They say the first step in homebuilding is to find a builder or contractor that you can trust. But what if soaring demand and labor shortages have given every reputable builder a workload with no end in sight? It creates an environment where business owners in the construction industry are no longer motivated to chase future work or reply to prospective clients. High-quality contractors are intelligent people, and the best strategy in current conditions is to chase big fish and accept projects with the highest profit margin.
So, where does that leave my family and me? Homebuyers with a reasonable budget, expectations for quality construction, and a dependable timeline. As a subscriber to multiple forums and social media groups, none of those requirements are currently attainable from builders across the country; except maybe quality construction in some cases. Build prices have skyrocketed due to volatile material costs and luxury custom home builders who use qualified subcontractors can’t start new projects for 6-24 months! A destitute construction industry removes all hope from the idea of a custom build. If only there was a way to bypass the need for a General Contractor or Homebuilder…
Extreme DIY: General Contractor Edition
Much to my surprise, this IS possible. And it’s not as uncommon or crazy as it sounds. This advanced do-it-yourself method is called being an “Owner-Builder” and it allows you to be your own GC on the build of your home. An owner-builder is what the term indicates: a person who owns the property and acts as their own general contractor on the job, and either does the work themselves or hires subcontractors to complete each phase of the project.
“Owner-as-Worker” is a type of owner-builder where you personally perform the construction work. The permit is taken out in your name. You are personally responsible for the construction management, knowledge, workmanship, and completion of the job. You benefit by not paying others to perform this work for you and your risk depends on your own ability to complete the job correctly and successfully.
“Owner-as-Contractor” is a type of owner-builder where you personally act as your own General Contractor. The permit is taken out in your name. You hire licensed sub-contractors to perform portions of the construction work.
As an ambitious 30-year-old who has had a hammer in hand since the day I found my dad’s toolbox, this concept is attractive to me. Although my woodworking background is minimal, I spent a large portion of my life developing proficiencies in metal fabrication and design. Additionally, 6 years of regular employment as an industrial project manager instill further confidence in this daring venture.
Despite numerous internet articles describing the risks of being an owner-builder, you can also find testimony after testimony of real-life people who have taken this route and would do it again without question. The people who’ve taken this leap and committed every spare minute for 1-2 years have done so to save money on their project. They wanted to get more house for their money, and it is possible IF you are extremely organized and somewhat knowledgeable about construction. However, those people will also tell you, don’t embark on this stressful and difficult journey to save money – do it for the experience and because you truly enjoy the process. And remember that the biggest cost savings come from sweat equity (doing the actual work yourself rather than hiring subcontractors).
Is it Legal?
The first step I took to investigate whether this was a possibility for us was checking to see if it was even legal in our state (Oregon). After a quick google search, I found a document on the state’s website stating the responsibilities for homeowners acting as their own general contractor (link below). As long as you abide by the requirements, it is totally legit in Oregon!
What About Funding?
We will need at least part of our build to be financed, so the next item in question is the construction loan. A traditional construction loan requires an approved GC to build the home. Certain banks will offer owner-builder loans where the borrower also acts in the capacity of the home builder. Lenders which offer owner builder loans are typically rare due to the high-risk nature of allowing a nonprofessional layman to manage such a large project. Hard money loans could also be a potential source of funding, but that should be a last resort.
An internet search of construction loan lenders in my state resulted in a list of potential funding sources. The list also included a few out-of-state sources who specialize in the owner-builder process. A short email inquiry to these banks and credit unions quickly narrowed our options down to 1 or 2 lenders that offer this type of financing.
After these boxes were checked, it became clear that the owner-builder path is totally feasible! I spoke with the branch manager for the local bank and she explained what was needed to take the conversation further. I am now working on preliminary floor plans and a very rough budget to see how much of a loan we would need for construction and the lot/land.
Owner-Builder Resources:
I strongly recommend buying the book “The Complete Guide to Contracting Your Home” on Amazon. I paid about $25 and there is so much good information in this book on the entire process.
Here are some of those testimonies from folks who’ve lived through the process:
“I did all (well, most) of the finish work (hanging cab's, finish plumbing, all electrical--rough and finish--finish woodwork, painting, some but not all tiling, etc.), and coupled with having a "regular" job and being out of the country each year for a month (actually more like two months given two weeks or more on each side of the trip was not dedicated to working on the house), don't think the three years was a real "long" time to do what I did. I know I could do it quicker if required a second time.”
“Although I knew it would be a lot of work, and worked best when there were about a half-dozen different things going on at one time, I didn't fully realize how much I would have my own tool-belt on to bridge things/stages/trades in the process. I also lifted a shovel a lot too.”
“You really have to want to do this out of interest first, not saving money per se; I think for the pretty custom product I got, I saved money; especially after getting just quotes on foundation and framing (some quotes close to my entire project costs). There is a learning curve, and I definitely paid my "tuition" in costs and time. Would I do it again? Yes, and plan to next year for my sister's project.”
“I was a little distracted by those (usually licensed contractors) who said that I couldn't do it myself; I wouldn't say it was a bigger project than I thought, but there were heaps more to it than I thought about entirely; a lot of little to mid-decisions that affect the whole project will always come up and need attention.”
“You and your spouse or partner will have to realize what a time commitment it is for one of you or both of you. One or both will need to have jobs that permit time away from the desk to be able to manage things at the job site. Tradesmen won't want to discuss things with you on-site at 6:30 am or 5 pm. You'll need to find ways to be there at the start and or end of the workdays, as often as three days per week, especially when things are hectic. "Hectic" means more than one sub on the job at once, and a well-run job can have that going on quite a bit.”
“Be forewarned, you will get a lot of flack here at Breaktime, from those who will say you won't save a dime, or that you just plain can't do it, or that you shouldn't do it, for a million reasons, but rest assured, it can be done. It ain't rocket science. It's just a project. If you've been involved in your work life with complex projects that call into play resources from many different disciplines, you can get a house built. Even if you can't read drawings, you can take a class that will teach you.”
“My subs all have worked an owner-GC'd job, and what they say about it is this: some are great, and some aren't. Sorta like "real" GCs”
“I am doing it now. It can be done and you may save some money. I guarantee that it is far harder and the monetary savings are less than most books will tell you. You have to be very well organized, plan stuff well in advance including detailed bids on everything. Plus you need to know more than a little about construction. I had done some work on apartments back in college but still didn't know a whole lot. So I started reading. I read books on framing, plumbing, electrical, insulation, tile, and a couple on trim work. Now none of these made me a framer, electrician or trimmer; but they did give me enough information to ask intelligent (well most of the time) questions of my subs, do some of the work myself and address problems when they came up.”
“You should be a person who deals well with stress and uncertainty. As a first-time builder, you will be thrust deep into your zone of incompetence on a daily basis. You will have no pull with your subcontractors, so getting them to work to a schedule isn't going to happen in any consistent way, which will aggravate you as well as all of the other subs who are counting on you to get the previous subs out and have the site ready for them. That kind of chaos is just going to be the background music of your day for a while”
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