Transcription
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Dave: I'm thinking about building a house. Any suggestions?
Absolutely! Definitely got suggestions. When you're thinking about building a house, there are three, and maybe four, things you must do. If you're going to build a house, maybe five, but I'll walk you through it. Here's what we do.
Okay, there are some sub-pieces, so three, maybe four. The maybe four is if you've already picked out the property and bought it, and you've already got your builder, and you're doing kind of an independent, standalone type of a deal, then we will pass on number one.
But number one is, if you haven't, then I would get a good buyer's agent realtor at daveramsey.com. Click on ELP for real estate, ELP, and get them to represent you through the whole transaction with the builder. They can help you navigate with the builder if you haven't already selected it.
So, if you're going in where somebody's building houses, a builder's got a subdivision going, and they're doing a whole bunch of deals, and they got houses popping up everywhere, and you're going to run down there, "I want that one on that lot," and you haven't done that yet, then yeah, I'd get a realtor in your corner—a buyer's agent in your corner—because they'll work as your liaison during the construction process. They're going to work their butts off for their commission, I promise you.
Now, the other three are with everybody. There are three things that run a building job. A building job is simply a project; it's project management. That's all it is. If we're doing a project here, developing a product, or we're writing a book with Chris Hogan on millionaires—okay, Chris Hogan's writing a book on millionaires, so that's a project.
How do you do that? Well, projects all need basically three things. You need a blueprint, which is how the project is going to be built. What's the house going to be? You need a detailed blueprint that you and the builder are in agreement on. If you don't already have that, while you're drawing it, involve your builder with the architect so the two of them are working together to develop the plan.
You don't want the architect drawing something stupid that's ridiculous to be built or super expensive because they went to art class and don't know anything about building. Okay, so you've got to have the balance in there. But if you've already got your blueprint, you've got your blueprint—that's thing one. This is one of the three pieces of paper that manages a building job.
The second piece of paper is: do not engage in a building project without a detailed schedule. A schedule! When we built the homes that we built, we had a spreadsheet, and before we broke ground, we knew the week the trim carpenter was going to show up. We knew the week the painter was going to show up. We knew the week the roofer was going to show up. We knew the week the grading was going to be done on this or that.
All you know is when bushes are going in on this date, we're going to get the certificate of occupancy on this date. So, you begin with the end in mind on the schedule. You've got your blueprint, you've got the schedule that we're going to build it, then you can tell if the builder's off track because he's building something that's not on the blueprint, or he's off schedule because weather's been bad, or he hasn't done a good job of keeping the subs scheduled in.
But if you start a house in October and you know March the 4th the trim carpenter's supposed to be there, you can already schedule the trim carpenter. You don't end up without a dadgum trim carpenter when you're supposed to. Right now, there's a shortage of labor in the building business, and if you don't have your subs lined up all the way out, you're going to get messed over on your schedule.
So, a schedule and a blueprint. The third piece of paper is a budget. A budget, which we're building to. When they come in and say, "Well, we can't do this on budget," what do you mean you can't do it on budget? This is the budget; this is what we said. It keeps you from doing stupid stuff.
We're building a house, and the decorator came in and picked out expensive carpet for the downstairs. Nobody goes downstairs much, and she's blowing our whole carpet budget or flooring budget on this stupid downstairs carpet because the decorator's being a decorator.
Right? I'm like, "No, you're this Dave Ramsey building this house, kiddo, so put the cheaper carpet downstairs. Nobody goes down there anyway, and get your dead gum flooring budget back into because we're not going a bazillion dollars over a flooring budget."
So, you can build a house on budget, on schedule, and then every Friday we met with the builder and we looked at the blueprint, the schedule, and the budget, and made sure everything that was done that week was lining up with all of that—the blueprint, the schedule, and the budget.
The blueprint, the schedule, and the budget—every Friday morning. And of course, we had the money lined up, so we paid them every Friday morning, and they were able to pay their subs. Everybody's happy; everything stays on track. We finished the houses early and under budget.
The last two houses we built—can you imagine that? Can you imagine building a house for me? How big a pain in the butt that is? But you know what? We didn't change 63 things along the way. The more change orders you do, the more you're going to lose your butt. It's hard on the builder, it's hard on the subs, it's hard on the schedule, it's hard on the budget.
So, make your mind up and stick with it. We did two or three change orders on both houses—almost no change orders. We had some big stuff we got in there, and we said, "Now this isn't right; we got to change this." And we spent, and it was on us.
And then, if it's on me, and then mixed in, this is you as the person building the stinking house—you have to do your job, and that is stay ahead of them on the selections. When you don't go pick out the carpet, you don't go pick out the light fixtures, you don't go pick out the faucets, you don't go pick out the plumbing fixtures months and months and months ahead of when you need to, then you're slowing the whole thing down.
And then you go, "I had a bad experience building," because you were so freaking indecisive. You were impossible to work with. Every time I give this talk, builders all go, "God, I wish I could get all my people to do this." I'm like, "You need to demand it."
Because then you stay mad at your builder, and it's your fault. Now, sometimes builders are, you know, doofuses too, like any other business. But if you've got a quality realtor helping you lead your way through this, and you'll do the budget, the blueprint, and the schedule—the budget, the blueprint, and the schedule—manage to that, and you stay ahead of them.
Don't you be the problem. You make your decisions. A friend of mine took him an extra year to build his house because he couldn't get his wife to go pick out the crap. I mean, I'm having a fit.
Hey, she couldn't make it. I'm like, "What are you talking about? She can't make it over my a year?" You know, when we enjoy the process—I don't enjoy the process; I want to get it done. I'm like, "Why am I building the house?"
Because it's a game. I'm building it to move into it. So, you stay ahead of them. You don't stop them from anything. You don't cause—you don't get in the way. You don't be a problem child.
And don't you go over on the site and start telling subs stuff's wrong. You're not running the job; the general contractor's running the job. If you're going to go around the site, the only thing you do is take food, smile, and tell everybody how wonderful they are.
And if you've got a problem, you call your builder; you call your general contractor. Don't you go telling the electrician the plugs are in the wrong place. They get confused who the boss is.
Stay out; stay in the chain of command. Keep stuff picked out; be a pleasant experience, and you will have a pleasant experience. But manage it like it's a project. I mean, people wander around the barn building these houses, and it takes you forever to get them done.
I've got some friends that build houses here in the area, and they refuse to build houses for people. They build them as specs, and when they're done, you can move in them; you can buy them. But they won't let you be involved because people drive the builder crazy by being indecisive.
And you know, a country music girl in our area was building a house, and she and her decorator changed everything. It took them an extra year, and they spent an extra four million dollars on an eight million—I mean, it was supposed to be a four million dollar house, and it ended up being eight million dollars.
And it took them an extra year to build it—all because she changed everything. She built a stupid house twice as she was going up—just change, change, change, change, change. The whole house is change orders. I mean, it's ridiculous.
No, that's a dumb way to build a house. It drives everybody crazy. It makes the decorator money, makes the builder money, makes the builder crazy, and makes you, the customer, crazy and broke.
Figure out what you're going to do and do it. Have a clear path to building a house, and you'll have a great experience. If you do that, I have had great experiences.
Now, nothing—no project of that size happens without glitches and without you having to have some discussions from time to time, like "Get your butt in gear" kind of discussions. But that's true of managing any project.
You've got to line the labor sources up and get things moving. Like, "Dude, you guys are two weeks behind; how are you going to make it up?" "I don't know; it's been raining." "Well, make it up!"
I mean, I come over here; you ain't working. It's two o'clock in the afternoon; where the flip are you? You know, you have some of those discussions, right? But you can't have those discussions if you're not on schedule, and there's not a schedule.
So, lay that stuff out. And again, if you're starting from scratch, get a good buyer's agent on the front end to walk you through the process and use those three things: the budget, the blueprint, and the schedule.
The budget, the blueprint, the schedule. This is the Dave Ramsey Show.