The Current BuilderFish newsletter May. 20, 2011
Sent Friday, May 20, 2011View as plaintext
A few questions we're commonly asked regardless of the project:
Why do I need a general contractor?
You don't if you know what you're doing. Specifically, if you're a skilled do-it-yourself hobbyist or otherwise have current, professional experience supervising the trade(s) you're hiring. Bottom line, somebody needs to manage the project (logistics, subs, quality control) and that person needs practical working knowledge (i.e. reading how-to on the Internet doesn't count) of both the construction process and building science.
Two related questions, how much is your time worth? Somebody MUST manage all aspects of the job, so there is indeed a general contractor on every job. You're the G.C. if you don't hire one.
And finally, have you considered both upstream and downstream the effect of what you're doing to the house? Think of your house as a puzzle, every piece affects the others. Rarely does one repair or improvement NOT affect anything else. This is something we address on nearly every project, owners not realizing changing one thing impacts the whole house system or building envelop.
I don't care what lenders are promising or advertising, construction related loan products are so restrictive as to be impractical, particularly equity lines and loans. Borrowers must have a minimum 740 middle credit score to get the most favorable terms; but, even assuming stellar borrower credit profile, appraised value (falling home values) continues to be the deal killer. Most people don't have the necessary equity in relation to their current loan balance. In order to finance a project, owners need a large equity position or require only a small loan.
Other options to consider, a reverse mortgage (for those over age 62) or borrow against a cash value life insurance policy or a brokerage account. Consult your tax AND financial advisor to determine what works best for you. My main point, the typical home equity products and construction loans are difficult to get, which is the primary reason new construction remains depressed.
Won't I be wasting money if house prices are falling?
Depends. If you've deferred maintenance, you might be destroying your home faster. Ignoring that seemingly minor rot could be the tip of the iceberg. We recently looked at what the owner thought to be a minor problem only to discover the home is rotting from the outside and will literally come apart if major renovation of over $100,000 isn't completed within the next two years. Like ignoring sounds from your car engine, the expense of deferring home maintenance compounds with each month.
But let's assume you're only considering wish-list projects, don't look at your home as an "investment", I can't stand when I hear people say that. Investments carry a rate of return, earn a dividend or generate income. Period.
Your primary residence is the place you LIVE and where you build happy memories. Improve your home if you'll enjoy it more. As long as you're going to continue living there for a few years (typically more than 3-5 depending on the project), do whatever makes you happy or your life easier. Do not make your decision primarily on perceived "future resale value". That's bunk, see the housing crisis for plenty of examples.
I mention because I know like many, we clip the coupons, even put them in the car, but often forget to have them handy when we go to buy what's advertised.
Well, I heard this week that many Valpak merchants are honoring the discount if you show them the on-line coupon from your smart phone. In other words, patrons who have forgotten the hard copy, hold up their phone "redeeming" the web version.
Anyway, here's a cache of printable coupon sites to help you stretch those dollars and maybe try something new for less than full retail. And please patronize local businesses!
Benefits of Idiocy
(...yes there are)
Ever heard the saying, "You don't know what you don't know" ? Sometimes I wonder if knowing less is best. I'm a fan of Dilbert and Scott Adam's strip Wednesday relates. I seem to attract quite a few folks who follow this philosophy!
Looks like we can park the Ark this weekend, forecast to be in the 80's.