What Is an Owner-Builder? What Is an Owner-Builder?

If you have ever thought of building a home, you have probably been confronted with outrageous labor costs. General contractors typically charge 20% of the total project cost as a fee. This fee cuts into the potential equity of the owner. It is not uncommon for people who build new homes to have little to no equity in the project. High general contractor fees take away from what the owner can afford. Why build a house when you cannot afford the flooring, cabinets, and siding you want? Many people have become owner-builders to take control of the project, earn more equity, and build the house the way they see fit.

What Is an Owner-Builder?

An owner-builder is a person who acts as the general contractor on their own project. Believe it or not, you have a legal right to build your own home. Many people believe you have to hire a general contractor for new construction projects, which is a misconception. As the general contractor, you hire the subcontractors, pay the bills, and get materials to the job site. You are responsible for securing all necessary permits, financing, and ultimately, making the project a success.

An owner-builder assumes full risk of the project, ut they also reap all the rewards. Most people have done projects around the house, but never built a home. It can be an intimidating and downright scary thought. Many owner-builders wonder, "I have never built a home before, so how can I be successful?" The truth is, many general contractors do not actually build the home either. Instead, they manage a group of subcontractors who do the actual work. They pay the bills and order the materials from the lumberyard. They also charge a hefty fee for these services. An owner-builder does the same thing. The most successful owner-builders have certain common qualities:

  • Organizational skills
  • Attention to detail
  • Persistence
  • A strong work ethic

Notice how none of these skills involve picking up a hammer. If you can organize people, pay attention to invoices, persistently follow-up on unfinished items, and stay focused on the task at hand, you can build your own home.

The first benefit to building your own home is equity. Because you are removing the general contractor from the equation, you turn their fee into equity. The result is that when your home is finished, you will have turned a 20% fee into 20% more equity.

The second benefit is that you have control over the project. You hire the subcontractors, which allows you to control the labor costs. If you think a bid is too high, you can search for another contractor. The money you save on labor can then be spent on better building materials. If you think stainless steel appliances and Australian Cypress hardwood floors are unattainable, an owner-builder program can allow you to get them.

Does Being an Owner-Builder Mean You Have to Go It Alone?

The answer is no! If you search "owner-builder" on the Internet you will retrieve a list of owner-builder companies. These companies specialize in financing and construction management. Not all owner-builder companies are created equal. They all charge a fee for their services and these fees can vary greatly. Contact these companies and ask them how they can help you.

Some offer great financing programs with construction support you can really use like takeoff services, vendor programs, and material purchasing options. Other companies offer little to no service, so it is important to investigate them before signing on the dotted line. An owner-builder company can assist you with many aspects of the project. In some instances, banks will require you have a third party work on the project as a condition of the loan. Construction management companies can help you achieve this goal.

Being an owner-builder allows you to get more for your money. You will control the labor and materials costs, and the headaches. The result is instant equity in your home, control over the project, and the pride of knowing you built your own home. You owe it to yourself and your family to investigate the benefits of being an owner-builder.

Got a New Project You're Proud of?

Post it on Your Projects!