You're in a good place! Use the search tools and start reading. Ton of info on here and lots of people that enjoy helping. Start reading for a while, then ask some more specific questions.

I started by reading What Your Contractor Can't Tell You. It was a good start. Then I read up on design.

From a resale standpoint, a smaller house with high end finishes may never sell for what it cost you. You might be much better off with a pre-1960's house - the older, the better. In that era, even small houses had dome very nice finishes, millwork and flooring, in particular.

Amy Johnston's book was published 4 years earlier as "What The Experts May Not Tell You About Building Or Renovating Your Home".

It concentrates on project management which is definitely the place to start.

I think part of what you're talking about is the concept of the "Not So Big" house (books by Sarah Susanka are interesting on this topic). While it's true that if you put Cambria on every horizontal surface and stick a Wolf appliance suite into a 1600 sq ft house, you'll never get your money out of it (in fact, you'll probably have trouble getting it to appraise for a loan), I think you can still have a quality house built if you prioritize the right things in the process. Nicer molding profiles, tiled bathrooms etc. I do know what you mean - I'm not a big fan of flimsy, builder-grade stuff, either.

Many 'custom' features in custom homes are done in the finish work. Trim, flooring, countertops, built ins, lighting, and so on. Those areas fall into the area of replacement when remodeling, especially when a new owner buys.

The other area of custom building is in the design and construction of the building. This is where a lot of planning and thought will make a huge difference. Design of the rooms, use of insulating materials, overall heating/cooling(type of furnace or AC unit), comprehensive plumbing design, electrical needs, roofing, siding, even the footprint on the lot will afford a lot of value.

Using high end products throughout a mid range priced home means very little return on investment. Using mid range products in a high end design can be money in the bank.

Example: Crown molding looks high end. Using naturally finished wood stock is very expensive. Plus, the longer lasting styles are dark colored, limiting design possibilities. Using foam plastic crown molding stock that is painted white means no seasonal expansion/contraction, painted color is easily changed, and there is a huge saving in initial cost.

Do not use that material for other moldings because it is easily damaged. Use real wood for door/base moldings. Paint grade stock is less expensive than stain grade stock and the wood lasts longer and is harder to damage.

Use solid wood doors instead of hollow core doors. Look and feel are high dollar with an initial investment of about $50 a door more than the cheaper versions.

There are literally hundreds of things that can make a mid range house a custom build for a lot less than you think if those things are designed and built in initially. One way to find these ideas is to talk to tradesfolks about their gripes.

Example: Drapery installers often find window headers are built to code, but are too short for installing heavy drapery securely. Having longer window headers in the design might cost $15 a window, but allows for any type of drapery hardware installation.

Plumbing design. It is not difficult to find pictures of how plumbers have cut out floor joists to install piping. Designing the support structure to compliment plumbing/HVAC means less installation labor costs and a more secure floor.

One more. Walls and ceilings. There are at least four stages for sheetrock finishing. The differences are in the amount of mud and sanding. Hate popcorn ceilings? Know why they were invented? Cost. A ceiling finished for popcorn application is the cheapest level of sheetrock finishing. One coat of mud, and a hit and miss sanding. The popcorn covers and hides all the imperfections. Know why eggshell paint is so popular? Yup, the sheetrock finish again. Semigloss and eggshell can be applied over a level 2 or 3 sheetrock job. Like glossy walls/ceiling. That takes a level 4 or 5 job. Spending the money during construction for the higher end sheetrock finishes provides a higher end look for a lower than remodel cost.

When I look through Amy's book it feels like the story of my life. Its what I do everyday. I would hate to have to explain it all to someone and then expect them to get all of it right on their first project. (I'll tell you about my first project after I retire)

You can spend a year or two learning how to design and manage a custom house project and then try to apply it to your project or if you have a high level of expectation for the design, a tight budget and have other things that are important to you like a job, a spouse, offspring, friends and hobbies, you should consider hiring someone who has already spent many years developing the necessary skills and correcting mistakes and saving problems on real projects, probably has more talent for this endeavor, is grossly underpaid and waiting for your call.

>lacking in quality finishes

Who can tell what that is in your opinion? I find most houses build in 1960-2000 have very little redeeming features and need major floorplan redesign.

Find a good house with the good bones and tastefully upgrade the finishes. Skip "Not So Big" house - not worth renting, much less reading today imho.

>How to budget for it? How to finance it?

Talk to your bank.

>, I am exploring custom build, but don't know much about the process.

If you want to build talk to a builder or two. Changing kitchen can be done on the budget - 8k Merilat cabinets kitchen may look super high end, and improperly design 50k woodmode cabinets will look bad.

Talk to several local builders and architects. Pick their brains about building and you will learn things specific to your area.

I'd talk to a bank, start seriously looking for a lot, and research architects.

One big problem with older homes is energy efficiency. Yes, you can retrofit, but it's hard to bring a leaky old house up to modern standards. One of the reasons that we built new is that older homes in our area are poorly built, and could have been a real money pit in the long run. In our case, most existing homes were too big, and didn't have the property we were after.

Anytime you do anything "different" - and especially in the realm of unseen upgrades (re: energy efficiency and structural build quality...), you should be able to "self fund" a larger portion of your build than buying a semi custom or builder home. Appraisers love square footage and fancy upgrades, and fireplaces, they LOVE those fireplaces.... And, in my experience, while some might state that they can appraise for 'green home' features, they are not particularly well versed in quantifying that into increased value, nor do they or can they pick similar comps / adjust appropriately for it. Lastly - different dually means that you pay more from the subs, too, since they are outside their comfort zone and don't know how to price things, so they tend to overbid to cover themselves - so it either takes more rounds of discussion and negotiation, or, you just pay more...

I don't blame you for wanting something "for you" - we did the same thing - but we're paying.

Find a good property - easy to build on (clear, flat, check neighbors for soil conditions for your septic if necessary, ask around to others who have built and see what they have encountered, easy access to utilities), consider HOW you want to build (ICF, super insulated, etc) and find someone familiar with that type of construction. That should reduce the complications.

Usually the largest hurdle is financing, if that applies to you.

Some advice, in addition to the other good stuff on the thread:

1. Really pick your Realtor's brain- how will your home "compete" if you ever sell? Get current sales comps etc, and take great care with over-improving. Having the most expensive house on the block (even if it's just price per square foot) is very rarely a good idea. This step becomes even more important if you're paying cash. You'll be the "bank" and the only step between you and spending way more than you want, for value.

2. If you're financing, talk with your loan officers before you buy land/start on design. They and appraisers/underwriters will want to make sure that your plans affect a competitive home in the market. A question they ask over and over again during approval purchase is "if it all goes 'badly', do we have the potential of getting stuck with a home that's overvalued and will be hard to recoup the loan?

No aspersions cast on you, personally. But I've seen more than one homeowner go to a bank with a plan and get turned down for the financing, because the "value proposition" wasn't there.

3. If you're still comfortable with it all- Try to buy the biggest lot possible, in your area. That way, you can build what you want now but still allow for the possibility of expansion for somebody else, if you sell in the future. It's become popular in some areas to have a second home on property, and many buyers find it an attractive possibility. A good realtor can also help with codes/zoning/future possibilities. You don't have to do it, but it does preserve/add value to your property.

4. As you speak with contractors and architects, you'll find out that not all square footage is created "equally". Especially in a ground-up build, sometimes you find that adding (for example) flex space, or an extra bedroom can be extremely cost effective. Spaces you can finish out fine, close off, but still adds to your home's value. If you're careful with materials, you should also find out that building out the master closet you want is also a lot less expensive at this stage than aftermarket, and still allow you to put in the quality features you want for things like kitchens and bathrooms.

I relate to your desire for a smaller home, but you might find you can both affect it and get a bit more square footage so your home won't appear "odd' in a neighborhood full of huge homes.

5. Finally, don't skip legal advice BEFORE you sign a contract with a builder/GC. You shouldn't enter a relationship with a builder expecting legal fights. In fact, a good real estate attorney will tell you that the reason he/she is reviewing/adjusting your contract is to clarify and help avoid that scenario- stave off issues that are unclear from the start. Spending the few bucks will increase your knowledge of who carries what obligations, what to do if things get a bit sideways-and in a custom build, that'll happen once or twice!

Houzz is littered with threads from homeowners who have real questions about how to work through contracting/design issues. "Lawyer time" for some, but the truth is if your legal comes in at the end- only if there's trouble- it can be harder, more expensive to work through than ensuring total clarity from the beginning.

My last real estate contract morphed to almost twice the pages. None of it was "just because" legal goop. It was because the standard Builder's Contract offered by most residential contractors in my state was designed/written by the state's Builder's Association- and really didn't include me, as the homeowner.

Basics to building a custom home?

1. Financial--land purchase, construction loan, permanent mortgage and cash out of pocket (see No. 7 if the construction contract includes a long list of allowances)

2. Land evaluation and selection

3. Identifying needs vs. wants

4. Appreciation of architectural character and styles

5. Finding professionals who are experienced, creative and communicate well

6. Understanding the risk management differences in types of design and construction agreements

7. Understanding of the differences between designing and specifying everything and a long list of allowances

8. Determining who will supervise and administer the bidding and construction phases of work

   9. Understanding the design approval and building permit processes and costs of your local jurisdiction

   10. Understanding just how long it takes to build a custom home--quality vs speed

   11. Giving thanks for a Certificate of Occupancy in your lifetime.