Maximize home equity and reduce mortgage rates.
Barnes & Noble.com
Advise Building Consulting, LLC
Advise Building Consulting, LLC
The Home Builder Workbook was published to provide a means of saving money for persons interested in building a new home, renovating a home, adding onto a home or developing an investment property. It takes the guess work out of managing a construction project. Managing your project is as easy as opening up the book and following the work sheets.
Congratulations on the decision you have made to build a new
home. This is an extremely important and worth while venture. The
purpose of this book is to walk you through the nuts and bolts of the
actual construction process and make it as simple as it can possibly be.
Instead of text heavy pages of rambling information that leaves you
confused and reconsidering whether or not you can actually pull off
building your home, this book provides you with the tools you will need
to be successful.
Different segments cover the important phases of the
construction process. Each section is set up item by item in order to try
and insure that you will not miss anything. However, home building
specifications are not universal. In other words, building on the beach in
Florida is not the same as building a mountain home in North Carolina.
In each of the documents in this book, you will find places to add
information in order to customize each to suit your needs. This can be
accomplished by simply referring to your finished plans and through preconstruction
conversations with your sub-contractors.
The Budget includes 150 items and makes tracking your project
simple. Track your final bids and quotes along with the total actual
payouts and know exactly what the status of the budget is on an item by
item basis. You will be in control of your money at all times.
The Bid Tract covers 57 bid items with worksheets to help you
through the bidding process. Simply track and retain three quotes from
every sub or vendor listed. Instantly know who bid on your job and
the total of all the bids. If one trade doesn’t work out, simply go to the
next option as all of the bid information is organized and at your
fingertips in order to make this process simple.
The Schedule is the most critical part of the building process.
Time is important to both you and the bank. Every month that passes is
interest paid out by you the owner resulting in ZERO principle being
applied toward the mortgage. Banks also get a little nervous when
construction runs over the allotted time as they want to set up long-term
financing. Each passing month beyond the construction timeline will
result in more money (interest) leaving your hands and possibly straining
your relationship with the bank. The Schedule has been designed to
prevent that from occurring. However, you as the Owner/Builder will
have to stay on top of the scheduling duties. Carefully review the typical
schedule, which has been set up on a four month time-line, and note all
of the important scheduling dates which have been italicized. Setting
your trades and deliveries up in advance will be the ultimate deciding
factor in regard to the success of the timeline. Nothing is worse than
having two weeks here and there where no one shows up. Or, if
something doesn’t get delivered on time and the sub-contractor has to
move on rather than wait. This can cost you several weeks just for
forgetting one scheduling item. Combine several missed items and you
could easily be a month and a half behind schedule. This can adversely
effect the budget. Carefully review the schedule and write on the working
schedule as you organize your own timeline.
Throughout the building process, you will have a series of
inspections. Consult your local government for a list of required
inspections, permit information and fees. Use the worksheets to track
each inspection and the result.
Often tracking the amount of monies paid out to sub-contractors
and vendors is difficult to monitor on an item by item basis unless you
are a natural born accountant. Most of us aren’t. Worksheets have been
designed to make this a simple process. Track each draw and compare it
against the amount paid. Know at any given time the final bid, the total
of each weekly draw and the amount of money remaining on an item by
item basis. The goal is to prevent overpaying as this can lead to a number
Two check lists have been provided. The first is to-do items. The
second is a very detailed list that is to be used during a final walkthrough.
It is up to you to decide the standard that is acceptable. Locations have
been included to check off or write down any items that may need to be
addressed on an item by item basis. Be sure to look at everything.
Throughout this building event, you will have many
conversations with a lot of different people and it is impossible to
specifically remember each one. A twenty-seven week – 135 day – log
has been provided. Log all the details about conversations and promises
made by your sub-contractors. It may be your word against theirs and
having a detailed and dated account of the conversation can be helpful.
Note any problems and weather conditions or anything that you feel will
Perhaps you have purchased this book for the sake of trying to
decided if you want to build, if you can build your own home, or your
having second thoughts on whether or not it is worth the effort. While
building a home is not a difficult task, especially with the above
mentioned tools to help you, it can be an aggravating process. I have
learned that anytime you have to deal with people things can, and
normally do, get unnecessarily complicated. However, I speak with
numerous people who are interested in building either their primary
residence or an investment property. Nearly 90% of these people only
believe in the traditional method of home ownership: Hire a general
contractor to build their house, or purchase a newly constructed home.
Perhaps you are one of those people and are considering whether
or not you should act as your own developer and general contractor.
Maybe you have thought about building your own home but have heard
horror stories from friends, family members or co-workers about the
nightmare that home construction can be. Is owner building worth the
time and effort?
Consider the benefits. What if you could cut your construction
costs by $20,000.00 to $200,000.00 (or more depending on your home)
and turn the savings into home equity? This is money that you will not
pay on for the next 30 years, so, consider the thousands of dollars saved
in interest alone. What can you do with that money? Put it towards
retirement, start a new business and build your own brand, take an
awesome vacation or whatever you want to do.
Home building costs will vary depending on what part of the
country you wish to reside and on the extravagancy of your taste in the
products that will be purchased. However, let’s say you hire a general
contractor to build a home for you. Usually GC’s charge using what is
known as the cost-plus method. This is the result of taking the total cost
of building your house then adding a charge based on a percentage of the
construction costs. A typical rate is in the range of twenty to twenty-five
percent. The contractor builds a 3,500 square foot home at a price of
$110.00 a foot. Building costs before profit will total $385,000.00. The
GC’s charge at twenty-five percent is $96,250.00 added to construction
costs will increase the total building costs to $481,250.00 before finance
charges. If saving the $96,250.00 isn’t important to you, especially after
30 years of finance charges, than perhaps owner building is not for you.
What about buying a home already pre-built by a contractor?
Again, low end cost of building a home in today’s market can be at or
near $110.00 a foot. If a contractor builds a 3,500 ft. spec home, his
investment will be about $385,000.00. The housing market over the last
several years has seen houses sell from $120.00 a foot to $150.00 a foot
or more depending on certain variables (it is highly unlikely that a new
3,500 square foot home would sell as low as $120.00 a foot, but for the
sake of making a point we will use it). If your purchase price is $120.00 a
foot, the total financed cost of the home will be $420,000.00 with a profit
of $35,000.00 for the contractor. At $150.00 it will be a total financed
cost of $525,000.00 and a contractor profit of $140,000.00. These
numbers will vary according to the size of the home, location and quality
of products used etc.
Another benefit is lower monthly mortgage rates. How many
people today fight to make their house payments each month? If you
have read the papers lately or watched the news it is likely that you are
aware of the outrageous number of foreclosures taking place. How many
former home owners would have avoided foreclosure if they had been
able to purchase a home that met all of their needs, was loaded with
equity and at a price that they could comfortably afford despite any of
Twelve years ago my wife and I decided that we wanted to
become home owners, but at that time we could not afford to hire a
general contractor. Most of the General Contractors that I had worked
with knew little to nothing about the actual details of building. They
simply put a package together, sold it, relied on the knowledge of good
trades and the inspections process in order to construct their projects.
I had been in the construction industry for about 7 years at the
time and we decided to do everything ourselves and owner build. The
end result was an affordable mortgage and equity that continues to grow
to this day.
Shortly after we moved into our new home, I developed a
medical condition that resulted in several emergency room visits, two
surgeries and numerous tests and doctor visits. Soon after my medical
problems began, my wife and I learned that we were going to have a
second child. Despite having insurance, my medical bills, coupled with
the amount of lost revenue resulting from the days of missed work,
proved to be a heavy burden. We lost nearly $30,000.00 a year in
revenue during that time. I can’t imagine what it would have been like if
we had a mortgage that was several thousand dollars a month. Thankfully
we created a manageable mortgage by choosing to owner build our
home. Had we not, perhaps we would have ended up in foreclosure.
Having equity in our home proved to be a tremendous asset that is paying
dividends to this day.
After all that I experienced through those years of dealing with
the illness and the medical expenses associated with it and after
witnessing what happened to the region in the wake of Hurricane
Katrina, I wanted to help people save money and protect themselves and
their families by providing an opportunity for them to save thousands and
build equity. Prayerfully, I can help a lot of people through the things I
learned from both experiences.
Every day home owners unwittingly throw away thousands of
dollars purchasing a pre-built home or in the hiring of a general
contractor to build a new home. General contractors don’t pour the
concrete or build the walls or invest any physical labor into your project.
They simply organize the project and schedule trades in a proper
sequence. The county/parish has building guidelines and will inspect
your project at various phases to insure that the building code
requirements have been met. This doesn’t mean that you will not have to
visit the job and inspect it for yourself, but, with the proper tools (as
provided by this workbook) this is a job that you can do while saving
tens of thousands of dollars.
The Home Builder Workbook was designed specifically for
people like you who are willing to take on the roll of Owner Builder.
It is basically the General Contracting business on paper for you.
The book is not a text heavy “tell all” manual that overcomplicates
the building process, but is meant to be used during
construction. Use the functional documents to organize and track the
This will be a rewarding experience as you invest and work to
maximize equity in your home. Be reminded of two things, the reward is
worth the effort and you can do it!
Congratulations on your decision!