Building Your Own Home For Dummies

by Daum, Kevin; Brewster, Janice; Economy, Peter

• ISBN13: 9780764557095
• ISBN10: 0764557092
• Edition: 1st
• Format: Paperback
• Copyright: 2005-02-25
• Publisher: For Dummies

Summary

Keep construction on track with helpful checklists Turn your dream of a custom home into reality! Thinking about building your own home? This easy-to-follow guide shows you how to plan and build a beautiful home on any budget. From acquiring land to finding the best architect to overseeing the construction, you get lots of savvy tips on managing your new investment wisely -- and staying sane during the process! Discover how to: * Find the best homesite * Navigate the plan approval process * Obtain financing * Hire the right contractor * Cut design and construction costs * Avoid common mistakes

Author Biography

Kevin Daum has 22 years of experience in the real estate and mortgage industry. He is founder and CEO of Stratford Financial Services, and is the leading expert in custom home financing. Daum has financed more than 800 custom homes and has published numerous articles on construction financing,mortgage education, and entrepreneurship.

Janice Brewster served as editor of Log Home Living magazine for five years.  Brewster has been involved in the custom home industry for more than 10 years.

Peter Economy is Associate Editor for the Drucker Foundation's award-winning magazine Leader to Leader and a featured expert for AllBusiness.com. He's the coauthor of the books Leadership Ensemble: Lessons in Collaborative Management from the World's Only Conductorless Orchestra, Strategic Tools for Social Entrepreneurs: Enhancing the Performance of Your Enterprising Nonprofit, and many others, including Consulting For Dummies, Home-Based Business For Dummies, and Raising Capital For Dummies.

Table of Contents

Introduction	1	(1)
About This Book	1	(1)
Conventions Used in This Book	2	(1)
What You're Not to Read	2	(1)
Foolish Assumptions	3	(1)
How This Book Is Organized	4	(1)
Part I: Getting Started: The 411 on Custom Home Building	4	(1)
Part II: All You Need Is Dough: Financing Your Custom Home	4	(1)
Part III: Hammers and Nails: The Construction Process	4	(1)
Part IV: All the After Stuff	4	(1)
Part V: The Part of Tens	5	(1)
Icons Used in This Book	5	(1)
Where to Go from Here	6	(1)
Part I: Getting Started: The 411 on Custom Home Building	7	(116)
The Custom Home Process in a Nutshell	9	(14)
Where Do You Start? Preparing to Build Your Home	10	(1)
Money Makes the World Go Round --- Paying for Your Home	11	(2)
Asking yourself about affordability	11	(1)
Them that has the gold makes the rules: If you finance, the bank will dictate process	12	(1)
Introducing the Custom Home Life Cycle	13	(6)
It takes (more than) two to tango --- A quick guide to the players	13	(3)
So many tasks, so little time --- 50 steps to a custom home	16	(2)
Patience is a virtue --- A true timeline for building your home	18	(1)
Being an Owner-Builder: More Power to You!	19	(4)
Analyzing the truth about savings	20	(1)
Finding and managing subs	21	(1)
Financing implications	21	(2)
Preparing for the Process	23	(18)
Organizing and Documenting	23	(4)
Building a workbook and portable file system	24	(1)
Calendar and communication --- Your PDA is your friend	25	(1)
Being the bean counter --- Keeping track of your finances	26	(1)
Shopping and sharing --- Collecting material information	27	(1)
Budgeting Your Project	27	(5)
Looking at your finances and cash flow	27	(1)
Defining ``dollars per square foot''	28	(3)
Using a budgeting template	31	(1)
Hiring a Contractor	32	(4)
Understanding the contractor's role	32	(1)
Getting bids --- Comparing apples to apples	33	(1)
Evaluating a contractor's 3 Cs --- Cost, craftsmanship, and compatibility	34	(1)
Using expert interviewing techniques	35	(1)
Identifying Insurance Issues	36	(2)
Liability policy	36	(1)
Workers' compensation	37	(1)
Course of construction policy	37	(1)
Managing Your Expectations	38	(3)
Planning a timeline --- A custom home is forever (So what's the hurry?)	38	(1)
Making hard choices --- What you can (and can't) afford	38	(1)
Patience --- Not everything must be perfect right away	39	(1)
Making the process fun	40	(1)
The Land Grab: Selecting the Perfect Site	41	(22)
Knowing the Difference between ``Land'' and a ``Lot''	41	(1)
Location, Location, Location --- Refining Your Lot-Buying Needs	42	(2)
Finding a Lot	44	(2)
Surfing for turf	44	(1)
Engaging a real estate agent/lot specialist	44	(1)
Doing the legwork on your own	45	(1)
Finding a lot when there isn't one	45	(1)
Evaluating a Particular Lot --- The True Value of Dirt	46	(6)
Examining amenities and utilities	46	(1)
Zoning in on zoning's limitations	47	(1)
Understanding setbacks and footprints	48	(2)
Size matters --- Assessing the land's value with the house	50	(1)
A tale of two lot buyers --- How square footage impacts value	51	(1)
Dealing with a Tear-Down Property	52	(2)
Accounting for demolition costs	52	(1)
Assessing neighborhood tolerance	52	(1)
Financing pros and cons	53	(1)
Buying Your Land	54	(9)
Understanding the purchase process	54	(2)
Using the bank	56	(3)
Finding other land loan alternatives	59	(1)
Making sure the loan period is long enough	60	(1)
Stop! Don't pay off your lot yet!	61	(2)
Defining Your House Style	63	(20)
Getting to Know Your Style Preferences and Limitations	63	(4)
Educating your eye	64	(1)
Discovering your local style	64	(1)
Playing by community rules	65	(1)
Tapping the wisdom of the pros	66	(1)
Considering Conventional Construction: Wood versus Steel	67	(1)
Enjoying the Warmth of a Log Home	68	(4)
Two ways to skin a log	69	(2)
Purchasing your log package	71	(1)
Highlighting Wood Inside --- Timber Frame or Post-and-Beam	72	(3)
Considering a System Approach	75	(4)
Weighing your options	75	(2)
Making a purchase	77	(1)
On the line	78	(1)
Unearthing Alternative Construction Methods	79	(4)
Architects and Design: Time Spent Is Money Saved	83	(26)
Arming Yourself with an Architect	84	(5)
Deciding whether you even need an architect	84	(1)
Finding the right architect	85	(1)
Managing the architecture process	86	(1)
What does all this cost?	87	(2)
Looking at Architect Alternatives	89	(2)
Published floor plans --- Picking a home from books or online	89	(1)
Software programs --- Designing your own plans	90	(1)
Hiring a home designer	90	(1)
Placing the House on the Lot	91	(3)
Foundation issues	91	(1)
Which orientation is best? North, south, east, or west	91	(2)
Taking advantage of natural elements	93	(1)
Planning the Size and Shape of Your Home	94	(3)
Size matters --- Figuring the right square footage	95	(1)
Designing for resale --- Create a house everyone wants to buy	96	(1)
Exterior styles --- Considering architecture examples	96	(1)
Designing Your Home's Interior	97	(6)
Ten general floor-plan considerations	97	(2)
Special considerations room by room	99	(4)
The Devil Is in the Details	103	(6)
Materials, hardware, fixtures, and finishes	104	(1)
Make all your decisions now --- Allowance is a dirty word	105	(1)
Energy efficiency --- Saving the earth (and your money!)	106	(1)
Considering technology options	107	(2)
Engineering and Plan Approval: Bureaucracy Made Somewhat Easy	109	(14)
Understanding Plans and Blueprints	109	(5)
Prelims --- Floor plans, site plans, and elevations	110	(1)
Working drawings: The how-to-build-it papers	111	(3)
Working with the Building and Planning Departments	114	(2)
Submitting Your Prelims for Approval	116	(4)
Addressing grading, septic, and well issues	116	(1)
Understanding design guidelines	117	(1)
Requesting variances and exceptions --- Don't be Don Quixote	118	(1)
Not so fast --- Acquiring neighbor approval	119	(1)
Gathering the Permits You Need	120	(3)
Submitting and revising the working drawings	121	(1)
Picking up permits and paying the fees	121	(2)
Part II: All You Need Is Dough: Financing Your Custom Home	123	(78)
Cash Is King: Using Debt to Your Advantage	125	(14)
Accepting the Need for Cash, Cash, and More Cash	126	(1)
Breaking the Emotional Barriers --- This Is Not Your Father's Depression	127	(4)
Evaluating real estate within your net worth	128	(1)
Acquiring secured debt can be good	129	(1)
Getting on the same page --- How banks evaluate risk	129	(1)
Changing perspective --- Home equity isn't a savings account	130	(1)
Understanding the benefits of liquidity	131	(1)
Okay, So You Have All This Cash --- Now Manage It	131	(3)
Finding and working with a financial advisor	132	(1)
Diversifying your portfolio	133	(1)
Exploring alternative investments	133	(1)
Turning Your House Into a Money-Making Machine	134	(3)
More house for less cash --- Benefiting from leverage and appreciation	135	(1)
Protecting your investment by making it marketable	135	(1)
Understanding taxes --- Many parts of a home project are deductible	136	(1)
Safely Deferring Financial Decisions Until the End of the Construction Project	137	(2)
Knowledge Is Power: What You Don't Know About Construction Loans Can Hurt You	139	(22)
Exploring Your Construction Loan Options	140	(3)
Getting it done all in one --- Benefiting from a single-close	140	(1)
Construction-only loans --- The double-close process	141	(1)
Full documentation versus no-income-qualifier programs	142	(1)
Poor credit and odd-property options	142	(1)
Finding a Good Construction Lender	143	(4)
Choosing a broker or a bank	144	(1)
Testing a loan officer's knowledge	145	(1)
Getting value added --- Education and experience are worth the money	146	(1)
Private money --- The last resort	147	(1)
The Loan Process from Start to Finish --- When to Do What	147	(5)
Deciding when to sell your existing house	148	(1)
Applying on time	149	(1)
Getting the loan after construction starts	149	(1)
Preparing the paperwork	150	(1)
Locking in an interest rate	151	(1)
Determining the length of your construction loan	152	(1)
Understanding All the Fees	152	(6)
Paying points	154	(1)
Escrow and title are more than other loans	155	(1)
My goodness so many appraisal fees	156	(1)
Insurance costs	157	(1)
Figuring all the little stuff	157	(1)
Letting the Lender Carry Your Burden	158	(3)
If someone offers you money, take it	159	(1)
No payments --- Taking an interest reserve	159	(2)
Qualifying: It's the Bank's Way or the Highway	161	(24)
Stepping Behind the Desk --- How a Construction Lender Views Your Project	162	(4)
Why some lenders may seem uncaring	162	(1)
Understanding risk assessment	163	(1)
How banks view your property	163	(1)
How lenders view contractors	164	(1)
How lenders view occupancy	164	(1)
How lenders view spec projects	165	(1)
Recognizing What a Construction Lender Really Wants to See	166	(9)
On your credit report	167	(2)
On your tax returns	169	(2)
In your bank accounts	171	(2)
On the appraisal	173	(2)
Building the Bank's Construction Budget	175	(4)
Figuring the land: Factor A	175	(1)
Soft or indirect costs: Factor B	176	(1)
Hard costs (board and nail): Factor C	176	(1)
The contingency: Factor D	177	(1)
Calculating the interest reserve: Factor E	177	(1)
Loan closing costs: Factor F	178	(1)
Totaling up the cost-to-build	178	(1)
Calculating the Loan Amount and Cash	179	(4)
Basing the loan on finished value --- LTV	179	(1)
Basing the loan on cost-to-build --- LTC	180	(1)
Calculating the cash needed for the project	181	(2)
Solving Other Budget Problems	183	(2)
Landscaping and finish work can kill the project	183	(1)
Costing --- What if I can build on the cheap?	184	(1)
What if I need more cash than is in my budget?	184	(1)
Show Me the Money	185	(16)
Managing a Self-Funded Project	185	(1)
Working with a Bank	186	(3)
Of course, you don't get all the money upfront	186	(1)
Preparing for inspection	187	(1)
Battling the bank	188	(1)
Understanding How the Voucher System Works	189	(1)
Taking a Closer Look at the Draw Reimbursement System	190	(6)
Figuring which costs are which	191	(3)
Managing the flow of funds with percentages and contingencies	194	(1)
Paying the subs	194	(1)
Dealing with deposits	195	(1)
Using the draw system to pay for your log or kit home deposits	195	(1)
Acing your finals --- Final completion and final funds	196	(1)
Figuring Out Who Gets the Money --- You or the Contractor	196	(2)
Using Credit Cards Responsibly Can Buy You a Trip to Europe	198	(3)
Part III: Hammers and Nails: The Construction Process	201	(74)
All the King's Men: The Contractor and His Cohorts	203	(14)
Working with Your Contractor	203	(3)
Fostering good communication --- A meeting a day keeps the anger away	204	(1)
Maintaining a productive work environment	205	(1)
Change orders --- Dealing with indecision	205	(1)
Keeping a happy and healthy relationship with your contractor	206	(1)
Managing Your Time and Money	206	(4)
Executing contracts	207	(2)
Scheduling the project	209	(1)
Controlling the funds --- How to manage the checkbook	209	(1)
Introducing Other Important Players	210	(3)
Dealing with suppliers	210	(1)
Working with subs --- Each one is an expert	211	(1)
Preparing for building and bank inspectors	212	(1)
Managing Disputes	213	(4)
Avoiding mechanic's liens --- The contractor's weapons	213	(1)
Using legal remedies --- Arbitration and attorneys	214	(3)
Excavation and Foundation: Getting a Solid Start	217	(14)
Surveying and Site Preparation	218	(7)
Using your survey	218	(2)
Preparing your site before the first shovelful	220	(1)
Dealing with trees	220	(1)
Clearing and grading	221	(1)
Constructing retaining walls	222	(1)
Providing drainage	223	(1)
Marking the build site	224	(1)
Spot-check --- Surveying and site preparation	224	(1)
Preparing for the Utilities	225	(2)
Connecting water	225	(1)
Hooking up to the sewer	226	(1)
Installing septic systems	226	(1)
Bringing in electricity	226	(1)
Piping in gas	227	(1)
Spot-check --- Utilities	227	(1)
Pouring Your Foundation	227	(4)
Excavating the site	228	(1)
Installing the foundation	229	(1)
Spot-check --- Foundations	230	(1)
Framing and Rough: So Much Goes Behind Those Walls!	231	(20)
Things to Consider Before Framing and Rough Work Begin	231	(3)
Questions to ask your contractor	232	(1)
Establishing a schedule	232	(1)
Trusses and I-beams: Yes or no?	233	(1)
Looking at What's Involved in Framing Your House	234	(5)
Understanding the framing process	234	(4)
Spot-check --- Framing	238	(1)
Installing the Rough Systems with Ease	239	(8)
Rough plumbing	239	(3)
Spot-check --- Plumbing	242	(1)
HVAC	243	(1)
Spot-check --- HVAC system	244	(1)
Rough electrical	245	(2)
Spot-check --- Rough electrical	247	(1)
Sheathing, Flashing, and Insulation	247	(4)
Covering the framing --- Sheathing and flashing with your clothes on	248	(1)
Rolling out the insulation	249	(1)
Spot-check --- Sheathing, flashing, and insulation	249	(2)
Heading for the Finish: So Much Detail	251	(24)
The Icing on the Cake --- Exterior Finishing	251	(8)
Applying wall coverings	252	(1)
Finishing an attached deck	253	(1)
Up on the roof --- Roofing and rain gutters	254	(3)
Installing the driveway --- Finish options	257	(1)
Exterior lighting	258	(1)
Spot-check --- Exterior finishing	258	(1)
Moving Inside --- Completing Fireplaces and Walls	259	(3)
Fireplaces and hearths	259	(1)
Drywall and wall textures	260	(1)
Spot-check --- Fireplaces and walls	261	(1)
The Finish Carpenters --- Doors, Windows, Molding, Cabinets, and Countertops	262	(6)
Doors and windows	263	(1)
Baseboards and moldings	264	(1)
Cabinetry and countertops	265	(2)
Spot-check --- The finish carpenters	267	(1)
All the Pretty Stuff	268	(7)
Painting	268	(1)
Hardware and fixtures	269	(1)
Flooring materials	270	(3)
Appliances	273	(1)
Spot-check --- Painting, fixtures, flooring, and appliances	273	(2)
Part IV: All the After Stuff	275	(42)
Home Sweet Nest Egg: Moving In and Managing Your New Investment	277	(10)
Finishing Up the Custom Home Project	277	(3)
Getting your certificate of occupancy	278	(1)
Obtaining the mechanic's lien releases	278	(1)
Rolling the construction loan --- Choosing a final loan amount and program	279	(1)
Taking the Final Contractor Walk-Through	280	(1)
Selling the Old Home and Moving	281	(1)
Managing Maintenance and Repairs	282	(2)
The builder's long-term responsibilities and warranties	283	(1)
Dealing with construction defects	283	(1)
Should You Stay or Should You Go?	284	(3)
Being aware of neighborhood trends	285	(1)
Two-year capital gains tax implications	286	(1)
Refinancing: More Money, Cheaper Payments	287	(14)
You Still May Want Another Loan	287	(2)
Filling the need for more cash	288	(1)
Reconsidering how long you will stay	288	(1)
Lowering your payments	289	(1)
Three Things You Should Know About Refinancing	289	(3)
You aren't the bank's customer	289	(2)
The banks view new custom homes differently than existing homes	291	(1)
Rates and fees are only part of the big picture	291	(1)
Picking the Right Mortgage Program	292	(6)
A mediocre loan officer can cost you big time	292	(1)
Home equity lines of credit (HELOCs)	293	(1)
Adjustable rate mortgages (ARMs)	293	(3)
Interest-only options	296	(1)
Zero-cost loans can be expensive	296	(2)
Paying Off Your Home May Be Fiscally Irresponsible	298	(3)
The 15-year fixed myth	298	(1)
The biweekly fallacy	299	(2)
Taking It Outside: The Art of Landscaping	301	(16)
Designing Your Dream Landscape	302	(7)
Using a designer -- yes or no?	302	(2)
Revisiting your site plan	304	(1)
Considering your wants and needs	305	(2)
Dealing with your climate	307	(1)
Saving time and money by design	307	(1)
Getting your plan on paper	308	(1)
Putting Your Plan in Action --- Hardscaping	309	(5)
Planning a patio, Daddy-o	310	(1)
Lounging on the deck	310	(1)
The art of fencing	311	(1)
Building great walls	312	(1)
Adding water	313	(1)
Lighting the way	313	(1)
Leafing Out --- Softscaping with Plants	314	(3)
Planting trees after construction	314	(1)
Adding texture with shrubs	315	(1)
Bloom time --- Annuals and perennials	315	(2)
Part V: The Part of Tens	317	(32)
Ten Common Custom Home Mistakes and How to Avoid 'Em	319	(6)
Ten Great Ways to Lower Construction Costs	325	(6)
Ten Common Stuck-in-the-Middle Problems and Their Fixes	331	(6)
Ten Helpful Custom Home Resources	337	(6)
Ten Ways to Make Your Home Green	343	(6)
Index	349