To see if you project "pencils out" ask yourself the question: "when this home is completed with all the details and features planned, how much would this home be worth if it were to be sold?" The square footage price is not really what I would focus on (you can always do the math to figure out what you pay per square foot). If the total project costs (price that a contractor will charge for the project, plus cost of land and permits, plans, etc.) are less than the market value of the project then things are looking good. The bigger the difference between the total project costs and the market value of the finished home, the more equity you will earn. For example, let's say that the home will be worth $4,000,000 when completed. Let's also say that you paid $2,000,000 for the land and the contractor will charge $1,100,000 to do the work. You will have a total home cost of $3,100,000 and you will have earned equity of $900,000. You will also have exactly the home that you want. Of course, some people want what they want and they are not as concerned about whether or not they will earn equity when the project is completed- that is a personal decision. Keep the big picture in mind- it is not the stated price per square foot, but rather the total project costs as compared to the completed project value that I think should be considered. I am a licensed real estate broker and a licensed general contractor and I have built custom hillside homes in Los Angeles.