Yes, you can build your own home! Acting as your own (GC) General Contractor when building a new home can save you thousands of dollars and help you create instant equity upon completion. Many people believe that you have to hire a General Contractor in order to build a house, but in every state you, the owner, can act as your own GC, take out all permits in your own name and no license is needed.Learn more at Learn more at see here
Why would someone want to build their own house without experience? Building your own house doesn’t require you to have construction experience. As your own GC, you are basically the project manager, managing each aspect of your build, hiring and scheduling subcontractors, and making sure everyone follows your plan. Building your own home doesn’t mean that you’ll need to be out there in work clothes, a hammer, and power tools. This is not to say that you can’t do any of the work yourself. If you have experience in a trade like electrical, drywall, framing, or roofing, you’ll save even more money by doing that work yourself. But, without picking up a power tool you should expect to save at least 15%-25%.
That’s right 15%-25%. A lot of families save even more than this when building their own house, some 35%, some even 50%. How can you save so much? Well, traditionally, a builder or GC will markup the price of your home 15%-50%. Cutting out the middle man puts that money back into your pocket!
So where do you start? Well, when building any home, someone has to pay for the land, materials, and labor, so financing or having the cash on hand is the first thing you need to think about.
Owner Builder Construction to Permanent Financing
Lenders who will lend money to owner builders are becoming harder and harder to find as the economy weakens and the mortgage industry guidelines become more strict, but they are still out there. If you don’t have enough cash in the bank or prefer to use ‘other people’s money’ then you’ll need to get qualified for financing. Construction to Permanent loans for owner builders will provide financing for the land, materials, and labor. There is one set of closing costs for the land, construction loan, and permanent mortgage. There are loan programs available with financing for up to 100% of all costs involved. If a down payment is required, land equity can be used in most cases so no money needs to come out of your pocket.
Once you know that you’re pre-qualified for financing or have budgeted money you’ll be using from a savings account to build your own house, you’ll need to start coming up with a plan. You’re going to need to find a piece of property (if you don’t own land yet), find a set of plans, and start putting a budget together.
As an owner builder consultant, I always advise families to find land first, and then look for plans. Some people go about this backwards, spending hours online searching for perfect house plan, then find their dream lot to place their home only to find out that major adjustments need to be made to plans in order to make them work on that specific lot. If you’ve already purchased plans, no need to worry, but it’s always good practice to find plans that will work once you know where the house will be going, the elevation of the land, views, sun exposure, etc.
So far, you’ve got the financing lined up, a land contract, and a set of plans. Now it’s time to solicit subcontractors who will do the work you want to sub out when you break ground on your new house. It’s always good to get bids from two to three different subcontractors when building your own home so you can comparison shop and make sure you’re getting a fair deal. Always use a company you can trust. Research their licensing status, better business bureau for any complaints, and call on references. Doing this work up front can help you avoid costly setbacks by dealing with unscrupulous subcontractors. And, always remember, the cheapest is not always the best choice. Don’t be afraid to pay for quality work.
Now that you’ve made your choices, it’s time to come up with a budget to build your house. Use the bids you’ve received from your subcontractors to comprise a budget. Make sure you get a comprehensive checklist of things that need to be done to build a home, and then account for every job aspect. Your bottom line should reflect what you’ve been prequalified for or what you’ve budgeted from your savings to build your house.