"Full
of fascinating,
money-saving ideas."
—George Ehrenhaft, author of
The Builders Secret
"Thanks to David
Cook we saved
$30,000 remodeling our kitchen."
—Sumant & Meddini P., Los Altos Hills
About the Book
Build Your Dream House for a
Song is a great tool to help you acheive
your dream! I've included excerpts below to give you an idea of the
tips and information available in the book. Just click on the link of
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Acknowledgments
Chapter 1: Historical Perspective
Chapter 2: Land: Finding and Buying
Chapter 4: Collecting Materials
Chapter 6: Temporary Dwellings
Chapter 8: How We Built Our Dream House
Glossary
Suggested Readings
Bibliography
Index
Like most people I used to think that in order to have a house of your own you had to scrimp and save until you had enough for a down payment, and then sign up for a thirty year mortgage. That's what I did, not realizing at the time that it was really more the bank's house than my own. After a few years of making mortgage payments I decided there had to be a better way. So I made up my mind to build my own house—not just any house either, but my dream house—and I was determined to do it as cheaply as possible. When the dust settled and I added everything up, I discovered I'd saved so much money that I actually made over a quarter million dollars in equity.
The thirty year mortgage is a phenomenon of only the past two generations, encouraged by institutional lenders and fueled by the mortgage interest deduction. Those who are industrious enough to save up a down payment for a house, then have the pleasure of working the next thirty years to pay back the lender—a figure which ends up more than double the original price of their home. If they can't make the payments, the lender takes the house.
Say you have an average goal in the conventional housing market of a standard three-bedroom tract-built house, you probably have the wherewithal to build an exceptional house. You could take your down payment and stretch the spending power of those dollars.
Your house is more than likely your single biggest investment. It may in fact be the reason you are working so hard—just to make your mortgage payments. Imagine how different your life would be if you had no mortgage payment and no rent?
You can live in a house that you own outright, and it can be your dream house. Thanks to modern technology, building your own house has never been easier. Nail guns are available to do every kind of nailing job, electric saws to do every kind of cutting job and a myriad of other helpful tools that were not available a generation ago.
The impetus for this book was the ease at which I, with almost no experience, built my dream house. It was a lot of work, but the end result was well worth it. Imagine owning your dream home free and clear!
In these pages you will learn how to save money every step of the way. However, saving money in only a couple of areas will still allow you to beat the conventional system of home ownership and have the house of your dreams free and clear in five years or less.
During the course of building my own dream house for as little as possible and the subsequent research for this book, I discovered five major areas for saving a great deal of money, and I will cover them in detail in the following chapters. They are:
- How to buy land for as little as twenty cents on the retail dollar.
- Buy building materials for as little as ten cents on the dollar.
- Design for ease of construction, thereby saving a lot of money.
- Live on your land comfortably and rent free while you build.
- Get the best help for the least money.
Return to Table of Contents
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Chapter 2
Land: Finding & Buying
There are many things to consider before buying land. The land you select must be buildable; apart from that, you shouldn't let anything be set in stone. Everyone has a wish list, but, quite frankly, no one piece of land will have both the mountains and the plains as well as all the other qualities that will make it buildable and livable.
Make a list of priorities to help you determine which ones can be compromised. Here are eleven criteria to consider when looking for land:
- Cost: terms and down payment.
- Employment: Are you looking in the area of your current employment or do you plan on moving into a new area?
- Schools: An important consideration if you have or plan on having children.
- Essential services: Health care, police, groceries and supplies.
- Utilities: Electricity, telephone, gas, water, etc..
- Soil: Can you install a septic system? Or, is the land on a city sewer? Do you want to grow things? Is it contaminated and unsafe for children?
- Exposure: For direct sunlight year-round, southern is best.
- Neighbors: Go and meet them. Try to get an idea of what they're like—they'll be a good source for information on the area.
- Resale: What is the area like? If you ever want to sell, will you make a good profit? Check both land prices and house prices in the neighborhood.
- Noise: Is the site near a freeway
or street with heavy traffic?
Lay of the Land: Is the lot level? How much preparation will it take before you can build?
________________________
Also covered in this Chapter:
Best time to buy
Zoning
Methods of buying
Real estate agents
Dealing directly with the seller—expired listings
Newspaper classified ads
Sign on property
Word of mouth
Stumbling upon that dream site
Tax defaulted land sales: buying land for as little as twenty cents
on the dollar
Preparing for a tax-defaulted land sale
The auction
Tax deed states
Tax certificate states
Public utilities
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here to order Build Your
Dream House for a Song and take the first
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________________________
Conclusion
You don't have to pay retail for land! If you're careful and do your
homework, there are good unconventional strategies for buying land.
Make sure that you have a buildable lot by evaluating the soil for a
septic system and checking zoning regulations at the county offices.
If you don't feel comfortable buying land unconventionally, then buy
from a real estate agent. After all, I still have four other major money-saving
ideas for you!
Return to
Table of Contents
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Conventional Home
Loans
The conventional method of home ownership requires you to save up a
down payment of anywhere from 10 to 20 percent or more, depending on
your ability to qualify for a loan. Qualifying means that a percentage
of your gross income, anywhere from 25 to 33 percent, should be available
for housing expenses. You'll need to save money for closing costs as
well.
Construction Loans
Qualifying for a construction loan is similar to qualifying for a home
loan—good credit, verification of employment, and sufficient income
are all required. (A statement of assets and liabilities may also be
requested.) In addition, you must provide the lending institution with
an itemized construction cost breakdown. Expenses in this list would
include: materials, labor, architect's fees, building-permit fees, surveying,
insurance, clean-up, plus an amount for contingencies (things you've
forgotten to include in your breakdown, but will be paid from the construction
loan). Like most loans, construction loans are expensive. And they have
a short term, typically less than a year. Extensions are available,
as long as you don't mind paying a little more.
Seller Financing of Land
Land is often financed by the seller. In this example, let's assume
that you bought your land for $30,000, putting 20 percent down. And
let's say you lived on your land while you're building and used your
savings to purchase a mobile home (you'll make your money back because
you won't be paying rent). Perhaps, you've already collected some building
materials and lined up skilled help. Also let's suppose, you build in
your spare time and maintain the flow of your monthly income. If you
financed the land for five years at 8 percent, you'd have the following
figures:
Pay As You Go: No
Financing
This scenario assumes that you've read this book and learned about tax-
defaulted land sales or have found another cheap way of buying land.
It also supposes that you have decided to build your own house and don't
mind spending your spare time working on your new house for the next
year or two.
Conclusion
Most institutional lenders expect borrowers to have nearly perfect credit.
Credit helps if you want to take the conventional path. But more often
than not credit is a gilded cage: quick and easy money now for much
too much interest later, later, later.
Indeed, the mortgage interest deduction is a tempting incentive to fall in line with the masses and sign over middle age to a thirty-year mortgage. But, remember, you'll have to earn enough money every month to make that mortgage payment just so Uncle Sam can't take away all the money that you're earning to make your mortgage. . . it's the proverbial vicious circle.
Traditional financing may not be necessary for building the house of your dreams. Take advantage of seller financing for the land; live on your property, and use the money saved from rent to pay for building materials and labor, and do a lot of the work yourself (it's not that hard—buy a nail gun).
I know that you can build your own home without financing—or at the most, short-term seller financing on the land. I know because I've built my own home this way. And in the next chapters I'm going to tell you how to do things a little differently for a great deal less.
Credit is comforting, and we may all need to borrow money from time to time. By owning our home free and clear, we can tap that equity and always get the safest and cheapest money out there, avoiding long-term loans, high interest rates, and points.
Return to
Table of Contents
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Chapter 4
Collecting Materials
Start collecting materials today—even if you haven't yet purchased land. No place to put them, you say? You probably have lots of free storage space at your disposal. Ask your parents or relatives if they don't mind lending a little extra yard space. Because, trust me, if the chance arises to pick up some free or cheap building materials, you don't want to pass it up.
Certain items, such as cabinets, interior wood trim, carpeting, and doors must stay dry. However, tiles, windows, toilets, bathtubs, and roofing can all be stored outside. Framing lumber can be stored outside as well but remember to put spacers between each layer of lumber so that air circulates around each piece. Cover this with a makeshift roof— old plywood, corrugated tin, or plastic will all do—and be careful not to wrap the lumber in a way that traps moisture inside.
It's true—friends may think you've become some
sort of crazy packrat, but when they laugh, remind yourself that you're
going to own your dream house, free and clear. And soon enough, you'll
be the one laughing. . . all the way to the bank.
________________________
Also covered in this Chapter:
Avoid custom items
Auction sales
Get there early
My first auction
Buy a truck
The cheapest way to buy materials
The steel building
Look past the dirt
Other auctions
How to find auctions sales
Make sure it works
Don't pay too much
How to bid
Moving your stuff
Building wrecking yards
Salvage materials and recycled materials: free stuff
Scavenging
Newspapers and classifieds
Garage sales
Click
here to order Build Your
Dream House for a Song and take the first
step towards owning your own home free and clear in five years!
________________________
Conclusion
Think of buying materials at a discount as a game, like finding the
pieces to a very big puzzle. It can be exciting when unusual materials
inspire unconventional building solutions.
Perhaps you worry that buying materials at a discount or at auction could somehow diminish the quality and craftsmanship of your dream house. I don't suggest buying something shoddy because it's cheap, nor do I think you should settle for a hodgepodge house. What I do suggest is figuring out ways to buy lasting, high quality materials—Italian marble, Brazilian tiles, maple floors, steel—at less than retail. By coupling imagination and interesting materials, you'll build a unique structure filled with unusual details that caters specifically to your aesthetics.
Next to land, materials will be the second largest expense in your dream house. You'll save tremendously if you try to buy as many materials as possible at some fraction of retail. Be patient. You won't find a bargain on everything in one day. But if you take your time and start collecting materials slowly, you'll be able to buy most of what you need at a discount. Remind yourself that this is a five-year plan to build and own your dream house free and clear. To make this happen, you don't want to cut corners on quality or craftsmanship. Patient collecting will reward you with the house you want at the price you want.
But if you are not able to find any materials in these unconventional ways, don't worry! In the next chapters I will tell you about three more money saving tactics.
Return
to Table of Contents
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KI.S.S.: Keep It Simple Stupid. Unless you already have experience, let this motto govern the design of your home, whatever it may be—a log cabin, a lightweight wood frame construction, an adobe villa, or a timber frame house—try to keep it simple. And by simple, I mean that you design something that can be built in manageable stages. Thus, building your dream house will never become an overwhelming or daunting task.
All houses incorporate windows, doors, kitchen appliances, cabinets, bathtubs, toilets, plumbing fixtures, electrical fixtures, flooring. . . . So why do we choose one kind of construction over another? Aesthetics, economy, availability of materials, and ease of construction are all considerations.
I suggest that you design your home around the materials you've already collected—much in the way I was inspired by the steel building. Of course, if you hire a knowledgeable person to help you (see chapter seven) or you already have experience in one particular type of building, then this should also influence the design of your house.
By keeping the design of your new house simple, the
construction will go smoothly and according to your best expectations.
________________________
Also covered in this Chapter:
Remodeling versus new construction
Hiring an architect
Computer-aided design
The roof
Entrance
Safety
Orientation
Designing your dream house for a $100
A few comments on the house I designed
The rest of the story
Completing a set of plans
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here to order Build Your
Dream House for a Song and take the first
step towards owning your own home free and clear in five years!
________________________
Conclusion
Dream house is, of course, a relative term—your dream house may
be a cottage or it may be a mansion. It is self evident that your dreams
will somehow have to be controlled by your pocket book if they are to
become a reality. If you live in a rented apartment, any home that you
design, build, and own free and clear should be a dream house. The main
thing to remember is whatever you design let it be easy to build. Even
if you buy land and materials at retail, you can still save a bundle
by designing a house that is easy to build.
Return
to Table of Contents
________________________
There are a number of options for living on your land and paying no rent while you build. Obviously, paying no rent can save you a great deal of money, which in turn can be put toward the cost of your dream house. Following are four options: (1) build a small guest house, (2) build your house in stages, (3) build a small house that will be converted into a detached garage, or (4) buy a mobile home.
My family and I lived in a mobile home while we built, and it was actually much nicer than we had anticipated. The great thing about a mobile home is that it comes equipped with a kitchen, storage, bathroom and a number of other amenities. This means you don't get bogged down with building a comfortable temporary dwelling, but, instead, can focus on the construction of your dream house right away.
In the United States, thousands of older mobile homes are available for under $5,000 each. You can buy one, live in it while you build, and then sell it to recover most if not all of your investment.
Many counties allow you to live in a mobile home on
your land while you build. We had no trouble getting a permit in Marin
County for our mobile home. Living there while we built saved us over
$20,000 in rent—all of which we were able to apply to materials
and labor. To get your permit, you'll be required to hook up to the
sewer or install a septic system. You'll also need a source of drinking
water and probably want to install electricity and a telephone.
________________________
Also covered in this Chapter:
Mobile home permits
Purchasing a mobile home
Moving a mobile home
Setting up a mobile home
Sewer lines
Waterlines
Electrical supply
Propane vs. natural gas
Other options
Moving into your new house early
Click
here to order Build Your
Dream House for a Song and take the first
step towards owning your own home free and clear in five years!
________________________
Conclusion
My family and I were doubtful that we could find a tolerable temporary
solution for living on our land while we built. All the options seemed
as if they would be inconvenient and uncomfortable. But honestly, we
were very happy with our mobile home. Whoever designed it truly understood
the practicalities of everyday life. We never felt cramped nor that
our privacy suffered.
If you're not able to save by other methods (e.g., buying land and materials for less than retail), living on your land while you build is the surest way to save a bundle.
Return
to Table of Contents
________________________
Labor accounts for at least 40 percent of the cost of building a new house. Of the major money saving ideas (buying land and materials for less than retail, designing for simplicity of construction, and living on your land while you build) directly engaging hands-on in the building process is probably the most significant thing you can do to realize the dream of owning your house free and clear in five years.
I believe that you must make a commitment from the very start to participate in the actual construction of your dream house. This doesn't mean that you have to build the entire house by yourself—quite to the contrary, I recommend hiring competent help. In fact, if there's anything you shouldn't try to skimp on, it's the quality of the people helping you to build your dream house. This doesn't necessarily entail hiring a contractor or professional construction workers. I suggest that you make a trade of services with another seasoned owner builder or that you find a retired builder who would enjoy working on your project part-time simply because he or she loves to build.
I want to emphasize, however, that you shouldn't walk
off the job when you hire others. There are good reasons for participating—not
only because you'll save on the cost of your own labor, but, more importantly,
you'll maintain direction of the project. What I'm trying to say in
euphemistic terms is that you should get help, but be wary of being
"ripped-off" by those who aren't worth their pay. The best
way to figure this out is to be on-site as much as possible. Trust me,
things quickly go astray if you're not around to provide the necessary
encouragement and wide-spanning vision for what is, after all, one of
the most important projects of your life.
________________________
Also covered in this Chapter:
Learning to build
Schools for owner builders (listed by state)
Alaska
Arizona
California
Colorado
Florida
Maine
Massachusetts
Minnesota
Montana
New Mexico
New York
Oregon
Pennsylvania
Texas
Vermont
Virginia
Washington
Habitat for Humanity
Christmas in April
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