I was speaking with a new borrower today, and he asked me what he might have overlooked when calculating his carry costs and borrowing hard money. Here are a few things to consider, especially in the winter:

  • Your contractor won’t care if the windows and doors are open in the winter, he is going in and out 20 times per hour anyway and wearing a jacket.  You will care when you get the heating bill.
  • If it snows, you’ll need to keep your job site cleared of snow for several reasons and most plow guys don’t work for free:
    • deliveries
    • liability from falls
    • inspector access
    • contractor vehicles
    • lender access
    • etc
  • If you are replacing a roof in the winter and you get 2 feet of snow, you’ll need to clear that snow too.  And then pay attention to where the piles of snow end up in front of the doorways after the roof is cleared.
  • Utilities: you’ll need electricity and water to the property as well to run power tools, contractor heaters, and for the plumber and HVAC guy to test the system.  Water and electricity are free to the same degree as the heat is that we discussed in the first bullet point.
  • If you are buying a winterized property, have the pipes tested before you turn the water on.  It’s not unheard of for a contractor to make a mistake when they winterize, so you may have cracked pipes and not know it, if it’s been cold and the house is frozen solid.
  • None of these are different if you are funding with hard money, conventional funding, or cash but are worth remembering when you run your numbers.