First Person: 3 Keys to Rebuilding a Fire-Damaged Home
In our area there are very few foreclosures, short sales or other distressed properties. So we needed to think outside the box to find discounted properties. The house we found had been badly damaged during a fire, which gave us the opportunity to buy a home at a discount (only $12,000). The plan originally called for remodeling the existing structure; however, upon further inspection we decided instead to level the whole thing. This was a major undertaking, and our budget was only $150,000 to build a brand new two-story 2,000-square-foot home. Three keys attributed to our success.
No. 1: Planning
First, a project like this requires an immense amount of planning. We purchased a contractor management system to help us through the process. From there we hired an architect to design our new home. While this did add on some extra cost, there were many benefits of having an architect. The first was the city inspector was more agreeable now that he knew the plan and he knew that it had been professionally designed. Second, it allowed us to generate a list of all the materials we would need to build this new house. This list was critical in negotiating with hardware and lumber stores. This helped make the process much smoother in the long run.
No. 2: Permits and Inspections
Always err on the side of getting permits, having inspections, and double checking all of your local building codes. Failure to do any of these things could result in work having to be torn apart, redone, or even fines and penalties for failure to comply. These things can all add up very quickly and can inflate your budget, costing you more money.
No. 3: Avoiding Up-Front Payments
Almost every contractor will demand money up front, but if you stop to ask them why, the answers may surprise you. Contractors, just like you, have access to lines of credit to purchase materials and don’t have to pay for 30 days or more after purchasing. So the excuse that he needs the money to get materials just won’t fly. The fact is, if you pay them before the work is done you risk them taking off with that money and leaving you in a bind. For this reason alone, never pay them up front — only pay them after work is completed.
These three keys helped us finish our beautiful home on time and under budget at only $146,000 and create $42,000 in instant equity. While this may seem like common sense, it is often these things that are overlooked and can cause you to spend way more money than you anticipated leaving you financially strapped, or worse, with an incomplete house.
