Do it yourself home building and owner builders
Today thousands of new home owners are bypassing traditional general contractor agreements and choosing to be owner builders. With the advent of new building technologies and the acceptance of owner builder loans by lending institutions, owner builder projects are sprouting up all over the United States. But what’s the difference between an owner builder project versus a traditional general contractor project?
Let’s first talk about general contractors
Under the traditional general contractor relationship, the general contractor is responsible for everything required to build a house to the specifications outlined in a contract. This includes obtaining permits, managing all phases of construction, paying subcontractors, purchasing appropriate insurances and lets not forget working in change orders. For this the home buyer agrees to give him/her a sum of money. Once completed the general contractor hands the keys to the new homeowner. They didn’t get their hands dirty and hopefully everything went off without a hitch, everyone walks away happy.
What did they exchange for not getting their hands dirty in this traditional relationship? Equity in their new home. It’s common knowledge that general contractors typically make 15% to 20% profit on projects. While this sounds expensive general contractors are worth every penny for those not up to the challenge of being an owner builder. One thing is for certain, not everyone is cut out to be an owner builder, even people who are experienced in the building trades.
Cue the owner builder
In essence the owner builder is really a general contractor. They are responsible for everything the general contractor is traditionally responsible for; permits, planning, accepting bids, scheduling, managing subcontractors, paying vendors and labor…. you get the picture, everything. The success of the project rest squarely on their shoulders. Successful owner builders are first and foremost good managers and know how to offset these responsibilities to the appropriate team members.
Owner builders must determine their role early in the planning process as to where they are going to contribute to the project. They must be realistic about their abilities and with their available time. Some owner builders find out the hard way that they should have hired a general contractor to build their home. Lack of time, organization, planning, experience in managing people and money can send an owner builder project down the tubes fast. It’s important to understand that just because someone chooses to be owner builder doesn’t mean general contactors are out of the picture, instead they can be utilized as invaluable team members.
How much involvement?
Owner builder projects can be as organic as complete ground up construction with no outside help, hybrid owner builder / general contractor relationships, or complete subcontracting of the project with the home owner being the main overseer. In the end, the more involved the owner builder is the more money they will save, typically. Remember poor workmanship and planning can be costly. Site supervisors can help.
Most banks will require a Site Supervisor, and with good reason. Banks want to know the owner builder has someone available to help in the planning and organization of the project. They also want to make sure the owner builder has someone to pull them out of a jam when the going gets tough. Having an experienced general contractor as your Site Supervisor be your best asset.
Know the rules..
The tasks of an owner builder are not to be taken lightly. By signing a building permit application an owner builder assumes full responsibility for all phases of the project and its integrity. Before beginning the journey of becoming an owner builder check local and state regulations. Special restrictions may apply to owner builders. Follow this link to find out more about your state’s requirments Contractor’s License Reference Site.
Ready to get started?
Click the next button and complete a simple questionaire.
