General Contracting Your Dream Home
Save Thousands of Dollars Using the Same Techniques the Pros Use
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Building your own home can be both rewarding and profitable. Generally when you hire a contractor to build your home he charges anywhere from 15 to 20 percent for his knowledge and organizational skills. That means that if you were building a home for $150,000, up to $30,000 would actually be going into his pocket and only about $120,000 would go into your home. Therefore it makes sense that if you are going to spend $150,000 anyway, why not get as much house as you can out of your money, and keep the 15 to 20 percent. For example, you could build a home that would appraise on the open market at $187,000 but actually only spent $149,600. Your new home would have $37,400 in equity the day you move in. There is nothing a general contractor can do that you cannot do yourself with the right knowledge.
To general contract your own home it will take time, organizational skills, and the information you will obtain from this book. Building your home should take six months from the time you break ground to the time you move in. You can do 60% of the work from your home and the other 40% will be spent picking up and dropping off things for your new home, keeping track of paperwork, talking with your lender, going to your title company, and visiting the building department. You can easily build your home spending only 10 to 15 hours a week actually working on it. Being organized is essential to building your home in a timely manner. The better organized you are, the smoother things will run.
This job may seem overwhelming and out of reach, but with this book you will be able to general contract your dream home. I will discuss the steps in an easy to follow format in simple English, with a glossary to help you with any terms you may not be familiar with. You will learn step-by-step the procedures needed to help you build the home you have always dreamed of having, but thought was out of reach.
If you have enough money to fund your entire project without taking out a loan then you are already a head of the game. You would save thousands in interest alone if you did not have to pay for a construction loan. Unfortunately, not many people have enough money to finance the building of their own home so they will need to seek out other means of obtaining funds. Most of us will need to get a loan to begin building a home. Some people may already own a home and others will not. In this chapter, I will discuss the different methods of obtaining the financing that you will need. You will also learn “tricks” so that the bank will loan you enough to purchase the lot and build your home with little or no money down. You will learn the role of the title insurance company along with the lawyer you may need to hire. I will also discuss reimbursements that can be made to yourself along with the order in which you should make your draws.
Lender
You will be asking the lender for a construction loan. The majority of these loans are for a duration of one year and usually are set at prime rate plus one or two. The prime rate is defined by The Wall Street Journal as “The base rate on corporate loans posted by at least 75% of the nation’s 30 largest banks.” So, what this means is that a borrower will pay monthly interest according to the Prime Rate (lets use the rate of 5%) plus the margin offered by the bank. In the case of prime plus one the interest rate the borrower will be paying will be 6%, or in the case of prime plus two the borrower will be paying an interest rate of 7%. The payments you make on a construction loan go only towards the interest, so when you are finished with the construction loan you will still owe the entire amount of the initial loan. You will be making monthly payments just as you would with any loan. There is however a way to have your monthly payments added to your loan so you make no payments until the end of the loan. This is called an interest reserve. What this means is that the monthly payment is taken directly from your interest reserve, which is a loan in of itself. When you are finally ready to pay off the construction loan you will owe the entire amount of the original loan plus the amount that has been paid out of your interest reserve.
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About the Book
Saving money is always a welcome idea and this book is the perfect tool to make sure you do just that when building your dream home. Why settle for something that someone else is selling when you can build exactly what you want and do it for a lot less? This book teaches everything you need to know such as how to find land, what subcontractors you will need and how to get financing to name a few. You will also learn how to deal with title companies, supplier and insurance companies. Most importantly, it discusses different techniques to save money and get the dream home you have always wanted.
About the Author
Brian Edman has been involved in construction for more than half his life. He started as a young man helping his uncle with concrete. As the years went on, he dabbled in everything from landscaping to carpentry. A number of years ago, he went into business with his father and brother general contracting homes. He quickly learned that the real money was not in swinging a hammer, but in being the boss of the guys who swing the hammers, hand the drywall, or shingle the roof. Throughout the years, Brian has learned many tricks of the trade to make the building process run smoothly while at the same time saving a lot of money. Brian is a full-time firefighter and still manages to build numerous homes each year using the techniques he has learned through the years.