What you Need to Know about Being an Owner-Builder
Have you just bought the perfect piece of land and are ready to build your dream home? A majority of people hire a licensed general contractor to get their home made from scratch. But some of the people, those who wish to be an owner-builder or owner-contractor, actually plan to build the house on their own physically.
There are pretty mixed opinions about whether it makes sense to be an owner-builder. It is safe to say that being an owner-builder can be an adventure, where you may have good, bad and unexpected experiences.
You will easily come across a number of excellent owner builders in Victoria and other cities around the world who have constructed beautiful homes for themselves.
Why should you build your own home as an owner-builder?
The job of an owner-builder can vary dramatically. A skilled and trained individual who decides to be an owner-builder could build his home nail-by-nail, pipe-by-pipe, wire-by-wire and shingle-by-shingle. But this normally is an extreme scenario.
Most of the times, while considering being an owner-builder, the person is taking on this extra responsibility to save money. Some of them still want to work with a contractor in some way or the other, but also willing to physically handle some of the work on their own. Others like to exclude general contractors altogether and intend to directly oversee all the skilled trade subcontractors who do the actual field work.
Builder fees fluctuates, but in some of the cases the fees can make up about one-fourth of the total cost of building a new home. However, anyone considering building their own home needs to focus on more than just the general contractor’s fee and must look at the whole process to understand if it makes sense for them.
The Risks of Being an Owner-Builder
If you are thinking of being an owner-builder, you need to think whether you are ready to take on the role, the risk and the responsibility. Although you may be highly skilled in carpentry, you may not be able to install plumbing or wire the house in a proper way.
Therefore, in most of the cases, you will at least have to subcontract some of the work. This is the point when your dream home can start to become a big burden. Likewise, eliminating a general contractor shifts the risks and responsibilities to you when things go wrong.
For the owner-builder, these building issues can develop for a number of reasons and have a lot of impact on the project, its cost and your home’s long-term value:
- Risk of out-of-control construction costs and blowing your budget
- Inability to control your schedule accurately, causing costly time overruns and delays in project completion
- Complicated construction issues, requiring solutions that may be beyond your capabilities
- Failing to build on local code and the unbudgeted costs of solving problems
- A majority of the best subcontractors won’t work with owner-builders
- Banks may not like to provide you with the best terms on a construction loan without a licensed builder on the job
- Difficulty refinancing a construction loan, especially when off schedule
- Foreclosure or other loan-related distress caused by budget and cash flow issues
- Low resale value when home is not built by a known professional
This was your short guide on being an owner-builder. Hope you find this read informative and helpful.