Where Ya Gonna Put It?

Managing client expectations is an important, if not critical, part of the building and remodeling process. Most clients haven’t a clue about the process upon which they are embarking. Unfortunately, this clueless condition often, all too often, leads to misunderstandings that get in the middle of the client – contractor relationship. It’s the contractor’s responsibility to manage the client’s expectations, not the other way around.

One of the issues that clients don’t consider before work begins is where they will store their precious belongings during the process. Nothing is quite as frustrating as arriving on the appointed morning to begin a remodeling demo only to find the area to be demo’d full of furniture! Though the most obvious, but last place to store the pieces is in the garage. This space is going to be needed to store and assemble deliveries such as new cabinets, vanities, mirrors, and item that can’t (shouldn’t) be stored in the weather. Sometimes it can be as simple as spreading the pieces throughout the house, but sometimes that’s not an option. What to do . . .

It’s easy . . . first cover the issue early in the discussions with the client. Then suggest they rent a commercially available storage space. Commercial storage units often offer both heated and air conditioned units which are just the ticket for storing precious antiques and collectables.

It’s not an expense the client will have considered when planning their initial budget, but, if you address the issue early and well, then suggest the client allow you to put the cost of the storage unit in your estimate, that cost can be absorbed and easily financed with the materials and your labor.

Remember, managing a client’s expectations is YOUR responsibility. What other ways can a contractor better manage a client’s expectations?

Client Financing In a Tight Money Market

It matters little if we are in a “slow down” or a full-blown “recession.” As contractors there’s little we can do to remedy the housing woes brought on by the subprime market, and frankly, time moves on. That said, regardless the belt-tightening in the mortgage market, we can be a conduit to money for our best clients. By best I mean someone that has a decent credit score, a job, and the things we normally look for in a well-qualified client anyway. So . . . for these homeowners that meet the qualifications and only need a relatively small loan, $25,000 or less, there’s good news . . . very good news indeed.

Here’s the skinny . . .

There’s a HUD program called Title I Home Improvement Loans that requires no . . . let me say it again . . . no appraisal and no equity. The Title 1 home improvement loan option is a second mortgage, but can be much more effective than a traditional home equity loan or the more restrictive conventional refinance program.

Insured by FHA, the loan is designed to give homeowners from the ability to finance the rehabilitation of a property; make improvements to a property; as well as the construction of non-residential buildings on an owner-occupied parcel of land.  Under the program, the amount financed can be used for either a single or multi-family property, and can have repayment terms of up to 20 years. 

Though the interest rate is negotiated with the lender and there maybe, probably are, origination fees and points, lenders don’t fall out of their chair trying to make these loans. They, lenders, just don’t make very much return on their investment, thus there aren’t all that many lenders that make them. Though I’m sure there are more, we have discovered one bank that does make these loans, and to my best understanding they are approved to make them on a national level. That bank is Domestic Bank out of Rhode Island (800- 533-8188 x394) and the contact person is Brent Morgan.

Ok . . . you the contractor, aren’t going to make anything from the lender should your client use the Title I program, but have this tidbit of knowledge about a “no curve ball” loan may make you the most attractive hammer swinger available for a client’s project.

This is just one of many financing options available to homeowners, but it may be the best option for homeowners that qualify. Knowledge is POWER!

Extra thanks to Kyle Dube of Project Plus Builders in Princeton, MA for the lead on this post.

Be a hero! Do what you say you’re going to do and stand squarely behind your work!

The Ohio Auto Plant Conundrum

 I don’t know about you, but the political primaries have dominated much of my TV watching of late. As I watched the laid-off Ohio auto plant works moan and groan about their truly horrible situation, I was reminded of a parable sent me by a friend in the mortgage business.

A Modern Parable

A Japanese company ( Toyota ) and an American  company (Ford Motors) decided to have a canoe race on the Missouri  River.  Both teams practiced long and hard to reach their peak  performance before the race.

On the big day, the Japanese won by a mile.

The Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat.  A management team made up of senior management was formed to investigate and recommend appropriate action.

Their conclusion was the Japanese had 8 people rowing and 1 person steering, while the American team had 7 people steering and 2 people rowing.

Feeling a deeper study was in order; American management hired a consulting company and paid them a large amount of money for a second opinion.

They advised, of course, that too many people were steering the boat, while not enough people were rowing.

Not sure of how to utilize that information,  but wanting to prevent another loss to the Japanese, the rowing team’s  management structure was totally reorganized to 4 steering supervisors,  2 area steering superintendents and 1 assistant superintendent steering  manager.

They also implemented a new performance system that would give the 2 people rowing the boat greater incentive to work harder.  It was called the ‘Rowing Team Quality First Program,’ with meetings, dinners and free pens for the rowers.  There was discussion of getting new paddles, canoes and other equipment, extra vacation days for practices and bonuses.  The pension program was trimmed to “equal the competition” and some of the resultant savings were channelled into morale boosting programs and teamwork posters.

The next year the Japanese won by two miles.

Humiliated, the American management laid-off one rower, halted development of a new canoe, sold all the paddles, and cancelled all capital investments for new equipment.  The money saved was distributed to the Senior Executives as bonuses.

The next year, try as he might, the lone designated rower was unable to even finish the race (having no paddles,) so he was laid off for unacceptable performance, all canoe equipment was sold and the next year’s racing team was out-sourced to India.

Sadly . . . the End.

Now here’s something else to think about: Ford has spent the last thirty years moving all its factories out of the U.S. , claiming they can’t make money paying American  wages.

TOYOTA has spent the last thirty years building more than a dozen plants inside the U.S.  The last quarter’s results:

TOYOTA makes 4 billion in profits while Ford racked up 9 billion in losses.

Ford folks are still scratching their heads and collecting bonuses…….