How Much Will I Save Building my Own House

How Much Will I Save Building my Own House

Q: How much will I really save building my own home?

A: 25% of the market value of the home (what is will be worth) is not uncommon.

Some save more, some less. It all depends on how well you do the job of general contracting. 25% represents the GROSS profit that a builder expects to make.

A professional builder then has to pay overhead costs out of that profit which can eat up half of it in a heartbeat.

You however, don't have overhead, so you get to keep it all.

If you save $50,000, that's $50,000 you don't have to earn (after taxes) from you job, or, even better, that's $50,000 you won't have to pay on a mortgage and pay back over 30 years, which when compounded by interest would equal a $150,000 savings

Q: How much more can I save if I do some of the labor?

A: Construction costs, excluding land and loan costs, are usually 50% materials and 50% labor. You do the math.

Murphy's law in construction is "when you perform your own labor, if you aren't an expert in the trade, it takes you four times as long as a professional with half the quality as a result."

Q: How much can I save on remodeling and additions?

A: The National Association of Home Builders recommends that General Contractors (GCs) build in a gross profit of 50% of contract price on remodeling jobs or building home additions. Or put another way, 100% of the cost of labor and materials.

The reasons General Contractors are advised to charge more for remodeling and additions are:

There is usually more work involved in remodeling and additions, there are hidden costs that don't show up until you are into the project, and most importantly, it takes as long or longer to do these small jobs when more actual dollars could be being made on a new house.

Therefore, it stands to reason that you, acting as your own General Contractor for remodeling or additions to your home, can save 50%

Q: How much do I need to know about building to be my own GC?

A: When I build my first house I thought a stud was a horse. I had no idea what a footing was. WOW, was I stupid!

But I got through it and I had very little help or people to turn to.

You however, have my books, and me to turn to.

The key as you will see, if you haven't figured it out by now, is not what you know, but what the people you hire know

Q: How much of my time is this going to take?

A: As long as you don't hire anyone by the hour, your time devoted to building your own home is as much or as little as you want to put in. Don't quit your day job, and don't let it disrupt your life. That would be self-defeating.

Ninety percent of the role of being a GC takes place during the planning stage.

The planning stage consists of shopping for material, labor, and money. Fit all that in to whatever schedule you can devise, i.e., nights, weekends, or lunch hours. Once the house starts "coming up out of the ground," let the professionals you chose and hired do their jobs.

You do not have to be there to watch them work. No one likes to have someone watch them work. If you did your job of hiring true professionals well, they will do their job well.

You need not go by the job site more than once a day. Get a cell phone for your subs or suppliers to call you if a situation that needs immediate attention arises. Cell phones are cheap.

If you ignore the advice in my books about not paying subs by the hour, pitch a tent on the job site, quit your day job, say goodbye to your family and live on the job site.

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