Hello everyone,
I have never posted here, but often post over at Knots.
Please don’t be hard on my question, but I’m looking for serious building advice.
I have designed, drawn the plans, gotten approval and built a 3,500 sq foot house before, using only semi-skilled labor, but this was a long time ago and in a different country where rules are stricter, methods and materials are totally different, all houses are brick built (except roof construction) and electrical wires (220v) had to run in a combination of steel and PVC pipes.
I’m considering buying around 2,5 acres in California and building, or sub contracting around 4000 sq ft. I know little to nothing about stick houses, but can learn very quick if I have to.
I have a B.S. and M.S. in Mechanical and Electrical Engineering, but have been in Management for a long time, so I’m not as close to the action as around 15 years ago.
Is it worth financially to jump into the deep end and do this, or am I better of with a professional builder and supporting his profit?
Thanks in advance
Replies
I won't be too hard on ya. Just one small thing. Asking the question of whether to use a builder or not, on a board that is peppered with builders, is like asking if it is worth using a bakery for bread... or baking it yourself... at a baker's convention.
But.. I will try to give you some objective advice.
First. If you are primarily looking to save money by doing it this way... you are on the wrong track. You should have, as a primary reason for following this track... is the desire to do it yourself and the satisfaction that comes with it. IF you save a little money along the way... that is a bonus.
Next. Do you have the time to effectively GC the house yourself? I can imagine very few things that would be more frustrating than to have a half-built house... and time constraints become oppressive at the primary job. In addition... if you don't have the time to dedicate to the project... you will evaporate any savings in down-time charges from your subs (waiting around for you to catch up).
Next. California is an interesting place to build, from my understanding. Depending on the area... you may have very unique building codes to comply with for earthquakes, mudslides, etc. Do you have the experience to deal with these issues?
Next. There are outfits that will consult with you as you GC the project. It may be worth a look-see. Whether it be a company that specializes in such... or a retried contractor that wants to assist (but not perform as the GC)... or a similar consultant... it may be worth its weight in gold. It is REAL easy to have a substantial error that will cost big $$ in construction. One catch of a major issue.. and the consultant would pay for him/herself.
Of course, I am going to SUGGEST that you hire a builder. I am a builder. It's how I make a living. If it was easy.. everyone would do it (just like engineering). BUT... IF (and only if) you want to do it for your own satisfaction... it is done everyday, in almost every part of the nation. As I said before... if the reason you want to do it is to save money... you are probably going to be very disappointed.
Best of luck as you ponder. I am almost positive that others will have very strong opinions also.
Rich,
Thanks for taking the time to post a quality reply.
I guess I need to be honest about true objectives here, all of you fellows must have started somewhere.
I have been in the corporate business world too long and sometimes long for greener pastures. I own two houses, one being a rental 1 1/2 years old and I have minimal loans. I'm planning to sell the rental and purchase a house on 2 1/2 acres, with short term plans of renting it out and longer term plans to try and sub-divide into 6 lots. This will be a nice GC job, perhaps allowing me to become one of you, without earning less $$.
So, it is for the money and for the love of it...
Well... subdivision would move you into the "developer" role. Whole different set of criteria there. Zoning, legal, etc. Whole lot more involved than GCing.
I can empathize. I was in the corporate world also... before taking the plunge (back) into the construction world. I have learned real quick that my organizational and management skills were of more value than my carpentry skills (although those do come in handy ;) )
If you can stand to take the hit of over-budget houses and a potential real-estate bubble... approach it like any other business opportunity. Develop the business plan and do it in detail. Be your own biggest pessimist and EXPECT every possible detriment.... and plan for it. Develop your budget and ONLY adjust if it makes sound business sense. It is WAYYYY too easy to get all emotionally involved in this biz. Good money thrown after bad is sooo easy to do.
Expect no income for the first three years. The capital investment is large... but doable in the right circumstance. Do lots and lots and lots of homework as you develop that business plan. Even IF you do not NEED a loan to do the deal... take it through the loan process. If the deal cannot stand up to the scrutiny of a good lender... it shouldn't stand up for YOUR money to be invested. Besides... it is almost always better to work with other people's money. <G>
Understand your market better than anyone else. Find the weaknesses (opportunities) in the market and fill them. Being "just another developer/builder" is NOT the way to go. The big builders can (and will) eat you up.
"Spec homes" are very high risk. Never build anything that you don't want to live in... for you may just have to do that. Much better to build when/after you have a buyer... but it is the old "chicken or egg" story. Tons of research with real estate agents (or even appraisers) will be of great value. Pay them for their consulting. It's only right... and it will give you a good reputation for the time when you need those same agents to be promoting your development.
Best of luck to ya.
Edited 4/6/2005 2:11 am ET by Rich from Columbus
it will cost about 30% more to build it yourself. Most banks will not loan to a do it yourself. so unless you like building, hire a turn key builder
Why will it cost about 30% more if built by owner?
Truly curious to learn why you make this statement as we are proceeding this route. Retired hubby has the time & plans to sub most of the work (he is knowledgeable in construction; though definitely admits he does not know all. Also we will not be dealing with bank on this one. I have wondered might we receive a lesser discount on materials than would a builder?
Why sub ourselves? Quality builders in this area have at least a 6 month waiting list & we need to relocate to live on the farm especially since it is 35 miles away & commuting costs continue to soar . Being in somewhat a rural area, we can pick up quality subs in between jobs & are not pressed to sell current home. Actually, current home will not go on market until the door bell is installed in new home!
Brownbag,
I have been around for a long time and know that there is no way I will be able to sell my own personal labor for even close to what my career pays.
Let's get to your 30% more.......
For my employer, over the past three years, I have done a factory extension of 150,000 sq ft and a new warehouse of 250,000 sq ft, using a retired accountant as the GC, with some help from my own staff. We got the work done for 60% less than the best bid I could get from the big Civil Consultants here in town.
Where I live, a big Developer sells out his development in a couple of week-ends, before he starts building. When he charges in CA $600,000 for a 1,700 sq ft. home, I can reason that the main component is land costs. But when he sells a 3,200 sq ft home in the same development, same lot size, for $900,000 and I look at the charges for upgrades, my math tells me something.
Someone here is making a load of money and I don't believe it's the Carpenter, or the Plumber, or the Electrician, or the Landscaper.......
Yeah, I also found brownbags' number --
"it will cost about 30% more to build it yourself" to be a big load of BS too.
I'm in the Seattle area. If I built on my own land myself (again) vs having it built I figure my pay rate to myself would be in the $200 plus per hour tax free area, not counting the land value.
Not counting my own labor, my building costs would be about ONLY 20% of having it built, and 1/2 of that would be for permits! (cost includes all oak finish, carpet, all appliances, electrical plumbing, septic, etc) - some will probably question those numbers, but most material etc. have been stockpiled from wholesale or less sales over the last few years, and no equipment rentals would be needed. (labor for finding materials counts as recreation<G>)
Welcome to the board.
Every newbie posting here and wanting to build a secc house is required to read the Spec House from Hell thread.
(-:
Leadership - The ability to hide your panic from others.
From everything that I have seen from others if the goal is to save real money, NO.
If the goal is to create YOUR sepcial house or the goal is to convert some of your TIME in to equalty (realizing that might mean less time for paid word) then go for it.
Here's an idea...
First, do a feasibility study. Use real estate agents, government zoning officials, etc. Buy the house with 2.5 acres. Rent out the house (house #1). Get the land subdivided as you described. Hire a builder to build the next house (house #2)which will be a rental or for sale unit. Be very conservative in what you build for this house, doing more market analysis with real estate agents etc. Use this house as a learning experience about "how it's done" in that area. Put house #1 on the market. Once house #1 or 2 sells, build the house you wanted to.
Not being conservative here - the above cautions from other posters are all very warranted. Just throwing out an idea.
Be prepared for an anti-DIY bias on Breaktime. Most of the regulars are contractors and have a natural interest in seeing business go their way. "Not that there is anything wrong with that!" When you say "build it yourself", do you mean acting as a GC, or actually building it yourself (pounding nails)? (People often say "We are building a house" when they mean they are paying somenone to build it.)
If you have built a 4000 sf house (in Europe?), I don't see any reason why you can't build one here out of sticks. My wife, kids, and I built a 1560 sf cabin/retirement house by ourselves, and I had only limited handyman experience before. Contrary to what others have said about it cositing 30% more if you do it yourself, there is NO WAY we could have afforded to have this done by professionals, even bearing in mind that they are quicker and better. So, it was either do it ourselves or go without.
So, I think you should try it!