Each month, Mike provides tips, ideas, and advice based off his over thirty years of experience in the construction industry. For questions you would like directly answered, email him here.
How To Put A Budget Together
I have heard countless stories of a project nearing the end and the homeowners-to-be run out of money before completion. Why? Excitement. Everyone is always eager to start digging dirt and they spending money similar to a kid in a candy store! They want to finish their project in the manner they’ve dreamed of but the well has run dry; thus they either have to settle for less, or worse yet, borrow more.
Today let’s talk about putting a budget together. I like to tell people that a budget is like a pie. Slice it in as many pieces as you want with each slice representing a different subcontractor or portion of the construction. It takes all of those slices to make the whole pie.
So take the time to research all of the prices for each portion of construction. At first, obtain prices on what you like. Put those numbers together and see how that total fits your budget. Two things will happen. First, you’ll likely get sticker shock. More importantly is the second one: you'll prioritize your taste and selections. Start by deciding what is most important. Obliviously there are the basics you need: foundation, framing, septic, dirt work. Add in the next level of importance (roof, concrete work, drywall siding, etc.) and then you may start the priorities.
Be ready to substitute some alternatives for less important priorities. Remember there isn’t one thing that you can drop to get a price lower, usually you have to sacrifice several items or services in order to make significant price changes. If you plan on doing some of the work yourself or or have a close friend or family member willing to lend a hand, still figure in a price as if you were paying somebody to do it. Finally, don’t forget to add in the permits, loan fees (if applicable) and sales tax.
Side Note: If your borrowing from a bank or savings and loan, try to borrow as much as possible. YOU DON'T HAVE TO USE IT ALL. Whatever is left over, you can return when you roll it into permanent financing. Additionally, if you are using money from out-of-pocket as part of your loan, use your money first. You don’t pay interest on your own money - you pay interest on the money pulled out from the loan!
Posted April 23rd, 2011
The First Step in Planning A New Project
A lot of new homeowners-to-be like to get the cart before the horse, so to speak, and begin their new home building experience by looking at carpet and paint sampes. While that's the "fun part", what they should be looking for is a qualified builder first.
A qualified builder can estimate how much you can expect to budget based on your desires. At that point, you can reevaluate each aspect of your project before you actually spend more money than you need to.
So many times, I've had customers bring me plans for their project only to find out the costs was way more than they expected. Now they have to go back to the drawing board, spend additional money on revisions, and start again in some cases. Every penny counts, especially in a tough economy such as this one, and now they have to spend extra money that easily could have been avoided had they hired they consulted with a qualified builder.
Start your new project with your first step in the right direction: talk with a qualified home builder or two. The fun stuff - colors, granite, carpet, etc. - will come at the right time.
Coming up next month: Putting a budget for your project together.
Posted March 19th, 2011