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Who Should Be an Owner Builder in Today's Economy
Owner builder construction loans are specifically designed for borrowers who wish to take on the construction of their own homes without having to hire a general contractor. In this way, the owner builder not only saves a lot of money but also gets a greater amount of control in the outcome and specifications of his home.
Unfortunately, many people are confused about the true role of the owner builder. Simply put, an owner builder is someone who takes on the role of managing the construction process without hiring a builder, or general contractor. Sometimes they are also called an owner-contractor or self-builder. In essence, he or she is the general contractor.
Being an owner builder does not mean having to actually do the physical work yourself. You can, if you want, but it is not required. In fact, this is an important point, because many borrowers think that they have to do much of the labor themselves to save a lot of money.
However, to successfully complete an owner builder construction loan, you never have to lift a hammer if you don't want to. You will still save a lot of money just by managing the process. Consider this: many general contractors never do any actual labor. Instead, they manage the process and charge for the service, not to mention the gathering of the materials and supplies.
Therefore, if you want to be an owner builder, you should focus on the management. Only do the labor that you are truly qualified to do. Otherwise, you'll waste both time and money - things nobody can afford to waste in the middle of a construction loan.
This revelation often becomes misleading for borrowers. They erroneously reason that the role will be easy if they are only managing the process. Unfortunately, this almost always leads to improper planning and disorganized construction.
Just because being an owner builder, focusing on overseeing the project planning and construction, does not have to be complicated, that doesn't mean it is easy. It takes time and energy. To be successful, you must approach the planning phase with as much care as the actual construction.
As the owner builder, you will have to 1) choose the right set of home plans for your area, 2) get the plans approved with your county's code compliance and building permit office, 3) choose and hire the best possible sub-contractors and material providers, 4) compile an accurate budget based on bids and contracts with these sub-contractors, and then 5) actually manage the construction itself. If you don't give steps 1 - 4 the care and attention they demand, then step 5 will potentially be a disaster.
Therefore, who makes a good owner builder? Experience has led to this simple litmus test. You should consider building your own home without a general contractor if you answer "yes" to these three questions:
1) Do you want to build the exact home you have in mind, without compromising either quality or amenities?
2) Do you want to save, on average, 15% to 40% on your new home's construction costs?
3) Are you willing to spend the time and energy in the planning and management of the construction?
There are two very important things to note about the three questions above. First, notice that the first two questions involve possible incentives behind being an owner builder. Indeed, control and money are the two main reasons that people decide to become owner builders. You may have your own specific reasons, but if you don't have a hefty amount of interest in the control and savings that come with the project, then you probably won't be satisfied as an owner builder.
The second thing to note is that the most important criteria listed in the questions above involves time and energy for management. There is no mention of physical labor or any detailed knowledge of construction skills.
Therefore, if you think you will want an owner builder construction loan in order to build your own home without a general contractor, it is a good idea to ask yourself the three questions above. In general, make sure you understand the role of the owner builder and are comfortable with the major benefits and advantages that come with it. And, never forget that a successful owner builder will focus on the planning of the project as much as the actual construction itself.
About the Author Owner builder construction loans from Owner Builder 101 and Chris Esposito are designed specifically for individuals who want to save money while building their home to their exact specifications - without a general contractor. Visit www.ownerbuilder101.com, or call (877) 876-3688. |
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