Percentage saved by being own contractor


Old 01-23-09, 11:55 AM
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Percentage saved by being own contractor

I am at that crossroads in my life where I want my own home. I am weighing the options of: buying an existing home and renovating it; buying a new turn-key package; or building a new home with myself as the general contractor and carpenter. How much would be saved, if I chose to build myself? Would it be worth all the time, effort and headaches involved? Thanks.
Old 01-23-09, 12:30 PM
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If you are savvy about home construction and are highly organized and detailed oriented, you can be your own contractor. You can, however, run into trouble finding financing, because lenders want to know that a qualified person is overseeing and doing the work.

There is no real documentation of the amount of savings in the long-run. Most DIY contractors tend to report 10-20%. If you are not a licensed contractor, you will likely not get the discount on building supplies. Often, subcontractors mark up cost of supplies when quoting their bids.

Depending on where you live, finding subcontractors to hire and scheduling them can be a nightmare. And, if you are not in the building or a related business, knowing who is good and who is not can also be a nightmare. Getting multiple quotes is recommended, but many make the mistake of going with the lowest bidder. That can end up being a nightmare.

Then, there are the issues of getting the proper permits and scheduling the inspections. And, if you are not familiar with the local building codes, that can be a nightmare.

Hiring a construction general contractor to oversee you and the building process can be a life saver. He helps with permits, hiring subcontractors, scheduling, etc.

You need to learn about financing. There are construction loans and then there are mortgage loans. And, most tend to estimate too low for building costs and end up paying more in the end. Most figure 10-20% over, but cost of building materials can go up overnight and one never knows what can go wrong on a construction site.

A savvy lender can help get you approved for both construction and mortgage loans so that the construction loan rolls over into the mortgage loan when construction is complete.

Right now may be a good time to buy an existing home. The real estate market is down. Properties have been sitting for months and years on the market. Prices have been slashed and often still remain negotiable. Take a look around in your area to look for a property within your price range.

Getting approved for a mortgage before entering the real estate market is very helpful. Realtors and sellers will feel more assured that you are a serious potential buyer because you have already been approved.

Locating an existing property at a good price in an area that you like can save you money and headaches in the long run. An existing property that needs a little updating and personalizing can satisfy your itch to do some DIY projects and feel a great sense of accomplishment.
Old 01-23-09, 01:18 PM
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Hi gigilonius,

Some notes:
- The type, style and size of the house are very important. Be realistic regarding your knowledge and your budget to accomplish the whole project
- Plan ALL--> Buy a plan or make a project, but estimate all the costs. Some Home Design programs allow you to develop a project and calculate the costs
- In the current market situation, get a good deal on a a house and remodell it is perhaps is a good idea --> you can develop the constructions in stages, according with your money availability--> in this way, you can avoid a large mortgage
Old 01-23-09, 03:19 PM
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hey gigilonius,
being your own subcontractor is something that can also be done in conjunction with companies that assist you in the building process and give you as much or as little help as you want. One company that does this is called, that is their website and they have offices all over the U.S. Go check it out and see if they have an office near you or check the web for other types of build assist companies. The caveat here is that you need to be prepared to do A LOT of work. My brother went this route several years ago and he saved around 40,000.00 on his house. The main issue is that he worked his rear off!! He never went home after work, he just went right to the house and started working. He usually did not make it home until after midnight so it was like he had two full time jobs. So be prepared and research thoroughly because a person can easily become overwhelmed with what needs to be done. You can go at your own pace but that can easily drag out a project for more than a year. Good luck with whatever you decide to do.
Old 01-24-09, 04:39 AM
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Back in the late 70's when I was young, I designed and built my own house. And by "built" I mean I swung the hammer myself. The only things I subbed out was the earthwork, footing and foundation, taping and sanding sheetrock, heating, and electrical. By "swinging the hammer" myself in this specific case, I estimated that I saved 35% to 40%. Fortunately it was a small house, because that was every single night til dark, every weekend dawn to dusk, and all my vacation for almost 1-1/2 years. When I moved in at about 1 year, I had a ladder from the main to upper lever and a table saw and all my tools in the living room. Basically, I had no life. Was it worth it? At that point in my life, darn right it was!!

The architectural firm I worked for in the late 80's tried doing construction management on 3 models for a planned townhouse development. Of course they had to pay my salary to be the CM, but when it was all said and done, we were not sure how much we saved. As an "unknown" contractor, we didn't get a lot of the price breaks or best prices from subs like we thought we would. And coordination of subs can be a real challenge; those general contractors who do a good job of managing a project earn every penny they make!! We used a general contractor for the rest of the project.

I know this sounds pretty negative, but I would hate to see you jump into this and find out you've bitten off more than you can chew, whether it's new construction or remodeling. If you have a fair amount of experience in construction, it's definately doable. Just be very careful to do accurate estimates, and add a LOT of money for the unforseens, the forgottens, the "it's only $100 for this upgrade"'s, etc. If you have done a lot of construction or sub scheduling, you know what I'm talking about. In any case, good luck with whatever you decide to do.
Old 01-24-09, 04:59 PM
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Six year ago when I built my home the bank said the shell had to be done by a framing contractor or they would not approve my construction loan. They wanted the home "in the dry" and lockable within 1 month. This means all framing done and sheathing on all exterior walls with locking doors installed. Windows could be in or sheathed over. They wanted to be sure they had something to sell if I did not finish the home and default on the loan. Also they had to do their own inspections after each phase. Money for the next phase was put into the account after the inspections. Each phase had to be estimated at the beginning and a final amount arrived at for the total cost of the home.
I live in the "country" where there are no "codes" to apply except for the county health board for water and sewer. They had to be inspected and approved by the county during install. Then they signed papers and filed them and gave me copies to prove the work was done correctly.
I went to a local lumber yard (several really) and got bids from them for all the materials. Told them the best bid got the entire order. I got 30 percent discount on my materials plus free delivery on my schedule. When I called and ordered they delivered that day or next. Of course the windows were ordered ahead of time and they stored them until I called for them. Surprising what the local guys will do to get your business. They even gave me the manager's home number and he said he would get and deliver anything I needed after hours or holidays. I only took advantage of that one time and he had it to me within an hour.
I do not know if any of this will apply to you but thought I would tell you my experiences.

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