house-building.com NEWSLETTER
#211
New House Building: Money Saving, Convenience and Healthy
House Tips
James Todd.
December, 2002
Christmas Greetings
Beginning with this edition, newsletters will now be archived
online at: http://www.house-building.com/newsletters/newsletters.html
CONTENTS:
- Money Back Credit Cards
An simple idea that will
save you hundreds
- The 10 most common mistakes in the building of
a new home, Mistake #3
Guest article by Chris McMinn,
Professional Cost Analyst and Consultant
- Construction Contracts
Guest article by Tom Landis, OwnerBuilder.com
- Useful Links
- Thought for the Day
- Subscription Information
Please forward this newsletter to
anyone whom you think may be interested!
1. Money Back Credit Cards
If you take our advice and build your house
without being the GC, a money back credit card can
easily save you several hundred dollars. If you choose
to be the general contractor you will be responsible
for buying many of the materials that will be used
in your new home. These purchases will add up to
tens of thousands of dollars. In this case, a simple
cash back credit card will save you thousands. One
piece of advice though, pay the balance at the end
of each month. If you don’t your savings will
evaporate and the card will cost you, not save you
money. If you are undertaking a building project,
you will have a source of financing lined up. Use
your cash back card(s) to buy the materials and then
use your credit line to pay off your card balances.
There are several good credit card sites mentioned
on the customer resource page of the House
web site. If you have purchased the Guide, you have
the access to this page, and we would encourage you
to take a look at it. Most cash back cards pay in
the neighborhood of 1% to at most 2%. Many of these
offers are paid on a sliding scale, viz. 0.5% for
the first $2500 charged, then 1% on everything over
this amount. Many of these cards also cap the total
amount you can earn at $500.
Recently I came across a new offer that pays up to
5%. To earn the full 5% you have to carry a balance.
Since you don’t want to do this, the most you
can earn is 3%. However the 3% is at about twice
what you will find elsewhere, so it is definitely
worth applying for this credit card. The card is
an
American
Express Cash Rebate Card. It has no annual
fee, an introductory 0% APR, and a balance transfer
option.
If you follow the advice in the
House Building Guide you will not only save 3% on the purchase of
fixtures, appliances, cabinets, countertops, windows
and many more items, you will also learn how to avoid
the expense of the builders mark up. By doing so
you will save an additional 10-20% that the builder
would have put in his pocket.
2. The 10 Most Common Mistakes
in Building Your New Home
This is the third in a series
from Mr. Chris McMinn. His firm, McMinn & Associates
are professional cost analysts and consultants. They review
and analyze a large range of residential and commercial construction
projects, applying the same methods and techniques of cost
engineering to residential construction projects as they
do for their commercial customers.
If you are looking for a professional cost consultant, we
encourage you to contact
Chris. If you are looking for written
Guide to many of the same issues Chris points out, we encourage
you to take a look at the House Building Guide.
Copyright © 2002 C. S. McMinn
The Third pitfall: integrating and matching
bids with specifications.
If you've ever bought a new car, you may have been enticed
by those "bumper to bumper" extended warranties.
Usually about thirty-seven months after purchase (one month
after your factory warranty expires), you discover a problem:
nothing major, just your car's battery goes flat every couple
of days. You drive down to your dealer, congratulating yourself
on that extended warranty. After a day or two of tests and
the expense of a rental car, they call you. "It's the
solid state **&##$@!??^%$!! Attached to your rectifier..."
"My what?" You hear a chuckle on the other end. "It's
part of your charging circuitry."
" Well, how long before it's replaced?" You ask. "A
couple of days. It's special order."
" Okay" you say, "Just
call me when it's done?"
" We will," comes the reply... "By the way,
our estimate for that part is $176– plus labor."
" WHAT?" You yell. "I've
got a BUMPER to BUMPER extended warranty!!"
" Yes, ma'am, we know. But that **&##@!??^%$!!
Is specifically excluded..."
(YOUR REPLY DELETED)
This may be your first encounter with
a basic rule of all selling:
" The Big Print Giveth
and the Fine Print Taketh Away."
This principle applies even more so to all construction projects– especially
yours. Unless you happen to be a dealer, an expert, or a
former contractor, these little time bombs will be embedded
in your contract documents. Your contractor knows exactly
what he did– and didn't– include. You don't.
But you can be sure that by the time your project is done,
you will have a whole new appreciation for
fine print.
What can you do now? This is a crucial and potentially costly
area of misunderstanding. Space does not allow an in depth
treatment, but you need to learn how to read and understand
bids, contracts and material specifications. If you don't
have the time, or find it too boring, your contractor will
quietly remove thousands of extra dollars from your bank
account– carried away by those new born change orders.
How big of a house are you going to build?? Find out what
size of mortgage for which you qualify.
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Don’t
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Get
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Save thousands in interest payments and cut years
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3. House Building Contract
After working with the home building community for
30+ years in the residential design/build process, what I've
witnessed as being a major concern for owners,
designers, suppliers and contractors alike is the lack of
a complete set of drawings, specifications and conditions.
These documents are needed to clarify the schedule, budget,
resources and people needed to get a project completed.
The drawings are a graphic description of the building's
dimensions, elevations and layout. The specifications are
a written description of the products to be utilized.
The conditions clarify the rights and obligations of owner,
designer, suppliers and contractors by mutual agreement.
READ ALLEN SEALE'S "WHAT ARE CONTRACT DOCUMENTS?"
http://www.starlink2000.com/ARTICLESpagesSITE/ContractDocumentsListed.htm
I'd like to present my thoughts on the necessity for a complete
set of these documents as a way to avoid glitches on your
project.
For those of you who may feel inept because you keep tweaking
your schemas, let me assure you the creative process occurs
in successive phases from your original idea to project completion.
There's nothing wrong when you're doing revisions when planning
and organizing the job.
What I tell folks doing a project is that the design/build
endeavor for home building or remodeling occurs through a
process of "progressive approximation."
What this means is that, at first, we're not certain of the
product/service mix necessary to complete a project; but,
after a series of revisions and collaboration
with the building community, we finally arrive at a point
where we understand what resources are necessary to get the
job done.
Best results are achieved when these drawings, specifications
and conditions are in place before the first shovel of dirt
is turned, not afterwards.
READ JIM MONTGOMERY'S "10 TIPS FOR A SUCCESSFUL CONSTRUCTION
CONTRACT"
http://www.jamesmontgomerylaw.com/Article_TenTips.html
After the initial epiphany regarding 'why' a building or
remodeling project should occur, the process of progressive
approximation launches itself, eventually leading folks to
a point where they understand the product/service mix that'll
suit them best.
We need to be comfortable with this creative process. It's
very rewarding, both in terms of project management and personal
achievement.
Ultimately, what's required is a complete set drawings, specifications
and conditions describing scope of work. These documents
just don't fall into one's lap because the design/build process
enjoys the presence of a variety of professionals with whom
the owner must collaborate.
There's no single best way; and, there's more than one way
to get the job done correctly.
There's an ensemble of players on the home building stage,
all of whom are reading from their own scripts, depending
on their occupational orientation: realtors, lenders, designers,
engineers, contractors, manufacturers, suppliers, inspectors...and
on and on.
READ ROB COOK'S ARTICLE "THE CONTRACT DOCUMENTS"
http://www.cookbros.org/contract_documents.htm
To keep all the players on center stage, and reading from
the same script, requires a dialog to occur leading toward
a common set of documents so all participants come to agree
on how best to accomplish the project.
Sometimes this can be a struggle, other times the process
just seems to fall into place. Either way, we need a complete
set of documents so we can properly direct the cast of players.
There are legal, technical and managerial reasons why the
drawings, specifications and conditions need to be in place.
Putting them into place will be part of determining
who and what will become part of the means needed to accomplish
the end
result.
This occurs by progressive approximation as we meander through
the marketplace finding the right product/service mix to fit a situation.
It takes time to accomplish results, but we need to take
this time so our jobs go smoothly.
READ HENRY GOUDREAU'S ARTICLE "5 KEY ELEMENTS OF EVERY
CONSTRUCTION CONTRACT"
http://www.hgassociates.com/article_contracts.html
What we end up doing is planning and organizing around the
schedule, budget,
resources and people necessary to achieve our goal based
on these three documents.
Once decisions are made, and the right product/service mix
is configured,
the drawings, specifications and conditions are then useful
to implement and control our projects.
This is how we remain in schedule, on budget, making best
use of products
and remaining on good terms with the people doing the work.
FURTHER READING: R.S.MEANS "BUILDING PROFESSIONALS GUIDE
TO CONTRACT DOCUMENTS"
http://www.rsmeans.com/about/pr-67261A.html
4. Useful Links
The following are useful links relating to the housing
industry that may be of interest.
Home Wiring Guide – This
free guide contains information about installing low voltage
wiring for audio, video,
home automation, phone, and data communications in your
http://www.wildtracks.cihost.com/homewire/
Contractor
Guide is a free service to help you find
contractors, suppliers and manufacturers on the Internet.
Their database contains more than 1,175,000
entries.
http://www.contractorguide.com
5. Thought For The Day
"In the end, we will
remember not the words of our enemies, but the silence of
our friends." -
Martin
Luther King Jr. (1929-1968)
5.
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