Let’s start with a “fantastic” yet equally real story.
George and Maria, after five years of married life and having two children, decided to build their dream home on a plot of land bought by their parents. After five years of hard work and saving, they had accumulated around €70,000, plus an additional €100,000 from their wedding savings, and after several visits to the banks, they secured a loan of €130,000. Thus, their budget was €300,000.
Our two friends heard about us from an old client, and after a phone call, they scheduled an appointment. We are a company that offers a comprehensive package for the construction of your building. We design, build, and have our own store with sanitary ware and ceramics from A.P. CURIUM, where you can choose all your products without restrictions.
The day of the appointment arrived. It was around 5:00 PM, and the couple arrived at our offices, excited.
Scenario 1:
“Good evening, Mr. Andreas.” “Hello, kids, how are you?” “We’re good, and you?” Without much ado, we got straight to the point.
“We have our own plot in the Ipsoupolis area in Limassol, it’s a proper 570m2 plot, and we would like to build a 180m2 house on two levels. Four bedrooms upstairs and an open-plan living/dining room with a kitchen on the ground floor.”
“Great, kids, what else would you like?” “We would also like a large walk-in closet upstairs, a bathroom with a shower in the master bedroom, and a laundry room in the hallway upstairs. On the ground floor, we would like an extra room for the kids and a fireplace. Also, we would like a covered garage with an electric door for two cars, if possible. And, Mr. Andreas, if we think of anything else during the design, we’ll let you know.”
“Great, first we will visit your plot, and then we will arrange a meeting with our company’s architect to get started.”
Oops – one year later, George and Maria, along with their two small children, are still renting. What went wrong? And here ends our story for the first scenario…
Scenario 2:
Let’s return to the 5:00 PM appointment.
Reverse Logic but not so reverse for us!
After our question, our dear friends told us their budget was €300,000, and they believed, based on other research they had done, that the amount was reasonable for what they wanted. We completely disagreed.
“My dear friends, we approach the process a bit ‘in reverse.'” “What do you mean, Mr. Andreas?” asked George. “Let me explain. First of all, to determine the square footage of your house, to make plans, studies, etc., and also to assess how much quality and extras we will include, I need to study and, most importantly, cost out the expenses for preparing the plot, as well as other factors.” “And how will that be done, Mr. Andreas?” asked Maria. “After an on-site visit and topographical survey by our surveyor, the external work costs will be determined.” “Alright then, let’s do it that way first,” George whispered.
We sent our surveyor, who brought back all the information. After costing the excavations, fillings, and retaining walls, since the plot was not level, a basic cost of €45,000 emerged.
“And now what do we do, Mr. Andreas?” asked Maria. “Our REVERSE LOGIC”
“Dear Maria, if we assume that our company can build your house with a very good quality package for €1600 per m², then our reverse logic says the following:
Let’s take your budget of €300,000 and subtract the 5% VAT because it is your first home. That leaves us with €285,000. Subtracting the €45,000 for external works, we have €240,000 left. Dividing this by €1600 per m², we could build a beautiful house of 150 m² with three bedrooms.
Above, we presented two scenarios, one of common logic and the other of ‘Reverse Logic.’ Let’s see what happened.
In the first scenario, the following mistakes were made:
- We did not ask George and Maria about their budget.
- The external works costs were not strictly assessed first.
- VAT was not deducted, which could be more than 19% for a home over 140 m².
- We did not discuss and cost out the extras the couple wanted.
- We did not keep a contingency amount for furniture, electrical appliances, etc., that George and Maria would need for their new home.
Result: There are two solutions. Either our friends go back to the bank and ask for an additional loan, or they forget about the house for now…
In the second scenario of Reverse Logic:
- The external works costs were assessed before starting any plans.
- The above costs and VAT were deducted.
- We discussed and costed all the extras they wanted before starting any plans.
- And finally, YES, they accepted and understood our Consulting approach, built on reverse logic, and built a 150 m² house instead of the 180 m² they initially wanted.
Result: Our friends George and Maria now live with their children in their dream home without any strange adventures or hidden, unexpected charges.
There is no epilogue to my article. Above, I presented some real events from my twenty years of experience in the construction sector. Our approach and how our team works with the primary aim and goal of keeping our friends, not clients, within their budget is our LAW. And because many who read the above will say, ‘What a nice story with a beautiful ending,’ you can verify it from friends-clients who have worked with us using ‘Reverse Logic.’
P.S. 1 – In other articles of mine that will follow, I will analyze ways for clients to save money from the same budget until they manage to enter their home. P.S. 2 – The above names, locations, etc., used are fictional.
Best regards, Andreas Papaelisseou Managing Director – Papaelisseou Group www.papaelisseougroup.com
