Homeowners can charge some remodeling costs to credit cards
By any measure, Paul and Ruthann Atchley's house in Lawrence, Kan., is unusual.
Three-quarters of the 2,600-square-foot, one-story house, which the Atchleys designed, is buried under six feet of Kansas prairie. The exterior and interior load-bearing walls are concrete, arranged to support 13 domed bays, each one rising to 13 feet. Between the insulative value of the thick earthen blanket and the passive solar benefits of a long, exposed concrete wall facing south, the Atchleys can heat the entire house with a small wood stove and sail through the hot and humid Kansas summers without air conditioning.
The aesthetics are also an unusual mix. The all-white interior -- with its massive concrete walls, shallow domed ceilings, spare but brightly colored furnishings and rooms that are bathed in natural light -- is more typical of a Greek island getaway, while the industrial-looking, corrugated aluminum sheeting that covers the exposed exterior wall is more often found on houses in California and Western Europe.
But the detail that will capture the attention of every visitor to the Atchleys' Web site is the brief entry under the Ecuador tab, describing their vacation: "Use a credit card with miles to build a house, get two tickets to South America for free. Priceless."
How was this possible?
The Atchleys acted as their own contractor, purchased all the building materials themselves, and they secured a construction loan from a small local bank that was willing to disburse construction funds when presented with a credit card receipt as proof of payment.
This unusual arrangement presented two major challenges, Paul Atchley said. First, he had to stay within his $20,000 credit limit each month, which was hard to do during certain phases of the job. Second, he had to coordinate purchases with his credit card's billing cycle so that he could get the bank's check in time to pay the entire bill each month and claim the reward points that they would use for their South American trip.
In all, Paul Atchley purchased about $100,000 worth of construction materials with his credit card, or about half the total. For the biggest and most complex part of the job -- constructing the concrete walls and dome -- he engaged a Minnesota firm that specializes in this type of project. They assembled a team of tradespeople, suppliers and equipment to do the work and, at their request, were paid directly by the bank.
Can homeowners with conventional projects who hire a home builder or a remodeler to oversee the work pay for it in a fashion similar to the Atchleys?
In interviews with custom home builders and remodelers in the District area, the answer for a new house was a flat-out no because this would add more complications to an already complicated process. For a remodeling project, however, the answer was a qualified yes. The remodelers were amenable to homeowners purchasing some items with a credit card to get the reward points if the items were things that would be installed near the end of the job and wouldn't slow down the rest of the work. This list could include cabinetry, appliances, flooring and light fixtures.
Steve Perlik of SEI Design/Build in Vienna, who has been a remodeler in the Washington area for more than 25 years, said, "In this market, people want to stretch their dollars wherever they can. On certain items, such as cabinets and appliances, some of our clients buy on their credit card to get miles, but for some things, like framing lumber, it's not practical, and it would complicate our job if the materials are not there on time."
A typical high-end kitchen remodel in the Washington area currently costs between $50,000 and $100,000, Perlik said. Of this total, his clients could expect to buy about "$15,000 to $30,000 worth of stuff" with a credit card from an approved supplier that has a proven track record from working with SEI on previous jobs.
Another advantage of paying suppliers directly with a credit card is that the homeowners also avoid paying the remodeler's markup. In the current economy, clients who purchase cabinets themselves not only save the markup, they also save on the purchase because suppliers have lowered their prices, Perlik said.
The policy of letting clients purchase things is not without risk to the remodeler, however. Perlik said that if one of his crew dropped a cabinet and broke it, he would have to pay for the replacement. With a markup, he would have some cushion to cover that possibility.
Guy Semmes of Hopkins & Porter in Potomac, who has been building and remodeling houses in the District area for more than 30 years, said that another problem with clients purchasing things is that they can order the wrong item, which becomes a headache for everyone. The job can drag out for an extra month or two and the homeowner has to pay for the replacement. Semmes said that his firm is fine with clients buying some things when the remodeling job is small, extremely straightforward and practically foolproof -- say a kitchen "face-lift" in which the locations and sizes of the cabinets and appliances will remain the same. But even in this case there can be problems, Semmes said. For example, the homeowners could get a great price on the cabinets, but they could arrive long before they are needed, and there could be no place to put them.
Allan Waschak of Allan Homes in Columbia, who has been building houses for 31 years and remodeling them for 12, said that he is comfortable with his remodeling clients purchasing some items with their credit cards to accrue reward points. He found that it helps them to feel more involved in the process and more relaxed about having their house torn apart. To make it easier, he creates a Web site for each client with selections for cabinets, countertops, appliances, light fixtures, plumbing fixtures and flooring with links to Lowe's and Home Depot. The allowance prices listed are the actual costs; he does not add markups. If the homeowners want to go farther afield and select something more upscale, Waschak said that he's happy to accommodate them.