There are many ways to save money on materials without sacrificing quality. If you are following my 6x = $1.5 Million plan and are going to build a home every five years you can begin looking for 'deals' a few months before you put your current house on the market. You wouldn't want to buy something at 10% off and then have to wait several years to use it. The money would have done better drawing interest. 

Lumber Yards & Major Supply Outlets 

Most lumber yards will take your plan and run a free estimate on the total project. You can probably get a further discount if you tell them you are building for an investment and plan to repeat the process. Make sure to ask if this price is good even though you may only buy part of the items on the list. Find out how long they guaruntee the prices. You might have windows and doors picked out somewhere else, or you could have some materialsl stored that you want to use up. This will allow you to get the best prices from your main supplier and yet still look for sales and better deals elsewhere. Make sure they don't charge for delivery. I have found that most lumber yards can't compete with places like Lowe's and Home Depot on certain items because those retailers buy some things in huge quantities. They often discount products every so often just to get people into the store. 1/2 inch or 7/16 inch 4x8 sheet of OSB that are used to wrap the house are usually a few dollars cheaper, sometimes more. If you have a trailor you can save about $600 per house on OSB, Advantech Flooring and Studs by buying this way. Also they always offer 10% off your purchase up to a certain amount (usually $2500 or so) for opening a new charge account. That's another $250 savings. These accounts periodically offer no interest deals for lyr on purchases of $300 or more on flooring, lighting, fixtures and major appliances. These are good deals because their prices are competitive & you save on interest. Most carpet retailers have similar plans as long as your credit is good. I've found that I can buy carpet and cabinets at retailers that specialize in those products cheaper than the big home improvement outlets. The same is true for most dimension lumber with the exception of the items mentioned earlier (rafters, floor joists, 2x4 platte etc.. on those its best to stick with the lumber yards. 

Location has a lot to do with where you shop if you have to make many trips. Pick-up trucks don't get great mileage so if you have to drive 30 miles round-trip to save $6 on a $20 hammer, then you only broke even on the deal, not to mention wasting an hour of your time in traffic. Don't be one of those people who cost themselves a dollar trying to save a dime.

Pay Attention to your invioces

You must pay attention to your invoices. I am frequently surprised by the number of mistakes I've found on my invoices from suppliers. I've been charged for other people's supplies, double charged on certain items, credits and returns have failed to show up on the next bill. These things are all relatively easy to correct but if you don't notice them then you could lose out on several hundred - if not thousands - of dollars. 

My cellphone is probably my most efficient tool when it comes to cutting costs. The savings that can be realized by making a few extra calls when shopping for supplies can really add up. I needed two 40x60 1/4" mirrors with polished edges. Having looked in the yellow pages under - glass: I found 3 suppliers conveniently located. The first bid turned out to be the highest: $264 each, the lowest: $226 which is close to a 15% savings. I needed a 7 x 18 foot steel backed insulated garage door with opener & key pad recently. Again I obtained 3 quotes. The highest being $918 and the lowest being $836. That's $82 or 9%. I took my floor plan with my finished framing dimensions clearly marked into one of the major home building supply retailers to obtain a quote on cabinets. The price came to $5,300. I collected brochures on those particular cabinets and went to two smaller production cabinet co.s and compared prices for similar quality cabinets (one local and one in a city 150 miles away). The one farthest away was by far the better deal. Since neither price included installation which I do myself, the distance was not a problem. I purchase virtually the same cabinet for $3800. This included $150 worth of knobs and pulls not included in the other bid of $5300. The trip there and back required $60 in gas, making use of my trailer once more. Total the savings equaled $1600 or 30%. 

Take drywall for instance. Here I find better prices in companies that specialize in drywall - not big chain outlets. I contact the company and they assign a sales rep. from my area to assist me. I ask him to come out to the job to measure so I will know what I need. Lets assume it comes to 8,000 sq. ft. Once I get his best price, I call a couple of other places. Negotiating, I can normally save around $160 this way (2 cents / ft). This is a very straight-forward process any time you are comparing bids on products that are simalar wherever you buy them and of equal quality. You can see from these examples, along with those I mentioned earlier concerning lumber products, that without too much effort, you could save as much as $5,000 on a $100,000 home. If you were hiring someone to build for you, those savings might not be passed along to you. One more tip is to plan ahead by anticipating a few weeks in advance which products and supplies you'll be needing. You would then start calling the suppliers and asking if they are running any sales on those items and if not, will they be any time in the near future. Lowe's, Home Depot and many other suppliers often run sales that last over a holiday weekend or for longer time frames (sometimes for weeks) on paint, flooring, lighting, appliances, tools, and practically anything you can think of that you might need while building a house. These sales always save at least 10% often twice that. 

"Beating the Bushes can pay off big!" 

Sometimes, you can litererally "hit the jackpot"!When I built my last personal residence I needed about 1200 sq ft of hard wood flooring and I knew this was going to be a major expense. So, I was out scouting & stopped at a local supplier to look around. I saw several products I liked but was really taken back by the price of $4/ ft. for what I really wanted. I told the salesman I could not see any way I could pay that price which prompted him to ask me a few questions. I was looking for something that had a distressed look - something that would look old & preferrably & wouldn't need to be sanded. It turns out he had the perfect product... Another builder had been buying most of what he had, but he did have enough to fill my order. The product was 8" wide by 3/4" toungue and groave red oak that were leftovers from the milling - mostly short pieces 18" long up to 60" long. The ends weren't square requiring a chop saw and there would be a 20% waste.  However, the salesman sold me 1200 ft at 50 cents/ft. & threw in another 300 ft to make up for the waste. I installed the flooring myself & all I needed to do was stain & put 3 coats of polyurithane on. I saved over $4,000 on materials alone + another $2,000 on labor by installing myself! 

How to Reduce Labor Cost

Other than doing it yourself, which is an obvious way to cut labor expenses, there are several techniques available to reduce costs. Getting competitive bids from subcontractors is essential. This is an area where my experience & background can save you money. During my years as a framing subcontractor, I always worked right along side my employees & was the "lead" carpenter. I soon discovered how appropriate the term "lead" really was. My employees always worked at the same pace I set. When I worked hard - they did too, when I was slow - they were slow too. Whenever I left the job for a time, production always fell lower than normal. This knowledge later proved valuable in evaluating my subcontractors.

In the early days of my contracting business, I compared several bids to choose my electrical subcontractor and my plumber as well. They were as competitive as any other company I had called & it seemed we got along well so I sort of settled in with them. Since I was always around my job sites working I began to get to know the various employees working for these subbers and I started observing their performance and productivity. I noticed that no one ever seemed to be in charge, they all appeared to be on equal footing. Rather than having someone motivated to set a good pace, they were more likely to slack off a little, not wanting to show each other up. It made me wonder how their employers made any money. It then hit me that maybe that was why the price was higher than it should be. I remembered my lesson from my framing crew days & decided to begin searching for subcontractors with similar attributes. I wanted to find the smaller companies, preferrably ones where the owner was another person like me who stayed on the job with his crew & worked right along side them. I managed to drop my plumbing estimate from $5,200 to $4,000 on the very first house. I had similar results with electricians and HVAC contractors. These individuals actually made fewer mistakes & performed more quality work, probably because the boss was always around to supervise. I had been paying a pretty stiff penalty for the inefficiencies of my subcontractor's business practices.

Tools

Is it necessary to rent or own?

We all know guys who are like kids in a candy store when it comes to buying tools! The slightest justification is all they need to take the plunge. Sometimes, even that isn't necessary, they just buy on impulse. You should always ask yourself: Am I buying this tool to make me money or to play with for fun? I know a builder who is very skilled in all aspects of the construction trade. He hires as few subcontractors as possible & performs most of the labor himself. This guy has every tool you can imagine. I'm sure many of the tools proved their worth over time. It all depends on how much a tool costs vs. how long it will take to pay for itself. If you can't determine how much a tool is worth, that might be an indication not to buy it. I will never frame a house again without a framing gun because I know how much that gun is worth to me. If you don't know how much a framing gun is worth to you than you probably don't know a whole lot about framing either. It wouldn't be wise to attempt to learn as you go and try to frame your own house while working another full-time job!

Another friend of mine who owns a lumber yard nearby decided to build his own home. A good move I thought since he could get most of his materials at cost. However, he became so focused on cutting cost that he tried to do way too much himself. After working 50 hr weeks for 2 1/2 years he finally moved in. It was a good sized house but he could have simply played the role of contractor and built the thing in 9 months or less. How much does it cost you per month to live where you're living now? Let's use $700/month as an example. If you attempt to do too much with a limited amount of available time, you may end up working for less than nothing. In the case of my friend we'll take 30 months (the time it took to build his house) - 9 (the time it could have taken) = 21.  21 x $700 = $14,700. If he spent 10 hrs/wk average for 2 1/2 years that totals 1300 hours.  Lets say he's skilled enough to earn $20/hr (unlikely) that comes to $26,000 - 14,700 = $11,300. Still worth it? & just wait, there's more! How much interest are you paying per month on your construction loan. On a construction loan you only pay interest on the money as you use it. By this I estimate my friend was paying an average of $450/month. 21X$450 = $9,450. Therefore $11,300 - $9,450 = $1,850 in actual savings or $1.42 an hour.

Lets go back to the builder I mentioned who had every tool ever made. Even a builder who builds for a living can have too many tools. This guy purchased a bobcat for yard work - spreading gravel, dirt etc. Trust me, they do come in handy and there's been many times when I could have used one of my own. However like me, this builder built less than 4 homes / year. I determined that I could hire someone to do all the work I need done on each house in 24 hours time. They charge $55/hr here which totals $1320 per house. Keep in mind that if I own the bobcat I also have to operate it. What is your time worth (A very essential question in this program)? Using $20/hr (which means the bobcat is paying you $35/hr) 35 X 24 = 840. $840 x 3 (houses/yr) = $2520. This builder also happened to be a good mechanic so he bought a used bobcat. Are you a good mechanic? He was also very proficient in the operation of a bobcat. Have you ever run one? A good operator can easily get twice the work done as a novice. This was a marginal investment at best, even for this full-time builder.

Another thing about tools is deciding whether to rent or buy. Occassionally, especially on bigger houses - a set of scaffolding might be needed. Scaffolding is expensive to buy, but cheap to rent especially by the week. Buying tools such as scaffolding will only pay off for people who are using them on a regular basis.

I purchased 500 sq ft of slate I found on sale that was perfect for an area in a home I was building for myself. I could have hired someone to lay it for $1,000. I decided to do it myself so I rented a wet saw from a local rental agency on Friday & returned it late Monday. The fee was $35/day but they didn't charge for the weekend so I paid $70 total. I saved $930 & the job took me less than 20 hrs. That's close to $50/hr. A good decision.

Its very important to keep your eyes open. You may have more resources at your disposal than you think. I was dreading the fact that I needed about 40 hrs of excavating done on a wooded, sloping 5 acre lot. The ice storm of the century that hit our area in February of '07 had caused serious damage to the trees. At $120/hr I knew this expense would be hard to recoup. Then I ran into a guy that used to operate a dozer but had since retired. We were discussing my situation & he suggested that since I needed a weeks worth of work done I should rent a dozer & he would run it for payment of $20/hr. I had already checked on a daily rental price prior and they were $700/day. He advised me that the weekly rate was only twice that amount. So I rented one for $1600 including delivery, added $200 for fuel & paid the operator $800. Total cost being $2600. Had I hired my excavator the cost would have been $4800!!!