The construction and remodeling process can be managed to a schedule and within the original budget, but this is often difficult due to the changes and discoveries that happen during a project. A project can be typically broken down into the following categories;
- Property Acquisition: The original purchase cost of the land and structures.
- Closing Costs: The costs due at the close of escrow, including insurance, real estate taxes, title fees, escrow fees, and loan origination fees.
- Carrying Costs: The costs that occur during the entitlement and construction process that are based on the duration, including real estate taxes, insurance, legal fees, accounting fees, and property maintenance.
- Entitlement Costs: The costs due to the permit process, including architect and engineering fees, inspections, reports, and permit application fees.
- Soft Costs: Additional costs associated with construction insurance, project management, inspections, utilities, real estate fees, and reports.
- Finance Charges: The fees charged for the land loan and the construction loan.
- Construction/Remodeling Costs: The costs associated with the actual construction and remodeling, including all the general contractor fees, materials, and subcontractor costs.
- Sales Costs: If the end result is for the property to be sold, costs for preparing the property for sale, carrying costs, realtor fees, and closing fees must be included.
In summary, the process is detailed and task-oriented but can be managed with diligence. Hiring professional designers, reputable contractors, and diligent realtors is the key to success.
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