Dream to Reality
Understanding what’s involved can clear the path to log-home ownership.
EVERYONE THAT NOW LIVES IN A LOG HOME has overcome two major obstacles:
(1) the log-home buying process itself and
(2) their budget. While the obstacles may seem obvious, methods of surmounting them may not.
If owning a log home were as easy as walking into a sales representative’s office with a floor plan and a checkbook, the hillsides and meadow’s of America would be blanketed with log homes. Unfortunately, obtaining a log home is more complicated than buying a conventional home.
When conventional-home buyers go house hunting, they either employ a Realtor or wade through classified ads and real-estate directories. They look at finished homes and builders’ models or renderings. At the most, they may choose a lot, point at a picture or visit a model, note a few modifications (only a few changes allowed) and let the builder take it from there. More often, they will visit a finished house they like, make a purchase offer and let the Realtor or real-estate attorney take over.
For log-home buyers, the process involves finding land, selecting a floor plan, choosing a log-home company, finding a builder, obtaining financing and, oftentimes, arranging to hire subcontractors or contributing their own labor. In the case of log-home buyers, since they are operating outside of “normal” home-buying procedures, they will have to direct the entire process themselves. A Realtor may help find land, and a log-home representative may provide building services (or at least offer suggestions), but working with the builder, the finance company and the log-home company falls directly on the buyer’s shoulders.
The process of obtaining a log home can be an obstacle. Preparation can overcome it. You must be willing to accept the additional time and energy commitments that the log-home buying process requires.
Budgeting is another potential obstacle to log-home ownership. Despite the efforts of log-home manufacturers, sales representatives and log-home publications to explain the costs involved in building a log home, many prospective log-home owners entertain notions that range from mild delusions to sheer fantasy. Many people think that they can obtain a large, custom-built log home, on rural acreage with private well and septic system, for less than the cost of a modest town house or a single-family home in a development.
There are three ways to deal with budget challenges. First, you can delude yourself. This is especially likely for those planning to contribute their own labor. Some of these owner-builders believe that most of the price tag of a turnkey, or finished, house comes from labor costs, which they can avoid by doing the work themselves.
Their delusion about log-home costs comes from a general lack of knowledge about the house-building process. Just as we’ve lost touch with the processes that put food on our table, most of us no longer understand what is required to put a roof over our heads. Complicating this is that most of us are not willing to settle for the same roof that sheltered our grandparents. Today, log homes and housing in general are far more complex.
In reality, providing all the labor for your house (and not paying yourself for your time) may save you one-third the total price of a turnkey, contractor-built home. But this is only if you are very good, very efficient and very organized. The real danger of deluding yourself comes when you manage to get yourself into the project and find yourself unable to complete it. This predicament happens frequently enough that many lenders list it as their main reason for refusing to grant loans to owner-builders.
The second way to deal with budget problems is to re-examine projected costs and realistically determine what can be cut without altering your basic dream house. Perhaps the deck can be added later, the second story can be finished in your spare time after you move in or the whirlpool tub can be roughed-in for later installation.
These decisions can often help bring a budget-breaking house plan within reason. But they usually work only when the budget is not too badly broken. And such measures mean accepting a house that, in your mind, is not truly complete — the legendary permanently unfinished house. After a while, it becomes annoying telling guests, “This is where the so-and-so will be, and over there will be the such-and-such.”
There is a third way to make your log-home dream come true, even in the face of massive budget discrepancy. It’s simple, certain and comes with a host of other benefits. It’s also the least tried. Stated simply, redefine your dream. Since, for most people, log homes represent more than just housing, this approach means examining your lifestyle and priorities.
When I first started selling log homes, I was amazed at the uniformity of people’s log-home dreams. The floor plans were different, but the size and the features were the same. I call them the “gotta-haves”: “We gotta have 2,000 square feet, a loft, all tongue-and-groove ceilings, a glass wall, whirlpool, master suite with luxury bath, hardwood floors, etc.’’ The price tag for such “gotta-haves” can run to well above $30,000.
I wondered how everyone was coming up with the same list until one day I realized it came straight from magazine ads and sales literature. I’m not protesting people’s “gotta-haves,” just pointing out that if yours prevent you from owning a log home, what have you gained? Luxuriating in a whirlpool tub in a non-existent log home is much less satisfying than stepping from the shower of a real log home and hearing the chorus of night sounds drifting in the window on a summer evening.
Perhaps a good way to evaluate your “gotta-haves” is to look at their real cost, not simply the price tag. Examine not only the dollars spent paying for, maintaining, repairing and replacing them, but also the time required to perform all those tasks or to earn the monev to have them done
Consider a luxury tub — and it seems almost every log-home shopper does. What does it really cost? Such a tub can start at $2,500. To satisfy most tastes (and look like the magazine ads), the price tag is probably closer to $4,000. But what does it really cost?
First, let’s look at the mortgage. Since that tub is going to be amortized over 30 years at the prevailing interest rate, it could easily wind up costing twice its price tag. And this figure does not even count the water or the electricity used to fill and heat the tub while it’s in use, plus regular maintenance and the inevitable repairs.
What about lofts? Lofts go with cathedral ceilings, which go with log homes. They can be spectacular, delightful places. But when you add a loft and cathedral-ceiling area, you automatically increase the size of house required to get the same usable square footage. A 24-by-40-foot, two-story house contains 1,920 gross square feet of usable area. If you leave a 20-by-l2-foot area out of the second floor to create a loft and cathedral ceiling, you have reduced the usable square footage by 240, or 13 percent. You must increase the house to 2,160 square feet to achieve the same amount of floor space.
The cost of this additional space will be only slightly lower because, although you’ve eliminated some second-floor framing, you’ve added trim carpentry and finishing in the form of loft railings. Also, a cathedral ceiling costs more to finish than a comparable area of flat ceiling. Assuming a bargain cost per square foot of $35 for that additional 240 square feet, your loft-cathedral ceiling will carry a price tag of $8,400. Its real cost, as part of the mortgage, will be roughly double that amount over 30 years.
Utility bills also will be higher in a house with large expanses of cathedral ceiling. Even using principles of solar design and energy efficiency in siting and building the house, you will spend more to heat and cool it than a house of the same area without those features.
Many people cannot imagine a log home without a fireplace. But even high-efficiency fireplaces cannot begin to equal the efficiency of a mediocre wood-burning stove, which costs far less. In truth, fireplaces are to enjoy for a few hours on blustery winter evenings. Wood stoves, on the other hand, can contribute substantially to heating a home. If yours is a wooded lot of any size in an area of moderate winters, you may be able to provide several seasons of heat just from the trees cleared for the house and the road.
Don’t forget to consider the cost of obtaining that wood. Many wood-burning hopefuls invest more than the cost of a complete high-efficiency heating system in the tools required for cutting and splitting wood. Then, after one or two seasons, they realize that there are things they enjoy more on a crisp autumn afternoon than the drone of a chain saw and the odor of gasoline. Next, they discover that a house heated by wood cut by someone else is about the most expensive form of heat obtainable.
Finally, there are features like hardwood flooring and tongue-and-groove wall and ceiling coverings. These are always substantially more expensive to install than their conventional counterparts: carpeting and drywall. Hardwood flooring, installed and finished, may be two to three times the installed cost of a top-grade carpet.
Tongue-and-groove costs roughly four times what drywall does. The materials alone may run substantially more than the total cost of drywall installed and painted. Tongue-and-groove has the mixed advantage and disadvantage of providing a permanent finish, whereas drywall needs periodic painting or wallpapering. From a maintenance standpoint, tongue-and-groove wins. But from a decorator’s perspective, drywall offers the possibility of changing colors or wallpaper. This flexibility can be important to someone planning on occupying the same house for 20 years or more.
Log-home shoppers needn’t settle for less in their dream home, but do consider the value of the features you want independently to avoid either making your dream unattainable or saddling yourself with a financial burden that makes your dream, once achieved, impossible to enjoy.
Paying for the Dream
Finally, consider that the price tag is only a part of value. Remember Henry David Thoreau’s definition: “The cost of a thing is the amount of what I call life which is required to be exchanged for it, immediately or in the long run.”
A family with a household income of $50,000 per year earns a gross salary of $24.04 per hour (based on a 40-hour work week). Commuting to and from work adds an average of five hours per week for most Americans, reducing their effective hourly wage to $21.37, of which about a third will go for taxes. This leaves about $14.25 received for each hour’s work done. Considered this way, that luxury tub discussed earlier actually costs nearly two hours of time from the homeowner’s life per month, or roughly 18 work weeks over the life of the mortgage. This does not include the time spent cleaning the tub (a half-hour or more per week, or two-plus hours per month) or the time spent earning the money to pay for the electricity and water. Weigh this cost against a conventional tub.
Likewise, that cathedral ceiling and loft will require 4.5 hours of labor every month, or almost one full year over the
30-year life of the mortgage. That may be worth it to you, but weigh it carefully against the other uses you might make of that money or the time it represents.
Many people whose budget is drastically out of line simply choose to postpone their log-home dream — “until we can afford it.” But this raises a final consideration: the future affordability and availability of log homes. Land prices skyrocket, building permit requirements and their associated bureaucracy increase dramatically, and lending requirements tighten drastically. These trends are not likely to reverse, even though mortgage interest rates and the construction market may rise and fall. If you are fortunate enough to live in less developed areas of the country, these trends may not affect you for some time. But many people may never live in a log home if land prices grow faster than their incomes.
Some people manage to pay for otherwise un affordable homes by acting as their own general contractor or providing their own labor. Mounting regulation of the construction industry and increasing strictness by lenders is making this trade-off more difficult each day, however. In some municipalities, homeowners must have all mechanical work on their house performed by licensed professionals. Only a few banks will lend to owner-builders (not just for log homes but for any kind of home).
For many people, there may never be a better time than now to buy a log home. Th is fact makes it especially important to consider the features the house contains and to evaluate their true cost. Examine your current lifestyle and the lifestyle you desire in order to avoid letting something with a high hidden cost prevent you from realizing your log-home dream.
Price it right
WHEN IT COMES TO BUYING A LOG HOME, most people’s first question is: How much does one cost? That shouldn’t be your first question. Your first question should be: How much money can I spend? And if that isn’t enough, how much more can I get?
With log homes, as so much else in life, money is the root of all frustration. Better to find out at the outset where you stand so that you’ll be able to tailor your plan to buy and build your dream home to the reality of your circumstances.
There are many ways you can control how much your log home costs (see the next chapter). There aren’t so many ways to get more money. What you have plus how much you can borrow equals your budget. Everyone has a budget. Assuming yours will be limited, let’s look at how things stack up. The math is simple, although the answer might not satisfy you. How much money do you have or expect to have: cash stuffed in a mattress, savings accounts. Don’t include retirement savings, but do add any other redeemable assets. If your new home will be your primary residence, add the equity you expect from the sale of your existing home (selling price less mortgage pay-off and Realtor’s fee).
Knowing how much money you can devote to your log home allows you to set priorities for its design, as well as determine your role in its construction.
How much money can you borrow? Responsible lenders set a limit of 2.5 times your total household income. If you’ve bought land and still owe on it, subtract that. The total is your home-building budget. If it’s $500,000 or more, you’re on I your way. If it’s less than $200,000, you’re not realistically ready.
How can you improve your budget | picture? Maybe the answer is adding assets, and not always more cash. Consider sweat equity, although these days building the home yourself is less a matter of hammering and sawing and more about managing the overall project. If you have carpentry skills or home-building experience, you may tackle hands-on projects and find them fulfilling.
Be realistic about your own abilities and the time you can spare to the project, however. Building a second home two and a half hours from your primary residence might mean devoting tw’o or three years of weekends and summer evenings to completing the job.
And unless you’re planning on a bare-bones vacation cabin, you’ll be building a modern, fully equipped home. If you’ve never built an ordinary house, think long and hard before taking on the responsibility of building your dream home.
Once you’ve made adjustments and know your budget, you can present this figure to your designer, your builder and your log-home company. Be candid wrhen discussing your budget with these people. Their aim is to work within your means.
Pricing a Log Home
Figuring your borrowing power and understanding the types of loans involved in building a log home are relatively simple matters compared with trying to put a price tag on that home. Compounding the difficulty is the quest for an easy answer. Everyone assumes there’s a way to cut through the complication, including the people selling the log homes. There isn’t.
The challenge begins with the log-home company that sells materials packages, or kits. Whatever the kit price, it covers only a fraction of the materials needed to complete the home and doesn’t include the labor to build it. There is no relationship between the package price and total cost any more than there is between the flooring you choose and the finished price.
Multiplying the package price won’t get you in the ballpark. Neither will coming up with a cost per square foot. These estimating methods don’t distinguish between levels of quality of materials and amenities or where the home is being built. Custom kitchen cabinets cost more than stock, but they have no bearing on the package price or the cost per square foot. Heber Springs, Arkansas, is a whole lot cheaper to build a home in than Breckenridge, Colorado, but even in Heber Springs, costs can vary significantly.
The only way to calculate the price of a log home is to take the package price, including any tax and delivery charge, and add the cost of materials not included in the package, as well as the labor necessary to assemble and finish the house. And the only way to learn these costs is to get estimates from suppliers and bids from contractors and subcontractors. Obtaining these figures is detailed, time-consuming work. And it cannot proceed in earnest until you have final construction drawings.
A FLOOR PLAN is the first step toward making your log home happen.The best part about this very important phase of the design process is that it lends itself to frequent revisions without entailing any cost. In fact, many so-called custom plans are actually modified floor plans of already built homes. This fact suggests that if you’re uncertain how a log home might be laid out (fewer halls, open rooms, etc.), you may familiarize yourself with successful layouts, both in this magazine and on different log-home websites, including our own, where you’ll find thousands for all sizes and budgets.