Ideally, you want to know how much your granny flat will cost well before you start securing bids. Unfortunately, the remodeling industry in general lacks transparency. For far too many homeowners, the true costs for their project only become clear when you’re already part way through the project — or worse — at the end of it.
GRANNY FLAT BUDGET = SOFT COSTS + HARD COSTS + CONTINGENCY
Soft costs are those costs associated with non-physical expenses such as architectural and engineering fees, as well as permitting. And like we’ve talked about before, permitting is very important.
Hard costs are costs associated with actual construction like materials for plumbing, framing, or trim, as well as labor costs for completing those projects. A contingency is a predetermined amount or percentage of your budget allocated for necessary, unpredictable expenses such as an undetected water leak.
Architect and/or Designer: 10-15 percent
Consultants: 6-8 percent
Permits and Entitlements: 4-6 percent
Total: 20-29 percent of your construction budget.
If you feel like you’re at risk of a ballooning budget, take these four steps:
Start with a bare minimum of what must be done and what you cannot live without (i.e. your “must-haves”), then prioritize them. If there is budget left over, add in some of your “nice-to-have” items in order of priority. Be mindful and don’t let yourself get caught up in the romance of building your very own granny flat! Like I’ve said before, you do not get champagne results on a beer budget.
Things may not go according to plan. So, plan for a few additional weeks of labor and a 10-15 percent reserve to handle unforeseen circumstances, like an undetected water leak.
You shouldn’t be saying things like “While we’re at it…” and “Since they have to be up there anyway…” opening the door to adding work — and therefore time and expense — to a project. So, zip it!
Assuming you don’t have unlimited funds and don’t want to end up with a half-finished remodel or under a mountain of debt, it’s crucial to be realistic and tactical about what you can afford from the start.