Soft Costs and Expenses to Date
If you had told me a year ago that I will spend over $10,000 in out-of-pocket expenses, I might not have even started this crazy endeavor. Early in the process it seemed as though financing would come much sooner, and that things like design fees, permits, etc. could be wrapped into the mortgage. Talk about a miscalculation! Much of this goes to:
- My lack of experience
- Overly rosey pictures painted by contractors, mortgage brokers, and others in the industry
- A decidedly different lending landscape
Well, with oceans of water under the bridge, I now know much more. I’ve also spent a lot of money for this education. Some of it was wasted, some of it well spent. Without further delay, I give you my list of expenditures through Jan 27, 2008. The first number is the actual cost, while the number in parenthesis is the estimate:
- Design (Costs to create the plans from scratch, including some help navigating the city bureaucracy): $7900 ($9000)
- Engineering: $2375 ($1700-$2000)
- Builder Fees (some builder charged to prepare estimates): $900 ($900)
- Appraisal (Likely a total waste of money): $600
- Permits/SDC Charges (this number will go much higher): $1168
- Land Use Review Fees: $595
TOTAL “SOFT COSTS”TO DATE: $13,945
It’s nice to see that my design costs are still under budget, and I find this somewhat surprising given the back-and-forth created by the land use review. I’d probably be another $1000 under budget had my backyard neighbors not put up such a stink.
On a related note, I wanted to take a moment to comment on the term “soft costs.” This expression is used to describe things that don’t go directly towards building materials or contractor services. This would include things like architects’ fees, engineering, permits, so on and so forth. Sadly, it’s a HUGE misnomer. There’s nothing “soft” about paying over 10 grand out of pocket. In fact, I estimate that my project’s “soft costs” will exceed $20,000 by the time we’re done. If you factor in loan closing costs, it’ll be closer to $30,000. Ouch!
I’m interested in hearing other stories of “soft costs.” I know design fees can easily eat up your savings, but what are other folks paying for these sorts of things?