoid the 5-6% realtor commission that would otherwise ask for. This way, you get to avoid this massive financial hurdle that most folks do not talk about.
The only downside to this is that you will have to spend an awful amount of time long before you actually end up starting to build your luxury home. Then again, what stays longer, stays sweeter, isn’t it?
4. Alternatively, You Can Hire a Splendid Real Estate Agent
In order to get the best and most out of your property, you can also consider hiring a real estate agent who might not be associated with any governing body, unlike a realtor. With a plethora of experts that you can find online, the greatest aspect here is the personal touch.
Assuming you are seeking real estate agents to maximize your selling proposition, the upside to the online world is that you can find one who suits your needs and pitches. In other words, if you can find a real estate agent who exactly gets your wavelength and selling propositions, you ought to hire them.
5. Quoting Your Home Insurance
Oftentimes this goes under the radar, but home insurance is one of the most visible yet hidden aspects that might prove to be a boon or bane. In this regard, you need to be scrutinizing your current insurance claims, as well as other clauses.
In order to protect the intricacies of your assets, you will need to consider homeowner’s insurance. The advantageous aspect here is that it comes in various shapes, sizes, and flavours. This not only ensures that you get the best out of your money, but also make sure that your insurance plans feel personal and customized. It is as if the insurance plan was made for you in the first place.
6. What About Renting?
On that note, there is also a fair chance that you might want to rent your luxurious space in order to generate a bit of currency when, say, you’re out on vacation. This is where you should think about renter’s insurance for your tenants.
Why? because renters insurance is meant to cover your tenants personal stuff, and additional personal liability aspects while they stay in your house. As a homeowner you should insist that your renters should get this type of policy which would save you the trouble if anything happens to them or their stuff while they are renting your home. Here’s everything you need to know about What does renter’s insurance cover? How different is it from homeowner’s insurance? What does it cover and what does it leave out? These are the basic questions that must be pondering over your mind.
Fret not, for the answer lies in the application. If you are certain that you might want to rent it out, ask your tenants to get renter’s insurance for items they bring in once you are out on your said vacation. In any other cases, get homeowner’s insurance.
The point behind insurance is to ensure that it does not encroach on other funds in case of damage or repair. Asking your tenants to get renter’s insurance would serve the same purpose for them. Either way, it seems like a win-win proposition for all.
7. Bid Your Work, and Have the Heart to Negotiate
There is an unsaid way in which you can end up saving a lot of money. By bidding your work, you will be surprised to see how much money you can essentially save. This could range anywhere from a meager hundred dollars to as soaring as multi-thousand dollars!
The reason behind it can be multi-fold. This could be because a certain builder might not need the kind of work you are proposing—ergo keeping a soaring asking price makes more sense. The other could be (which is related to the closer idea) that you possibly have not negotiated well enough.
The negotiating aspect would essentially require visiting a lot of homes and their associated construction contractors. You need to gauge the market and then set a fair bidding price. Since you are building a luxury home, you can expect a fair number
These six financial aspects will not only ensure that you save up a fair amount of money while building your dream luxury home, but also ensure that you can use those resources elsewhere too. While you have to spend a fair amount of time doing the necessary homework, eventually it will be worth it.