Many people investing in vacation properties decide to build a new home rather than purchase an existing home. Choices they make may range from using an architect to design a dream home to simply finding existing plans and choosing a builder. In all cases, the first decision is choosing the land or lot itself.

Once the location, plans, builder, and construction cost have been determined, the next question to answer is how to finance the construction. These choices range from cash to mortgage financing. In determining the best method of mortgage financing, a number of factors need to be taken into account.

Many banks offer construction loans, where the loan is set up so the builder can draw funds during the construction phase. These loans have costs associated with them, typically construction loan fees, inspections, processing, underwriting, appraisal, title, recording, and escrow closing fees. Interest during the construction phase is based on the drawn amount and either billed to the customer or taken from a prepaid reserve account.

When construction is complete, the construction loan needs to be paid off. This is typically accomplished with a traditional mortgage loan, or permanent loan. Once again, the customer incurs the loan fees and all other fees normal to any mortgage loan. The negative aspects of this type of construction-permanent financing are obvious: two closings double the closing costs, and interest rates may change during the course of construction.

The mortgage lenders providing the best financing for building offer one-close construction loans. These loans also allow the builder to make construction loan draws during construction, then automatically convert to the permanent loan on completion of construction. Besides the obvious cost savings of only one closing, the other primary benefit involves the interest rate on the long term loan: in many cases, the lender will lock in the rate at the time of the first closing. This means that the customer knows what their payment will be when complete, regardless of market fluctuations during that time.

There are other benefits created by one-close loans depending on the length of time the property is owned. Since many people purchase the land and build at a later time, their equity or appreciation during that time can work to their advantage, as the loan to value determination is based on appraised value, rather than cost.

For example: a customer purchased a lot for $200,000 that has doubled in value over time. They now wish to build a home with construction cost of $600,000. The appraisal comes in at $1,000,000. Since the lender will finance up to 80% of appraised value, there is $800,000 available. This will finance the construction, pay off any land loan, and include closing costs and construction interest in the loan, providing a true turn-key project with no out of pocket costs and payments starting when the home is complete!

Home builders also prefer this type of financing, because their own financial resources and credit lines are not needed. Since the customer is financing construction, the builder does not need to build in financing costs that would normally occur if they were building the same house for speculative sale.

Realtors who work directly with builders are also finding the benefits of one-close financing: Instead of just selling the land, and earning commission on the land portion, realtors can be instrumental in linking up the customer and the builder, selling the land and construction package and earning commission on the entire value.

The best advice for anyone deciding to finance the construction of a new home is to seek expertise in mortgage financing for their particular need. Companies advertising “we do everything” may not have the necessary lending relationships, just as banks offering two-step construction to permanent may not be competitive. In all cases, the customer will find that one-close construction loans save dollars and make sense.

By: J. J. Johnson

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When designing, planning as well as constructing a commercial property the costs involved are of paramount importance. Unfortunately this is even more true today than it was 10 years ago for the simple fact prices of materials etc., are continually increasing. However a great way of ensuring that the costs are kept to a minimum during any project is through using a commercial construction costs management service.

This is an establishment which is able to realistically look at the capital costs for any commercial construction project. They not only look closely at the planning costs but also cost control services. Plus this service will also ensure that the bids provided on the construction project are documented as well as being completed within the pre-arranged framework of costs and time. They will also look at finding the most economical ways of ensuring that the project does not run over budget.

Each construction project should employ an independent and professional cost manager or quantity surveyor who can police as well as have a clear overview of everything that is going on in order to protect the financial interests of the person who is having the construction project done. Generally these people will use their engineering judgment and experience which they then apply to scientific principles and techniques to allow them to analyze and develop the best action that should be taken in order to provide a good estimation of the costs involved as well as being able to control the commercial construction costs once the project starts on site.

By using a good set of cost management principles the cost manager or quantity surveyor will ensure that the construction project stays within the budget limits and still meets performance and quality targets.

In fact when a commercial construction project is being prepared the cost manager or quantity surveyor is an integral part of the team and can bring added value to any construction and design team.

However if there are any problems relating to commercial construction costs especially if they exceed the budget then this may well cause problems for the person who was asked to control the costs initially.

By: Michael Redmond

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The media recently has been abuzz with the halt of construction to Boyd gaming’s 4 billion dollar resort, The Echelon. The project was originally intended to open in 2010. Boyd gaming had razed the aging Stardust property in 2006 to make way for the resort. As a result of the stoppage, Boyd’s stock rose after the announcement. Of course, not everyone was happy with their decision. The property is now sitting half completed on some of the most expensive real estate in the state. Echelon joins other partial completed projects like the Cosmopolitan further down the strip. However, it’s not all doom and gloom for the construction industry in Las Vegas.

Las Vegas Strip Construction

Strip construction is going on up and down Las Vegas Boulevard. To the south you’ll see several resorts and high rises still under construction. Construction at One Las Vegas is nearing completion for tower two and some residents have already moved in. The massive CityCenter project, aiming to be the largest LEED certified project in Las Vegas is another huge project under construction. Despite several tragedies during construction, according to CityCenter officials the project is still on schedule and should be completed by November 2008. Should CityCenter obtain its LEED certification, it will become the largest green project in the world (although the Palazzo would still retain its claim to be the largest single green building in the world). CityCenter will feature two hotel towers with condo-hotel units and two residential towers.

Just down the street from CityCenter, construction on Turnberry Associates’ Fountainebleau is scheduled to be complete by fall of 2009. Upon completion, the resort will add over 3,800 rooms, condo-hotel units and penthouses to the Las Vegas strip.

Further down Las Vegas Boulevard, another massive project is underway. M Resort, a 700 million dollar project located at Las Vegas Boulevard and St Rose Parkway is going forward. One of the keys to their success while other projects stall or are even cancelled is their funding. Unlike other projects, M Resort, Spa and Casino had all necessary financing in place since the start of construction and as well fixed-price construction contracts(a practice that other builders would be wise to adopt, especially since the price of oil can be directly tied to the rise of construction costs).

Economic Impact

The economic impact the construction industry has on the Las Vegas valley is undeniable. Even without counting new construction, most strip properties are constantly being remodeled. This tax revenue has helped bolster state tax revenues as tourism has dipped over the last year. The other side effect is the creation of even more jobs once a project has been completed. In the coming year, several thousand jobs will be created by the opening of CityCenter, M Resort and Fountainebleau. Aliante Station, a local casino in the master planned community of Aliante in North Las Vegas, hired over 1,500 workers and plans on hiring more as needed in the coming months. Even without any state income tax, these new workers will impact the local economy.

The Future

While Las Vegas hasn’t proved itself to be recession proof, the city has fared quite well compared to other vacation destination cities across the country. Construction is still going strong, the job market while down will be seeing a huge upswing in the coming several months and tourists are still coming. All in all, I wouldn’t bet against the future of Las Vegas, the odds always favor the house.

By: Charles A Richey

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Construction Safety Management Plans (CSMP) must be specific to the organization and to the project, in other words you cannot have a generic CSMP; they will not be accepted by OSHA inspectors when they visit and audit your worksite.

Experience has shown that the best written CSMP are those prepared with consultation of key players of the delivery team ie coalface staff and first line management (work supervisors, team leaders and employees). Employees take ownership of the CSMP written in consultation with them and embrace them much more at the time of implementation.

Furthermore, the CSMP must reflect your organization and current work practices and not someone else work methods. What I mean is that when you write up your Construction Safety Management Plans, it must be written around your current work practices and the way you run your business. For example, for excavation works each organization may have its own way of doing the activity and some may use different type of equipment.

In this regard, you and only you know your own organization and the methods of work to deliver your projects, you know your costs, equipment and resources available and to comply with OSHA requirements you can always tailor your CSMP around your organization needs.

You can get help from OSH consultants to structure your CSMP, they will look at the plan with an auditor’s eyes to see if it complies with OSHA standards, but they will not help with the best practices of the industry, they may not have the experience in your field; you are the most qualified and experience person in your business.

Another great resource to get assistance with your CSMP is the Internet where you can find lots of “ready to download plans.” However, always keep in mind (as I said before) that the Construction Safety Management Plan must be specific to your organization and specific to each project.

By: Martin Sejas

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In recent years there have been a number of high profile disasters where structures have collapsed; in some cases the consequences were devastating. Many things can have an effect on the soundness of a building or other type of structure. Over time, factors such as extreme weather, earthquakes, or simple deterioration will take its toll on a structure. Some recent, high profile news stories have shown us what can happen when a structure can withstand no more.

On June 19, 2008 a construction worker lost his life in Houston Texas when the scaffolding and part of a wall collapsed, trapping several workers in the rubble, and on March 4, 2008 a vacant building collapsed in Harlem New York; prompting the halt of train service in the area due to fear that the vibration from the trains may cause a neighboring building to collapse as well.

In Kenya, on December of 2006, a large building under construction collapsed, injuring dozens of construction workers, and killing more than 11. Building standards appear to be the cause of this tragedy. Another building collapse in Iran on June 30, of 2008 took the lives of 19 people; the cause of this tragic building collapse was the building’s instability.

Collapsing buildings are catastrophic, but there have also been some recent tragedies concerning the collapse of bridges and tunnels. In many of these cases poor construction or erosion are to blame for the disaster.

In July of 2006, a newlywed couple would have their lives together cut short when they made the fateful decision to drive through the Boston Big Dig Tunnel, and over 12 tons of concrete fell onto their car from the ceiling of the tunnel. The husband was able to crawl out of their crushed car, but his wife was not so fortunate, and was killed.

On August 1, 2007 a Minneapolis bridge on Interstate 35-W collapsed, killing 13 people and injuring 145. This tragic bridge collapse is just another in a long line of structure failures due to poor construction, or erosion that was not attended to.

As a result of these and other tragedies, the soundness of structures has become one of the most scrutinized elements of new construction, and the focus has shifted to methods of ensuring that new buildings and structures are constructed in a way that ensures the building’s longevity.

Buildings, as well as other types of structures are designed to withstand a certain weight load, but what a building or structure may actually withstand can vary, depending on the quality of construction, as well as the quality of the materials used in the construction of the building.

If poorly constructed, any type of structure is subject to collapse, from a single family home to a skyscraper, or long bridge. In most cases the collapse of a building or other type of structure can be contributed to bad design, foundation failure, bad construction, extraordinary loads, or a combination of these factors.

In the case that a collapse is due to bad design and construction, the underlying issues are not only miscalculating the stress that the structure may handle at a future time, but also the construction materials that are used when the structure was built. The cause of many collapsed buildings or other types of structures have been attributed to the use of salty sand to make concrete, the substitution of inferior steel for the steel that had been specified, etc.

No matter how well a building is designed, it will not last if the foundation is faulty, or the materials used are substandard. For this reason, using only high quality materials is essential for new construction projects, and renovations.

Today, there are construction chemicals that can be used to help increase the life and stability of new structures and for the reinforcement of old structures. There are many advantages to using construction chemicals, including increasing a structures ability to withstand environmental hazards. In many cases of building collapse, you will find that when the structure was built, substandard materials were used, including poor quality construction chemicals. To avoid this you should always use only the highest quality construction chemicals from a prominent construction chemicals manufacturer.

Construction chemicals are often used in construction projects to ensure the best end results, which include the structure’s stability. Some of the construction chemicals that are commonly used include, concrete admixture, surface treatment, waterproofing, grout, floor topping, coating, sealer, and floor hardening. In particular, concrete admixture and silicone sealant can help to strengthen structures, as well as protect it from environment hazards, including severe weather and ground shifting. It is significant to remember that construction chemicals are an important element of quality construction materials.

A construction chemical supplier can ensure that you have the proper concrete admixture for your project so that you can be certain that your building’s foundation will be up to code and able to withstand the elements, as well as the test of time.

Silicone sealant is also an important element to protecting a building from extreme weather. Without protecting a structure from the elements, the chances of collapse will increase as years of exposure begins to erode the construction materials, but if you protect with silicone sealant, you may be able to nearly eliminate this problem.

To get the best construction chemicals on the market, research your construction chemicals supplier and only choose those manufactures with a solid reputation for supplying only the best in the industry.

By: Sam D Goddard

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It would be a great social benefit if the Albanian builders will get out of their hands a satisfactory amount of houses. If their price from year to year will become more appealing to customers, probably a part of new constructions history would be different. But so far none of these did not happen in the real world Albanian builders.

And what we have in this country?
- A “saga” construction with scary quality
- Number of palaces built wanting to fill the gap of 3-5 times more than is necessary
- Unlike many other products in the country, its cost per unit (apartments) are increasingly tending towards increasing prices even higher.

At first glance, there is nothing wrong with the construction industry. In the market there are a considerable number of communists, who are in strong competition with each other.

State barriers to create a building society are minimal. Labor power is a classic example of the diversity of forms with construction subcontractors or small working groups has a competition stronger within her. From the every point of view of housing construction sector is a perfect example of the competition. If we follow the theory would have a huge amount of product (apartments) and of course with the lowest cost possible. The obvious theory and practice collide with each other bitterly in the case.

So, what is wrong?

In fact, the first signals of the market, home-builders are more effective. They quickly and skillfully modify their situation changes depending on the circumstances. What they produce their clients require, but not the prices they would pay to meet the requirements that would have. Construction industry in Albania has not always been so inadequate. During the ’70s the country was building a housing boom. Also the ’80 had a higher number of buildings. The statistics are least prepared to prove this housing situation that lasted until the early ’90s. A triumph of the housing sector could be called this time selling enough to free them that those years were a tenant. Although those who have had years to reduce this amount to a minimum through multi-year lease payment.

Factors contributed to the construction costs and lower selling prices in the early ’90s they were among others:

- Cost of materials used free;
- Cost-free land (except for value-based infrastructure) on which built;
- Very small additional cost;
- Planning and building more controlled;
- Costs and barriers to state very negligible;
- Lack of corruption and
- The free labor that was used in these constructions.

Although these buildings are under construction specialists have gaps of time that they were built, they stood and is standing the test time is best. They proved a best thing, which are built strong and resistant. And are still attractive to buyers, affecting market prices of housing.

But with new constructions, what happens?

Go to any Builder or surrounding buildings in its center and you will find that with good shops and apartments will have large land owners. Early successor of landed housing or smart buyers at the start of the 90 are key benefits from this industry. Land-bank asset is their stable. Although construction sector is described as a profitable industry in the world, with land prices that are rising and omissions in the construction cycle by the state makes housing prices rise.

Earth is the element that creates the basis for sustainable growth equity builder.

By: Eduart Gjokutaj

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The development of new construction methods evolved together with the new materials, it is not possible for its development if it is not associated with it. For example, large glass panels could not have been used in the eighteenth century even if they had been available. No large-span lintel-support back then. Both new materials and new methods are developed to be able for the architects to be free to design. Present day structures are usually a combination of old and new skeleton-frame, curtain wall and cantilevered construction are good examples of old post-and-lintel.

The skeleton frame is one of the first methods developed. It employs modern materials. It is an open frame to which a wall covering is attached. The frame is the primary support and the covering is the shelter. It became popular because it is light, strong and usable. It is common in family dwellings. Steel-cage construction is a skeleton frame using steel for the skeleton.

The shapes are the architectural restrictions of shapes, such as square, cube, triangle, octagon, pyramid, pentagon, circle, and sphere used by most architects. This has come about with the development of materials that are stronger, lighter, and with many uses.

The sizes are the advances of sizes to a size greater then ever before. Sears Tower, tallest building in Chicago, but as technology develops even more buildings can increase to sizes previously thought impossible. Who can say what will be possible?

The location is the architect choosing, because design is not just its enormous size but also locations unthought of years ago. The advances in architectural and engineering will make more possible and workable locations.

The components are constructed piece of a building, it is the parts or sections made in advance. The use of components allows the builder to construct away from the site. Some examples of components are, assembled windows, trusses, or molded bathrooms.

The future of construction of buildings is related to new materials, new methods, and sociological changes because people live in a different society. Developments of new materials and methods of construction restrict the builders of traditional materials and methods.

By: Rocky Torres

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Construction In Dubai And Abu Dhabi Has A Great Potential For The Ones Who Are Gravely Willing To Double Their Money Overnight. Plenty of ongoing constructions reveal the growth and stability of property business in a country and the world witnessed a huge construction projects in Dubai and ADhabi mainly. These constructions in Dubai and ADhabi attracted a lot of builders and real estate investors and other type of investors. Special emphasis was laid to the make the laws pertaining to construction and property’s sell, purchase and rent better. This step also boosted construction in Dubai and construction in Abu Dhabi. One more interesting fact is that 16% of the world’s cranes are engaged in Dubai’s construction works.

There are certain reasons which have played a key role in growing construction business in UAE, especially in Dubai and ADhabi. One of the most significant reasons is the on-time completion of all the construction projects. Many construction companies are well-known for their ability to meet the project deadline and assigned budget such as Arabian Construction Company, Dubai Contracting Company, ACTCO, Nakeel Group and Dutco Group. These construction companies in Dubai top the list of the best construction companies all over Middle East.

The reason behind the quick completion of projects is the abundant exploitation of laborers in construction in Dubai and ADhabi. They employ higher number of laborers as compare to the other countries, especially western ones. They are capable of employing excessive laborers since they get them at cheaper rates from the third world countries like India, Pakistan, Bangladesh, etc. Same is the case with technical staff like architects and engineers. They hire good architects and engineers at much lower fees and salaries from the same countries so as to designs and monitor construction in ADhabi and Dubai.

In construction falsework designs are very significant since they are required to give the needed shape of the building being constructed. Falsework designs are also available on ready-made basis in the market, but it is not necessary that the construction companies in ADhabi always select the ready-made falsework designs. Normally falsework designs are constructed according to the architecture of the building. Falsework designs are availed from the construction material dealers. There are also firms having business in Dubai who only deal in falsework designs in Dubai, therefore, these firms excel at making falsework designs.

If we focus on the ongoing and complete projects, we can deduce that all the construction in Dubai and Abu Dhabi are focused to attract the visitors which lead to promotion of tourism and business. These construction projects include luxury residential apartments, big shopping malls, and 7-star hotels, especially near the beaches; and adding to the elegance is world’s current tallest building, Burj Khalifa.

It is obvious that one can see a great potential in all these finished and unfinished and upcoming constructions in Dubai and Abu Dhabi. There is no doubt that investment in Dubai will open the gates of fortunes to the investors.

By: David Hanley

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As we mature as a species, most people realize we need to take care of our world. That being said, most people think doing so is expensive. So, what does green construction cost?

The cost of green construction is a rather complex subject. It is an easily misunderstood subject also. One reason for this is the idea of an integrated approach that considers the economic benefits of any green project in relationship to the cost. The up front costs of a project may be higher. Yet, these costs are often balanced against the long term low operating costs of the building. It is further complicated by the fact that many of the benefits of the green approach cannot be easily expressed in dollar and cents. If our personal environment is safer and cleaner, and our health is better as a result, how do we quantify this?

In one example cost study done in California, $1578 was added to the cost of a home in order to bring it to a minimal green construction level. The additional costs went into projects that made the home more energy efficient. The estimate was that at current energy costs, the savings would be $185 per year. The initial cost would be amortized over the length of an 8 percent mortgage, and this would yield an additional cost of $139 a year. So, the net result would really be a savings of $46 dollars per year. It is how one prefers to look at this example that they would answer the question of cost. One approach claims the green construction improvements cost over fifteen hundred dollars. Another approach claims that the green improvements actually save over forty dollars per year. It is all a matter of perspective.

Most experts agree that green construction cost ranges from nothing at all to a nominal cost. It is possible to go to the next level and increase costs by using exotic items in the building plan. In most cases, this is not done, and the cost of the green structure does not differ much from the cost of the traditional building. Most builders are trying to do the right thing today anyway. Even when they do not consider what they are doing as green, they still try to do the right thing. They also have some very strict codes they must follow.

It is hard to compare recent projects. Green construction planners do not normally do cost estimates on their jobs comparing traditional costs. Traditional planners do not usually do cost estimates on green construction costs for their projects. In a recent study of 33 properties in California that did compare costs, the cost of going green was about 2 percent higher. This amounted to about $3 to $5 per square foot.

Green construction might very well be the wave of the future. Many new projects take years from the initial planning to the completion of construction. It is likely that code changes, and customer demands will change over the next few years. What would be the cost of scrapping a construction project and starting over again? Green construction costs little, and sometime even saves. It is the wave of the future though, and the bigger cost might come from ignoring it.

By: Zack Verde

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It would seem that construction activity is still fairly high based upon the number of calls that I get from people about construction loans. There are a lot of calls from people just getting started, as well as from a number of seasoned “construction veterans.” In a large number of those calls, I hear some common questions. So I thought that I’d answer a few of them here.

Q: How do construction loans work?

A: In general, just like every other loan. You sign loan documents and money is funded into escrow. In the case of a construction loan, only a portion of the total loan is released. The balance is released either in preset “stages” or as workers complete portions of the project according to a budget. The former is called a “draw” system and the latter is called a “voucher” system.

Q: How are the payments calculated and who makes them?”

A: Commercial loans have the added security of an income producing property providing the funds to pay the loan payments. For residential loans, it’s the borrower’s income. When a property is being built, there is no secondary source of repayment so the burden of payment would normally fall to the borrower. But lenders didn’t want borrowers to use up all of their funds in case something went wrong with the project, so they created “interest reserves.” This is a chunk of money set aside in the loan to do nothing but make the loan payments during the construction process. The payment is based upon how much money has actually been used or “drawn” at the time the payment is due. This is not the case for private money lenders. They calculate interest on the entire amount of the loan from the initial funding date.

Q: What’s a contingency reserve?

A: This is another chunk of money set aside in the loan to protect you against cost overruns. Since it can take a year or more to complete a project, the prices used to estimate the construction budget become less accurate as time marches on. The contingency reserve is released a little bit at a time during the construction process to cover inevitable price increases.

Q: How do you calculate the maximum construction loan?

A: The maximum construction loan is based upon many factors: Property type, stabilized value at completion, total costs, and equity invested to name a few of the key concerns. For any given property type, there is usually a maximum “loan to costs” and a maximum “loan to value.” The key is this: The largest permanent loan for which the property can qualify, assuming it is built and fully occupied or valued, will limit the construction loan. This is because the construction lender wants to be paid off at the end of construction and the way to do that is with a permanent loan. This does not mean that if the permanent loan exceeds the total costs of the project that you can get 100% construction financing. Just about every lender is going to look for 10% to 20% of the total costs to be funded by equity or cash from the borrower.

I hope that these few examples clarify some of the questions that you might have concerning construction lending. I’ll cover more here in the future. If you should have a question that wasn’t covered, email me at your convenience and I’ll do my best to give you a complete answer.

By: Craig Higdon

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