Home Building Articles
Building Your Own Custom Home
February 23, 2010
If you're thinking about building your own custom home, there are some simple questions
you should ask yourself, and some answers you should get before starting.
What are the reasons I should be my on builder?
In a word---Money! In another word---Control!
Let's talk about money first. There is no better way to build equity than to be
an owner builder---but the process will take more time and attention than having
a general contractor. So, in essence, you will earn your equity.
Builders are in the custom home business to make money. Nothing wrong with that--they
work hard for their pay. And the builder has to have lots of connections and resources
to make the project come off smoothly. But let's just recognize that a builder has
got to make a profit on the project. Otherwise, why do it?
So at the very least, when you build your own home, you will save yourself the "profit"
that the builder has to plan into that job. You may also save yourself construction
management fees and other markups that are simple part of the home construction
system. If you are building a $400,000 home, at least 10% of that project is profit
or construction management fees; maybe even more.
What about materials? There are tons of raw materials, hardware, lumber, components,
and fixtures that go into a house. A little price negotiation or bargain shopping
can go a long way. If you're willing to spend just a little time shopping for closeouts,
checking out the " odds 'n ends" tables, and doing a little dickering over price,
you can save a whole lot more money, By the way, builders don't often dicker over
prices. They may not even ask the supplier what price they are getting, especially
if they have used the supplier many times. Who do you suppose pays for that?
So let's say that you spend the next nine months planning, calling, getting bids,
coordinating, checking, shopping, negotiating, etc, until your home is built. Lets
also assume you are able to do this while still doing you full time job, which by
the way is very realistic. That 10% mentioned earlier amount to $40,000 and that
does not count the money you might save negotiating and shopping. So, that's at
least $32,000 that you've paid yourself, maybe a lot more, for a part time job for
nine months!!! Check the want ads. See if you can find a deal like that anywhere
else.
Bottom line---if you are willing to put in a little effort, the opportunity for
savings is huge. Be your own builder and save thousands!
Now let's talk control. When you are the owner builder, you take control of many
things that were previously out of you hands.
You have the ability to make subtle changes and improvements to your home, while
the project is going on, without paying significant change-order fees. You are also
in charge of who is on the job. You select sub-contractors who meet your criteria.
And, you select your material and suppliers.
Finally, you have the option of doing some of the work yourself, without asking
permission from a builder. It sounds funny, but if you work with a custom builder,
and you want to do some of the work yourself, you have to work that out early on,
and be pretty specific about it. And the money you save by doing it is an "allowance"
against the final cost. When you are the owner builder, you don't have to ask permission.
Of course, your work still has to meet code and covenant requirements; so don't
bite off more than you can chew.
What to do with the savings
Of course that's entirely up to you. Buts lets consider again the $400,000 house.
If you don't have to pay builder profit, construction management fees, markup, etc.,
that's at least $ 40,000 that could go into your pocket, or more realistically,
that's $ 40,000 that just won't be on your 30-year mortgage at 7% interest. Now
it really gets interesting doesn't it?
Of course, the same reasoning applies to all those other savings!
On the other hand, what if you really, really, really want to spend that $400,000.
In that case, just imagine what $40,000 worth of upgrades would do to your home.
How much work?
Sweat equity is a term that many people are familiar with. It means exactly what
it says. You sweat, and you gain equity. When you are the owner builder you have
the option to put as much sweat into your home as you want.
Land clearing is a simple starting point. Let's say you have to clear your lot,
take out trees or stumps, dig up rocks or old foundations, tear out old fences,
or just haul off that old car. Right off the bat, if you are willing to do it yourself,
you may save a couple thousand dollars.
If you know about any of the construction trades, you may be able to do some of
that work, depending on local codes and covenants ( be sure to check with your local
building department or with you neighborhood association if there is one.) A good
rule of thumb is to leave the skilled trades to skilled subs.
Painting is one area where just about anyone can apply his or her handiwork. Rollers
and paint-brushes are universal fit. They will work in anyone's hands.
Final clean up, or even clean up during the construction project, can amount to
a significant chuck of change. A construction site generates lots of junk and debris.
Just coordinating and planning the job---simple construction management---is part
of the sweat equity for the owner builder. The amount of "sweat" is inversely proportionate
to the amount of preparation, and to the system you develop for yourself. The construction
process may seem like a complex maze, but you can, with a little help and some advance
planning, draw yourself a map through that maze, and negotiate it with no problems
at all. Keep it simple, but plan it thoroughly.
What about my skill level or construction knowledge?
Times have changed. Years ago when you hired a homebuilder, he or she was a master
of many trades. In other words, there was a good chance he or she actually got involved
in building the home. Nowadays, most builders are serious business people, who simply
manage several home-building projects. Some may not even visit the building site
more than once or twice a week, because they have several homes going up.
If you can get out of bed on time and dress for work, you probably have the skills
it takes. You probably use most of the skills you will need on your regular job.
You may manage other people on the job. That's the same thing as managing sub-contractors.
You may manage complex projects from start to end, the same thing as managing a
home construction project, getting sub contractor bids and keeping records. You
may manage large amounts of money or pay bills, the same thing as managing your
construction account.
Everything you need to know about building your home, you can learn from a few well-places
resources or by doing a little reading. Plus, there are services out there that
want to help you succeed. There are companies who will, for a fee, draw you a map
through the maze of the construction process. And you will still save lots of money
and build lots of equity.
A little construction knowledge will be helpful, but it is not an essential part
of the puzzle, Remember – as an owner builder, you are simply managing the project,
not pounding your won nails, sawing boards, or digging ditches.
The "get along" factor?
Some people are worried about being able to get results from sub-contractors, or
straight answer from city building inspectors. It is very helpful to realize that
most of there folds really do want to do a good job, get along with the owner, and
compete a good project.
Again, the more planning and preparation that goes into the project up front, the
better the results will be, and the more you will avoid hassles with subs and inspectors.
Spell it out, speak your mind, get it on paper, make sure there is a clear understanding----up
front.
As the owner builder, you choose your sub-contractors, so choose the ones you seem
to get along with, even though their bid may not be the lowest. Also, remember,
if you tell them you want to award them the job, but they are just a few thousand
high, they may adjust their bid, especially if they want to get along with you.
Inspectors want you to succeed too. So listen to them. Try to build alliances. Let
them know that you are doing this for the first time. They will respect your honesty,
and they might try to offer some advice to eliminate the possible bumps in the road.
Most of all remember this—these folks are just like you. They have jobs, moms and
dads, kids and spouses, and they are trying to make a living. Treat them the way
you want to be treated, and you will make sure and steady progress on your home.
Custom home means custom home
One last thing to consider. Custom means C-U-S-T-O-M. Custom means never, never,
never, before has your exact home been built. That means some of the design is actually
done on the job. Some of the problems are figured out right on the spot, by the
framer, electrician, plumber, drywall guy, roofer, brick layer or stone mason, etc.
Recognize this simple fact, and flow with the problems and possible delays this
might mean. Don't be surprised when some problem pops up. And understand that it
will be resolved by the pros you have fired within a few hours or days. Be willing
to discuss options and solutions. Don't panic!
You can be an owner builder
Each year, thousands of people choose to be their own builder. They choose the freedom,
independence, creativity, and savings that go with managing their own home building
project. With patience, planning, and maybe a little help, they get the job done,
and they love the results. You can do it too.