What you need to know about SFR construction costs

What you need to know about SFR construction costs

With over 11 years of experience in the construction industry, the Letter Four team has established efficient processes to successfully guide a client’s project from idea to completion.

With over 11 years of experience in the construction industry, the Letter Four team has established efficient processes to successfully guide a client’s project from idea to completion.

As your reliable contractor in Los Angeles, Our Design-Build method is a truly collaborative way of building homes, meaning that you (the owner) can hire a single entity (the Design-Builder, Letter Four) to deliver your entire home under one contract.

The Design-Build approach means we provide initial cost estimations, architectural drawings, engineering checks, budget reviews, construction management, and final sign-off — allowing you to fully understand costs and timeframes at every stage of your project.

To explain how costs are estimated, here’s an overview of the three main types of construction projects, and what you can expect to spend on each.

Complete new build or ground-up construction

Estimated costs: $325-$450+/- per square foot

First things first, size matters when it comes to construction costs.

When estimating the investment, it’s vitally important to know the square footage of your project. There are many variables impacting expense (the lot, existing building conditions, and of course the design proposed, for example), but knowing the overall size of the project allows design and construction teams to provide quick ballpark estimates earlier in the course of the project.

Costs start at around $325 per square foot for a new construction. This can rise to $450 or more depending on the design specifications, materials, and condition of
the site.

Major renovations and supplementary structures share many of the same cost considerations, (as we’ll cover in more detail below), but there are several unique factors to bear in mind when estimating new build costs. These include:

Assessing the Existing Site

New builds tend to be simpler than renovations. This is because there are fewer variables to work around.

And yet, the existing lot and buildings (if any) need to be carefully assessed when estimating a price. Costs are incurred if existing structures need to be torn down, for example. If clients wish to work around the existing structure, this will further add complexity and costs too.

Other factors impacting costs include the soil type and slope of the lot. Flat lots cost less to build on, while up-sloping or down sloping lots pose significant challenges for both heavy machinery and construction itself. If the soil is sandy (for instance), this will increase foundation costs.

There may also be additional costs if your lot is entirely undeveloped. Installing utilities such as gas, electricity, water, and sewer or septic is an unavoidable and often expensive undertaking. The additional cost for these items is not included in the cost per square foot estimates in the section above and can run in the tens of thousands.

Design Requirements

One of the major benefits of building from scratch is designing your perfect home from the ground up.

The quality of finish and architectural styling will all impact costs, however. Traditional builds often cost less, while more modern finishes can come with additional expense. This all needs to be assessed and discussed as part of the conceptual design process.

Access and Infrastructure

As well as the project design and lot itself, it’s important to consider site access and infrastructure. What are the roads and streets like nearby? Are they wide enough for heavy machinery?

If extensive grading is required and you will need to remove soil from the site a haul route permit will be required. This adds additional expense and the requirement for a performance bond to assure the city that soil will be properly hauled (without damage along the route) to an approved facility.

Major renovations or remodeling

Estimated costs: $175-$275 per square foot

Major renovation projects tend to start at $175 per square foot, rising to $275 or more. With stand-alone American homes generally ranging anywhere from 1,500 to 4,000 square foot (or more), the size of your project will substantially impact costs.

So how are these costs assessed? Here’s a quick guide to Letter Four’s process for estimating renovation or remodeling expenses:

Due Diligence

When Letter Four kicks off any renovation project, we have to conduct thorough research and due diligence on the existing property. This includes reviewing inspection reports that were created when you purchased the property. If building systems like your mechanical, electrical, and plumbing need to be redone, then there are significant costs associated.

What’s more, if areas of the home were built without permits and need to be demolished and recreated to code, it’s important to find this out early in the project.

Conceptual Design

Working in close collaboration with clients and construction teams, our architectural firm in Los Angeles creates the initial floor plan and site plan sketches. This involves understanding exactly how the building will be reconfigured and updated, as well as any necessary structural work, retrofitting, and repairs.

We will compile a list of the scope of work and pull square footages from these sketches for our preliminary pricing.

Exploratory Demolition

Once due diligence and conceptual designs are completed, Letter Four may need to perform some exploratory demolition to investigate existing areas that are not visible but could affect the cost of construction, such as the depth of existing foundations.

This allows us to identify any hidden, unforeseen issues and ensure that you (the homeowner) have a clear understanding of the project scope. This prevents the likelihood of change orders down the road.

Major renovations + additional square footage

Estimated costs: $275-$350 (+/-) per square foot

If you’re undertaking a major renovation as well as creating an additional structure or extension to your home, prices generally start around $280 per square foot.

To create reliable pricing estimates for these projects, Letter Four initially follows exactly the same process outlined above. This includes due diligence, design, and possibly exploratory demo phases.

As well as this, there are supplementary factors to consider for additional structures. This includes:

Multiple Floors

If additional first and second floors are required, a structural retrofit will be necessary to carry the added weight down to the foundations.


Staircases take up a lot of room. The staircase location needs to be carefully considered during design phases, as it will occupy a sizable proportion of the ground and upper floor area.


The placement of your additional structure or extension will impact the cost of the project.

For instance, stacked walls help reduce costs and help carry the weight of second floors. That said, we don’t want to just place a “box” right on top of the existing home! When designing home additions, it’s our priority to integrate them beautifully with your existing structure — making everything look as if it’s always been there.

How does Letter Four estimate the cost of construction?

Building or remodeling a house can be hugely exciting. But it can also be hugely overwhelming and — where budget is concerned — we know that our clients can get comfort from knowing exactly how the costs are shaping up throughout the Design-Build process.

When you partner with Letter Four, there are multiple check-in points when it comes to the total construction cost. These are:

Preliminary Pricing Exercise

Our initial costing exercise calculates a preliminary quote based on current construction costs, due diligence, exploratory demo (if performed), and the conceptual design of the proposed Design-Build work.

Letter Four’s preliminary pricing documents are clear and concise, covering an overview of the process, the estimate itself and what’s included, anything that isn’t covered in the initial cost, areas for potential cost savings, and the next steps. While this is not an itemized bid, we do provide a table that summarizes hard and soft costs so that you know what costs to expect for the entire project based upon your scope and approved sketch.

We base these estimates on over a decade’s experience in the industry. We look at previous similar builds (using historical data) as well as current construction costs and any unique considerations specific to your project.

Itemized Costs During Design Development

As a construction project progresses through the Design Development, the cost estimate will be reassessed as the scope is more refined. It’s at this stage that we’ll engage engineers, submit for plan check to the Department of Building and Safety, and send the proposed design out to subcontractors to bid.

All Letter Four clients receive a line-itemed Design Development estimate so that they always stay in the loop with respect to the project cost.

Finalize the Construction Bid

As the Design-Build project really starts to take shape, there’s one final touchpoint for confirming the construction costs: preparing the construction documents.

Once the design drawings and documentation have been produced and we’ve got our team of engineers and/or subcontractors together, Letter Four can finalize the construction bid — adding in details such as lighting and power plans.

For our clients, this stage means agreeing to a final bid and contract — with total transparency and detail from the Letter Four team before starting construction.

Do you dream of a new SFR? Let’s make it a reality.

With a thorough understanding of how construction cost estimates are produced, you’ll be able to commence your home build project with confidence.You can also count on our residential design-build firm in Los Angeles.

Initial due diligence and design phases are vital for budgeting, so it pays to be as prepared as possible. Discuss any concerns, queries, or specific requirements with your architectural and construction team at an early stage, providing as much information as possible about your goals and existing structure

While construction cost estimations are exactly that, when they are done correctly and carefully, they can be an incredibly dependable guide to eventual project costs.

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