Use pre-treated wood for birdhouses hung outside. This will help the wood stand up to weathering without rotting.
Use the drill to drill a hole at least 3 inches wide in one of the 5-by-8-inch sheets of lumber. As you begin, drill a small hole with a 1/8-inch drill bit and gradually widen the hole with wider bits. This will be the entry point for birds, or the decorative hole if birds won't access it.
Place the face of the sheet with the hole against the edge of one of the 5-inch by 8-inch lumber sheets. Ensure that the 8-inch edges are flush.
Attach the edges with 3-inch nails. Hammer in one nail every 2 inches along the 8-inch edge.
Align the 8-inch edge of the front panel of the birdhouse, the panel with the hole, with an 8-inch edge on one of the two remaining 5-inch by 8-inch sheets. Attach the two pieces with 3-inch nails. Hammer in one nail every 2 inches.
Place the frame so that the front panel is face down. Put the remaining 5-by-8-inch sheet on top so that it forms a closed square. Ensure that the edges are flush, and attach the sheet with 3-inch nails on both sides. Hammer in one nail every 2 inches.
Turn the birdhouse so that it stands upright. Place one of the 5-inch squares on top of the birdhouse and attach it to the edges. Ensure the edges are flush. Use 3-inch nails to attach the sheet, and hammer in one nail every inch along all four sides.
Repeat step 7 with the remaining 5-inch sheet on the bottom portion of the birdhouse to complete it.
Paint or stain the birdhouse with bright colors. Use environmentally friendly stain to help protect the wood without harming the birds to create a functional birdhouse.
Allow the birdhouse to dry for 24 to 48 hours before displaying it or placing it outside.