Custom Home-Building Without the Headache

Written by Posted On Sunday, 23 October 2005 17:00

Building your own home can be a truly rewarding project and a lesson in frustration all framed beneath one rooftop.

"When I was 10 years old my dad was 42 and he started building his first home from scratch … when I was 42 and my son was 10 we started [building our] house," says Jim VeNard.

The Arizona resident, built his first custom home six years ago and quickly figured out that patience is key, especially because of the critical role he played in the process.

"I was a general contractor; I pulled my own permits and worked with a home designer because in Arizona you don't have to be an architect. Then you send [the designs] to an engineer to get approved," says VeNard.

VeNard built a 5,000-square-foot home in Mesa, Arizona for a little more than half-a-million dollars. The home is now worth approximately $1.2 million.

If you're considering taking on this challenge you'll want to, as I often say in my columns, do your homework first. This time that advice could save you thousands of dollars and endless headaches.

I interviewed financial expert Kevin Daum, who is a co-author along with Janice Brewster and Peter Economy, of the newly released Building Your Own Home for Dummies. Between the pages of his book is valuable information that takes you from concept to dream home and even shares problems and resources.

Unlike VeNard, most people don't build their home alone. Less than 25 percent of those building homes actually attempt to do it themselves; instead most will hire someone to handle the construction and oversee the process. However, Daum says that many books are geared toward the owner/builder person who plans to be a general contractor; he said he wrote his book to addresses the rest of the population.

"The bulk of [those building custom homes] are going to hire an architect, hire a contractor because they have to work for a living to pay for it. But they've been widely ignored by most of the marketplace in the books that are out there," says Daum.

Here are some important tips to help you custom-build your dream home.

Don't undereducate yourself: gather as much information as you can before you dive into the process, use multiple sources and ask for plenty of advice from experts.

Don't underestimate the amount of liquidity needed to build a home: "The American public is deeply misguided in thinking that equity is considered cash not just in construction but in everything; it is very, very wrong; it's a depression-era mentality that is not applicable any more," explains Daum.

"Equity is equity and it is not liquid and from a bank's standpoint they don't care how much equity you have. You could have a half-million-dollar lot that is completely paid off and if you don't meet their reserve requirements, their liquidity requirements, you will not get a construction loan," says Daum.

Decide what you want to build before you buy the lot: it's critical to realize when building your home that the two main issues, the ability to finance it and secondly to protect your investment are basically the same issue. Matching the size and price of the home you build with the neighborhood can help protect your investment.

"You're not going to build the Taj Mahal in a 1,500-square-foot neighborhood because nobody is going to buy it; by the same token you're not going to build a 1,500- square-foot shanty in a 5,000-square-foot neighborhood because if you do that you're going to spend more money than the property is worth," says Daum.

When designing the house, design the whole house including picking all the materials: building a home is not the time to leave anything to chance.

"Spend three more months with the architect, spend $5,000 more with the architect and spec out every single detail -- every hinge, every doorknob, every cabinet knob," says Daum.

"The point is, when you have a custom home, if you do that extra work and have your contractor check on availability of certain items … you're going to know exactly what you're dealing with and that's your absolute best remedy against having cost overruns. Pick the items before you start," cautions Daum.

Realize that what you spend may not be what your home is worth: "If you go into a million-dollar neighborhood and you spend $2 million [building your home] that does not make that house worth $2 million because people who are spending $2 million don't necessarily want to buy a $2-million house in a $1-million neighborhood," says Daum.

So if you're ready to go for it, here's one last bit of advice from VeNard, "You'd better be in a really strong marriage and you'd better be in a situation where that person is going to give you enough freedom and flexibility to do what you have to do on the fly because you don't always have time to say 'Hey we have to do xyz'; sometimes you have to just make those decisions and move forward."

For more helpful information, visit Daum's site .

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Phoebe Chongchua

Phoebe Chongchua is an award-winning journalist, an author, customer service trainer/speaker, and founder of Setting the Service Standard, a customer service training and consulting program offered by Live Fit Enterprises (LFE) based in San Diego, California. She is the publisher of Live Fit Magazine, an online publication that features information on real estate/finance, physical fitness, travel, and philanthropy. Her company, LFE, specializes in media services including marketing, PR, writing, commercials, corporate videos, customer service training, and keynotes & seminars. Visit her magazine website:

Phoebe's articles, feature stories, and columns appear in various publications including The Coast News, Del Mar Village Voice, Rancho Santa Fe Review, and Today's Local News in San Diego, as well as numerous Internet sites. She holds a California real estate license. Phoebe worked for KGTV/10News in San Diego as a Newscaster, Reporter and Community Affairs Specialist for more than a decade. Phoebe's writing is also featured in Donald Trump's book: The Best Real Estate Advice I Ever Received and The Complete Idiot’s Guide to Buying Foreclosures. She is the author of If the Trash Stinks, TAKE IT OUT! 14 Worriless Principles for Your Success.

Contact Phoebe at (858) 259-3646 or Visit for more information.

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