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How To Save Thousands By Becoming An Owner Builder

December 7, 2008
If youve decided to trade in your rental fees for a mortgage payment, good for you! The investment in a home of your very own can be one of the soundest over the long haul that you can possibly make. Not only will you have a place to hang your hat, but the land and building can, and generally will, gain in value over time.

The problem you now face is going from that decision point to actually finding the home of your dreams. If you happen to own your own land, or you plan on buying some, you will be in the drivers seat for enjoying some serious cost savings if you decide to build from the ground up.

There are some major advantages that go along with from-scratch construction. First off, you get to select your property. Secondly, you wont be restricted in designs by the homes offered in a cookie-cutter subdivision. The third advantage and its a big one lies in the potential bottom line savings you can enjoy if you decide to become an owner builder.

What Is An Owner Builder?

Glad you asked! An owner builder is simply a property owner who chooses to oversee the construction of a personal home. As a landowner (or soon-to-be-landowner), you have the legal right to assume the role that is traditionally reserved for a general contractor. You can also, of course, choose to work with a general contractor, but the real money savings come in if you take the lead.

Saving Money By Forgoing A General Contractor

When you cut a general contractor out of the picture, you will find the potential for saving money on residential construction is quite tremendous. Right off the top, youll be able to subtract the fees a general contractor would be likely to charge for overseeing a building project from beginning to end.

The potential cost savings are found in such fees as:

Total project management When you act as the owner builder, you wont have to pay anyone for overseeing the work. Youll take on this role yourself. This can add up to thousands of dollars in savings coming right out of the gate.

Hiring subcontractors General contractors sometimes build in fees for subcontractor work. This means you pay the general contractor X amount for electrical, for example, and he hires and pays the sub. Any money left over (and there likely will be) goes to the general contractor.

Overseeing and scheduling inspections Dealing with county or city inspectors can generate extra charges from general contractors. When you act as the owner builder, youll take these fees out of your equation.

Acting as your own general contractor can save you some serious cash. Do be prepared, however, it will call for some major work on your part.

What Youll Have To Do

As an owner builder, you will find yourself charged with filling a number of roles. When the general contractor is cut out of the picture entirely, youll have to:

Get your own building plans While many general contractors offer home floor plans and blueprints as part of a package deal, if you go it alone, youll have to get these yourself. Should you want a custom home or something different than everyone in your community happens to own, this is an opportunity not a liability. To get your own blueprints, you can order stock plans from an architectural firm or you can sit down with an architect and have custom plans designed for you. In either case, shop around, check into the sources and make sure youre in love with the plans before you make a final purchase.

Pull your own permits As the owner builder on your property, you will be charged with arranging for building permits and subsequent inspections. As long as your blueprints are in order and your land is suitable for building on, this shouldnt be a big deal. Expect to pay some fees for permits and inspections, as well.

Schedule work You will have to select your own subcontractors, schedule them and pay their fees directly. This can also be more of an advantage than a liability. This gives you the opportunity to shop around for the best quality services at the lowest prices. The end result of careful hiring will be the work you need at pricing that can beat what you expected to pay.

Order materials In many cases, you will also be responsible for making sure materials arrive on your jobsite on time. Unless materials purchases go along with the subcontractor quotes, youll be on your own here. This does, again, present you with a chance to save some serious money if you get multiple quotes and order with care.

The job of an owner builder isnt easy, but it can pay off financially. The more work you can do on your own, the less you will have to pay out for your dream home.

Other Areas You Can Save Cold, Hard Cash On

Part of the beauty of being the owner builder is that you can take on actual physical roles during the construction of your dream home. As long as you have the skills and tools in place for the jobs you choose to tackle, getting a little dirty can save you a lot on the bottom line.

Some areas that owner builders choose to tackle personally include:

Portions of major construction Again, as long as your skills are high, you can take on a major role in construction. Handling phases like framing, roofing or even drywall can cut contractors and their fees out of your financial picture. This can work to your benefit. Just dont bite off more than you can possibly chew time or skill wise! Also, do take the time to review building codes in your area. Some codes prohibit cutting out certain trades from handling phases of construction. Electrical work, for example, might be demanded by law to be performed by a licensed electrician.

Ordering of finish materials When you take control of ordering your flooring, counters, cabinets, paint, fixtures and even appliances, you can save some serious cash. As the owner builder, you have the right to shop anywhere you want. If, for example, youve found appliances at a scratch-and-dent store that suit you just fine, you can choose to install them for major money savings.

Doing some of the finish work Whether youre particularly handy or not, chances are you can take on some of the finishing work to save yourself some cash on construction. Painting walls, putting in flooring or even hooking up appliances personally can all add up to major savings for you.

Acting as the owner builder over your own homes construction will involve major effort. Dont think it wont. Still, if you choose to assume an active role during building, you can save yourself thousands and get the home of your dreams in the process.