These are mistakes that can really mess up your project and cost you big time.
- Buying a property with a plan to build a new house and not having the proper construction loan in place on day one. If you get bank money to close that’s fine but a private lender in first place that doesn’t commit to construction financing from the beginning is a liability for you.
- Receiving a commitment that doesn’t specify your construction draws. What???? Yes, this is a problem because they are committed to loaning money but not committed to a specific amount. So you’re still negotiating your loan.
- Signing up with a General Contractor (GC) to build your project but not having the GC fee broken out apart from trades and materials. So how do you know for sure how much you’re paying the GC if you don’t know what they are charging you?
- Buying a house with plans that are not what you plan to build. Then finding out that the changes will cost you another $6 bucks a foot. Ouch.
- Paying GC to pay the trades and not knowing if the trades are paid. How do you know for sure? If you’re not on the job site every day and you just wrote a cheque for $200K to the GC, how can you be certain?
- Not having a comprehensive quoted construction budget from reputable trades. Self explanatory.
- Hiring a mortgage broker who doesn’t know anything about construction financing who is gone after closing. How are you supposed to get your draws if you’re alone in the process?
- Hiring your friends to build the house and not really checking into prices, etc. because you trust them. Self explanatory.
- Counting on trades to show up, paying them deposits and never seeing them again. Don’t pay deposits, when work is in place, completed and your happy with the work then you pay in full.
Hiring an incompetent unlicensed uninsured GC. Some people are great at sounding like they know a lot. If you know nothing about construction then go to Tarion to find a builder.