PREPARE: Are you ready?

 

INTRODUCTION

You understand your ‘why’, you’ve set project goals, and you’ve confirmed the type of project you want to create in the previous Getting Started section. In this step, you’re going to continue to talk big picture stuff. You’re going to look inward and focus on setting a good internal baseline upon which to understand your project.

You’ll start by exploring the common question of “Where do I start?” and realize that it really doesn’t matter as long as you set a solid foundation of values and goals to work from. You’ll then start to familiarize yourself with the design and construction process from a broad, birds-eye-view to prepare yourself for what is to come, what to expect, and what your responsibilities will be. You’ll further explore your life commitments to gauge how much time and money you can commit as you start to create a budget and timeline for the project. 

 

 

KEY PROCESSES

WHERE DO I START?

Good news: You’re here!  That’s a great start.

But really, there isn’t a specific thing you MUST do first. Some people start by looking for land (if you’re building new), others start creating a list of must-haves, and others start sketching up floor plan ideas. Where exactly you start isn’t as important as making sure you take all the necessary steps to give yourself the best chance for success.

We feel the best way to start the home creation process is to understand yourself and your needs, get a baseline understanding of the general process and what to expect. Once you do those things, you’ll have set a solid foundation upon which to create a successful project.

We’ve already discussed some of the early foundational elements to consider before embarking on this journey in the Getting Started section. In that section, there’s information on setting project goals, understanding your why, and learning which project type is best for you. If you haven’t reviewed that section, go back and review it.

In the rest of this section, you’ll find information to help you get a baseline understanding of the home building process and what to expect. This entire OPEN DOOR resource is chalk full additional information to help you with more specifics as you go through the process.

If there’s information you can’t find here at the OPEN DOOR, don’t hesitate to ask us about it. Chances are, others are looking for the same information. And don’t worry, we won’t be offended if you go elsewhere to find information. The more well-rounded your understanding is of the process the better. And that sometimes comes with understanding other’s opinions and perspectives. And we’re OK with that. 

 

OVERVIEW OF THE DESIGN & CONSTRUCTION PROCESS

Before tackling this big project of yours, it’s important to understand the process (at least get a basic understanding of what the process will be like).

If you haven’t done so already, grab our free Homeowner’s Planning Guide, which guides you through the various steps in the process.

Here at the OPEN DOOR, we break down the steps for you in an organized, easy-to-digest way. We provide useful content and resources in each section and are there for you every step of the way. Here’s a quick breakdown of each section in the process:

  • Introduction & Exploration Phases:
    • Get Started (Understand your goals and what’s driving your decisions)
    • Prepare Yourself (Get an internal baseline: Understand the process, where to start, and what to expect)
    • Learn About Others (Get an external baseline: Understand who the key players are and what project delivery options are available)
  • Design & Construction Phases:
    • Brainstorm (Create a design brief, understand your style preferences, collect design inspiration)
    • Acquire Land (Determine your site location, finding land, and buying)
    • Pre-Design (Analyze existing site & building conditions, review codes)
    • Design (Create a design for your home that meets your project goals)
    • Jurisdictional Approvals & Permitting (Get zoning/planning approvals, building permit)
    • Construction Financing (Self-funding, construction loan financing, home improvement financing, hard money loans)
    • Award Construction Contract (Understand various types of construction contracts, find a suitable builder, sign a contract)
    • Construction (Understand the construction process & what to expect, understand how to manage disputes)
    • Project Completion (Certificate of Occupancy, inspections, project handover, settle finances, move-in)
    • Post-Occupancy (Post-occupancy reviews, 1-yr correction period)

Note: Note: Keep in mind that the guide shows the typical process of designing and building a new home. Every project is unique so there may be some variation in the actual steps, the order of the steps, or the amount of time spent in each step for your specific project. Nonetheless, this guide should help simplify the information and give you a general overview. If you’re renovating or adding on, your process may be slightly more abbreviated than this, so skip to the sections that are relevant to you.

 

ASSESS YOUR COMMITMENT LEVEL

Time Commitment

How much time can you commit to the project?

Building a residential project takes many months, and sometimes years. The amount of time you dedicate to the project may fluctuate depending on what phase of the process you’re in. But, it’s important to think about how much time you can dedicate to the project.

Knowing whether you can spend a few hours or many hours a week or month is important to know because it starts to indicate how involved or how hands-off you’ll be throughout the process. It also tells you whether you need or want to work with an architect or designer who can handle most of the design, detail work, and product research for you or if you’d like to do most of the research yourself.

Either way, understand that you’ll need to be involved at various points throughout the process. No matter who you work with during the process, there will be some amount of time spent communicating via phone or email, attending meetings, researching, talking to other professionals, answering questions, reviewing drawings or construction progress, signing off on things, etc. The amount of involvement is up to you, but it’s important to communicate your time commitment capabilities with your design and construction team so everyone is on the same page and can coordinate sign-offs and scheduling issues accordingly.

 

Financial Commitment

One of the most important decisions to make is to determine how much money you can (and want to) pay for your home project. Talk about affordability early and often throughout the process. Understanding what you can and can’t afford will help you make educated decisions and save you the headache and stress of going over budget down the road.

When you think about affordability, consider what you can actually physically spend, what you feel comfortable spending, and how comfortable you are with risk.

  • How much CAN you afford to pay?
    • Make a firm decision on how much of your own money you’re willing to put towards your project. Take inventory of your cash on hand, investments, and cash available from other assets.
    • Understand your borrowing power. Get a rough idea of how much you can borrow from a lender. Keep in mind that you’ll most certainly need a down payment so remember you’ll have money tied up there, also.
    • Combine your available cash investment with your borrowing budget to establish a limit to your project costs – not just construction costs, ALL project costs.
  • How much do you actually WANT to pay?
    • Just because you CAN afford to spend a certain amount of money on your project doesn’t mean you actually SHOULD or WANT to spend that amount.
    • Think about how much you feel comfortable spending and how much cash or liquidity you want on hand for you to rest easy at night.
    • After you’ve determined this number, you can use this limit to design and build your project to fit within your comfort level.
  • How tolerant are you to risk?
    • With any complex process, there are many variables outside of your control. Even if you do everything right, there is still the chance that something unpredictable can occur that could have a negative impact on your spending ability or the cost of construction, such as changes in market conditions, interest rates, unforeseen conditions on the project, etc.
    • Make sure you address your level of risk in dealing with these variables. How will you cover costs if the market turns sour, if material costs rise, or if there are delays in the construction schedule due to weather?
    • Determine what your safety blanket will be if something unexpected occurs. Will you tap into a retirement account? Will you dip into your savings more? Will you have a contingency of money set aside in your budget specifically for this “what if” scenario?
    • The best strategy to deal with risk and uncertainty is staying educated on the economy, your financial investments, and your home building progress. Don’t be afraid to consult professionals, ask questions when you’re confused, and access the risks and benefits of your decisions with your partner if you’re making decisions on both of your behalf’s.

 

CREATE A PROJECT BUDGET & TIMELINE

Project budget
Creating a budget is perhaps one of the hardest, yet most important part of the homebuilding process. There are so many unknowns and so many moving parts. How should you begin?

It starts with understanding how much you want to spend on the project – both of your own money and through financing – and then, work backwards. Once you know how much you want to spend on the project (and how much the bank will lend you), you’ll have a better idea of the total maximum budget cost for the project. From there, you can start dividing that cost into line items like financing fees, hard construction costs, soft costs, contingency, and moving/furnishing costs.

Do some research, make some calls, and learn the approximate costs you might incur on your project in your area. You can talk to your lender about financing costs, closing costs, etc. You can speak to a contractor about approximate construction or remodel costs. You can talk to a realtor if you’re looking for land to help determine land acquisition costs. And you can talk to a designer or architect about other soft costs like design fees, engineering fees, etc.

Your budget should stay fairly loose early in the game but as you figure out more information you can refine it further. At the onset, at least get a firm idea of how much your max budget is and subtract everything from there – including your contingency.

Expert tip:  If you’re building new, make sure to pay attention to the housing market in your area. You don’t want to build a house that won’t get you a good return on investment years down the road. Take inventory of what houses are selling in the area you want to build and talk to a realtor. Understand how much houses are selling for that are roughly the same size as the house you want to build. This should give you an idea of how much your house may be worth when it’s built.

Understand your project timeline
It’s important to evaluate your housing situation so you know if there is a looming deadline for the completion of your house.

Are you renting and have a lease that’s up at a certain date? Are you expecting a baby and need your new house built before or shortly after your baby is due? Do you anticipate an elderly relative moving next year and need a finished home by then? Are you remodeling and have temporary housing set up for a certain number of months? Are you planning to build your house yourself and need extra time for that?

Whatever your situation, make sure you understand and try to anticipate anything in your life may impact the timeline of your project.

At the same time, speak to builders, architects, designers, realtors, and bankers to understand how long each step of the process will be for you. Design and construction schedules usually vary based on the size of the project, the workload of the company, and the complexity of the project. But don’t worry about nailing down the timeline perfectly right now. You’ll have a better idea once you start assembling your project team and asking them about your specific project. For now, just make sure you communicate any timeframe issues with your team for they will most likely affect logistics and a number of resources your team dedicates to the project to ensure it gets done on time.

 

 

YOUR ROLES + RESPONSIBILITIES + EXPECTATIONS

You may feel like you know what is expected of you or what your role is during the homebuilding process. And this may seem like common sense, but you’d be surprised how much people forget in the heat of the moment when things get tense. So, here’s a few reminders of your responsibilities.

Make decisions in a timely fashion
Throughout the process, you’re going to make countless decisions. Some will be very big decisions like defining how much you can afford, where you want to build, and how big or small your project will be. Others will be much smaller like what color paint to use in the kitchen, whether you want drawers or doors on your cabinets, or whether you want this light fixture or that one. With so many decisions, it’s no wonder some people get decision fatigue before the project is over.

When faced with big decisions, take a breather, sleep on it a night or two, and talk about your options with family, friends, and professionals to get a good understanding of the impact of your decision. Equipping yourself with relevant information about your choices, the pros and cons, and the opinions of people you trust will go a long way in giving you reassurance that you’ll make the right decision.

For those countless smaller decisions, determine if you have the time to commit to making all those decisions and if you even want to.  If you enjoy the idea of picking out fixtures, accessories, materials, finishes, and colors for your home then, by all means, embrace this once in a lifetime opportunity to tailor everything inside and outside your home to your specific tastes. Be prepared to make a lot of decisions during both the design phase and the construction phase as the project develops. And don’t be afraid to ask questions when you’re unsure of something. It’s better to find out now that the tile you want is $30/sf than after it has been ordered and you see the bill for it.

If you don’t have time or the desire to be intimately involved in lots of small decisions, make sure your team knows that they have the freedom to make these decisions for you and only come to you for more significant issues. If your team has a general idea of your goals, your wants, your style preference, color scheme, material palette, and budget you’re aiming for they usually do a pretty good job at making those smaller decisions for you.

Provide accurate and necessary information to your team
It’s important as the Owner and Commander-in-Chief of this project that you provide accurate and full information to your team. Whether it’s to your banker, your architect, or your contractor, providing them with accurate information about your project goals, your schedule, your budget, and any other constraints about your project is crucial. These people will be planning ahead to accommodate your project into their schedule. If you’re dishonest about your budget or expectations or even delay getting information to them, it could completely change the timeframe, the scope, or the direction your project takes… sometimes even to the detriment of the entire project, resulting in lost time and lost money.

Communicate often
One of the best ways to create an enjoyable project is to communicate often with your team. Having open, honest, cooperative, and supportive relationships with your contractor, architect, building inspector, banker, partner, and everyone else involved helps ensure everyone is on the same page, has the same goal in mind, and trusts one another.

If you’re confused, dissatisfied, or even pleasantly surprised with something, don’t hesitate to communicate with the person involved. Having clear, honest, and straightforward interactions goes a long way to building trust and confidence.

Pay on time
It’s important that you pay your contractor, architect, and everyone else on your team who are providing goods or services in a timely manner. As long as they are working in a manner consistent with your contract with them, promptly paying invoices and purchase orders has its advantages. It encourages your team members to continue to work hard and it builds trust and confidence. If issues do arise where you aren’t happy with their work, communicate your concern and work together to find a solution. Don’t let it go for weeks and months when it’s too late to fix and you have a potential lawsuit on your hands. There are cases where you can withhold money for non-conforming, incomplete, or damaged work, just be sure you understand your rights and the implications of your actions. Seek counsel from an attorney, an advisor, or even your architect if you’re concerned about something.

Have a Realistic Idea of the Timeframe
Rome wasn’t built in a day and neither will your project. Expect your project to take months and maybe years to complete depending on the size and scope of the project and on the city or town you’re building in. Talk to contractors and architects in the area to get a sense of how long the process takes. As you begin to develop your project, your designer, and/or contractor should be keeping an up-to-date project schedule. Review this schedule at regular intervals and if things get off track, discuss with your team how to fix or prevent it from happening again if it’s within yours or another team member’s control.

Manage Your Stress
The homebuilding process will most likely cause you some sort of stress. It’s a huge financial commitment, it can be disruptive to your everyday life, and it can cause other personal differences to surface between you and your loved ones. Differences in lifestyle preferences, financial habits, and overall well-being can create tension in relationships especially as you try to create a new space that fits the varying needs of your entire family. Simply deciding whether to splurge, cut back, or eliminate something from the project entirely can create some sort of stress and tension between you and your partner who may have a strong differing opinion than you do.

There may even be tension between you and other professionals on your team at various times throughout the process. Managing the situations before they escalate is important so communicate your thoughts in a professional manner and try to resolve any confusion in the matter at hand.

Be Patient
Building a house or taking on a major home improvement project is a complex process and rarely does everything go exactly as planned. At the same time, many processes have multiple stages so if you happen to see something incomplete or partially finished on the job site, don’t be alarmed. Be patient. If you are concerned with something, discuss your concern with the contractor or designer. Usually, there is a logical reason that involves coordination with another trade, with a building inspector, or with the designer.

Have fun!
Building your perfect home is a unique opportunity that not many people get to experience. Sure, there will be frustrations or problems along the way, but in the grand scheme of things, the process should be exciting and exhilarating. Start the process off right by planning ahead, setting a realistic budget, and setting smart project goals.

 

 

ADDITIONAL ARTICLES

 

 

TOOLS & RESOURCES [Coming Soon]

  • Guide: Estimating Your Time Commitment
  • Guide: Project Timeline
  • Guide: Pre-Building Timeline
  • Spreadsheet: Project Cost Estimator
  • Checklist: Custom Home Process: A complete checklist of the design & construction process
  • Checklist: Home Addition Process: A complete checklist of the design & construction process
  • Checklist: Home Renovation Process: A complete checklist of the design & construction process

 

 

ACTION ITEMS

  • Get generally familiar with the home creation process.
  • Determine your time and financial commitment capabilities.
  • Create a rough project budget.
  • Determine if there are any looming deadlines or timeframe issues that may impact your project’s schedule.
  • Understand what to expect throughout the whole process.
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Over To You…

After going through the content and resources in this section, you should be feeling pretty good about your yourself and your situation. You now have a good idea of the overall steps involved in the typical home creation process. You’ve figured out how much time and money you can and want to commit to the project. You’ve learned about your roles and responsibilities and what to expect of the process.

Once you feel you’ve assessed your current situation enough, you can move forward to the next section where you will start to learn more about external influences on your project, such as creating a project team and choosing among project procurement options.

Next Section: Learn >