From: macrakis@osf.org (Stavros Macrakis)
Subject: Re: Construction Loan vs. Conventional Mortgage
Organization: OSF Research Institute
Distribution: na
Date: 12 Jan 93 14:56:11

In article <1993Jan12.110311.27031@ncrcae.ColumbiaSC.NCR.COM> cassorla@churchill.ColumbiaSC.NCR.COM (John.Cassorla) writes:

   I am contemplating buying a piece of property and having a builder custom
   build a home for me.  [How do I get a loan?]

The general rule is that the lender will work hard to avoid losing
money if something goes wrong.  The something could be that you lose
your job, the contractor gets paid but doesn't do the work, etc.

Typically, this means that the bank will only advance money after
periodic inspections.  The schedule for this (disbursement schedule)
is worked up between you and the contractor, probably with your
architect's advice.

I believe that construction loans are typically 1-year balloons, and
must be refinanced at the end of the year.  These days, they are much
harder to find than loans for purchase of existing properties.

For more information on all this, I strongly suggest the book I review
below.  The other books may be helpful to you in other areas.

	-s

----------------

House buying and building

I can highly recommend a book which covers both house buying and
working with contractors.  Do not be put off by its title; I would
recommend it even if you are buying a standard house or building an
addition to your existing house.

	Everything you need to know about Building the Custom House:
		How to be your own General Contractor
	by John Folds and Roy Hoopes
	Taylor Publishing, Dallas
	ISBN 0-87833-653-2, $15

Although it seems to be very specific to building a new custom house,
in fact it gives excellent advice on all phases of buying a house or
lot (including evaluating it, bargaining, financing, etc.) as well as
finding contractors, negotiating with them, etc.  It assumes you are
going to be your own general contractor, but even if you are not, its
advice is pertinent and useful.

Some of the discussions of contracts and payment schedules may seem a
bit nit-picky, but you ought to read "The Home Remodeler's Combat
Manual" to show why it can be necessary.

I find it much better than Bob Vila's book on house buying, and also
better than House Buying Step-by-Step (which was the best among the
other books I found at the bookstore).

It's unfortunate that its title makes its scope seem so narrow.

----------------

House renovation

There are many books on home renovation and restoration.  From such a
book, I would expect information on: evaluating existing conditions,
design, planning, contracting, materials and methods, and financing.
Some books are written for the do-it-yourselfer, some for the
professional contractor, some for the homeowner who will contract out
the work (or most of it).  Some emphasize modernizing mechanical
systems, some creating new living areas, and some restoring the
original; most are really a combination.  Unfortunately, I have found
no books that have a really creative aesthetic: most try either to
recreate the original features of the house (often watering down
things, or ignoring significant details), or bring them to some
version of vanilla 1990's taste.  None have the eclectic eccentricity
of designs you see in The World of Interiors (U.K. magazine) or the
creative brilliance of those in Casa Vogue (Italian magazine).  For
that matter, none of them have the emphasis on beautiful materials and
workmanship of Fine Homebuilding (U.S. magazine), even though
Litchfield is an editor of it (the founder, maybe?).  You might think
that this is because they deal with issues which are prior to
decorating, but much design happens when deciding on a plan, and later
decorating depends on it.

The `standard' in this field is

	Renovation: A Complete Guide
	by Michael W. Litchfield
	Prentice Hall: 1991
	ISBN 0-13-159336-6

It is not perfect, but after looking at a lot of other books (but as I
say above, I haven't studied the newest books closely yet), I find
that it is the best.  Litchfield is addressed to contractors and
homeowners doing major renovation and rehabilitation, not minor
redecorating.  It has good technical information but gives little
aesthetic help.  It is hard to use because most of the information is
in the running text: there are few diagrams and tables, and the
photographs are often unclear; it is certainly not a beautiful book.

It has an appendix on financing but as it says itself, it is out of
date and incomplete.  Folds and Hoopes might help some, but basically
you need to contact A LOT of lenders to find one that can handle
renovation loans.

Three books on renovation have appeared on the market this year.  I've
only browsed them in bookstores, so I can't give a very complete
review, but here are my notes:

	The Old House Journal Guide to Restoration
	Patricia Poore, ed.
	Dutton

Written for the individual who is planning to put in a lot of work
him/herself.  Good references to suppliers of specialized materials.
Good information on period details.  Aesthetically rather bland.
Probably less technical information than Litchfield.  Poore is the
owner and editor-in-chief of the Old House Journal.

	The Complete Home Restoration Manual
	Jackson and Ray
	Simon and Schuster

A British publication, with many references to specifically British
materials and techniques.  But also a very clear and well-illustrated
layout, in the style we've come to expect from British graphic
designers.  Few photographs, many clear color drawings and diagrams,
which are beautiful in a utilitarian way.

	Martha Stewart's New Old House
	Martha Stewart
	Potter

Lots of beautiful photographs plus Martha's running journal of the
project.  The contractor was her brother, so you won't learn much
about relations with contractors.  Some pictures of Martha wielding a
paintbrush or whatever, but basically seems written for the homeowner
who is going to contract out the work.  More stylish than Poore.  Not
much technical information.  (Who _is_ Martha Stewart, anyway?)

----------------

Contractors -- cautionary tales

A lot of things can go wrong when working with a contractor, whether
for a small redecorating project or a large renovation.  Even
redecorating can be a disaster: painting one room can result in wet
paint tracked into carpets in other rooms, stolen silver, and a
treasured family heirloom used to level a ladder's feet.  As soon as
you cut into a wall, things can get much worse....

If you want to be ready for the worst case, and get some funny but
cynical advice, you want to read:

	The Home Remodeler's Combat Manual
	Bill Adler
	Harper, 1991
	ISBN 0-06-096541-X (pbk) $10

Unfortunately, the author dwells a little too much on the horror
stories, and doesn't discuss enough how to avoid them.  I'd read this
book together with the Folds and Hoopes one: this one to tell you what
to worry about (and make it vivid!), Folds and Hoopes to tell you how
to avoid it.

----------------

Building Materials

Whether you are renovating yourself or having a contractor do it, it
is useful to know how a house is put together and what the right
materials are for different jobs.

I can recommend a book on the subject:

	The Visual Handbook of Building and Remodeling: the only guide
		to choosing the right materials and systems for every
		part of your home
	Charlie Wing
	Rodale Press/St. Martin's Press, 1990
	ISBN 0-87857-901-X (this may be a library edition)

It seems to have the right level of detail for me.  It is much more
complete and reliable than Bob Vila's book on materials and methods.
There is a lot of overlap with the Litchfield book.  Litchfield covers
planning and methods of construction in more detail (how to lay out a
plumbing system), while Wing covers materials in more detail (how to
choose a kind of caulk)


----------------

Design

	The Timeless Way of Building
	A Pattern Language: towns, buildings, construction

	Christopher Alexander et al.
	Oxford University Press, 1977-1979
	ISBN ?, 0-19-501919-9

Alexander is on the margin of architectural practice, but has many
important ideas.  His thesis is that there are many `patterns' which
over the centuries we have discovered work well, and others which work
poorly.  Patterns can be shapes, relationships, design rules of thumb,
or principles.  He doesn't care where the patterns come from-- they
could be architects' ideas or vernacular ideas-- what he cares about
is how they work.  He is strongly against flashy, trendy, superficial
design which looks wonderful but works poorly.  There is a
counter-culture flavor to his work, but it is valid well beyond that.

To use his advice properly takes a lot of thought and a lot of time.
Alexander intends his books to be used as much by laymen as by
architects; in fact, he'd rather they be used by laymen.  If you use
his method, you should get an original and comfortable house that
works well, but it does require some concerted effort.  And you will
probably still need an architect or engineer to translate your plans
into something a contractor could bid on.

The intent is not to help design a standard suburban house, but the
books will give you some guidance in proportioning rooms, deciding on
sizes and relationships, making sure you're not doing things stupidly,
etc.

They may help you evaluate someone else's plans.  You will be able to
pick out details, ask important questions, and begin to answer them
(e.g. ``will I feel comfortable sitting and chatting in that neat
breakfast nook?'').

They also give almost zero practical advice about building (as opposed
to design) -- they're not intended to.

----------------

Kitchen Cabinets

If you want to know how kitchen cabinets are put together, or want to
build them yourself, there is an excellent book on the subject:

	Making kitchen cabinets: a foolproof system for the home
		workshop
	Paul Levine
	Taunton Press, 1988
	ISBN 0-918804-94-9 $18

Levine works within a particular system, the frameless 32mm system.
The 32mm system is designed for efficient production and efficient
results.  Although it was originally designed for capital-intensive
mass production, with machines that can drill a dozen holes at a time,
etc., 32mm is also very effective for the home shop.  Levine shows how.

----------------

By the way, all of the above books should be available in a
well-stocked public library, if not their own collection, then by
inter-library loan.

----------------
Copyright 1992 by Stavros Macrakis
Usenet distribution authorized when I post it.
Redistribution to Usenet or other networks forbidden.

Newsgroups: misc.invest.real-estate