Contracting Your Own Home

[dinted voice]

My wife and I are currently in our first house and have just purchased 9.5 acres of wooded land to build our next (and hopefully final) house on, which we plan to start buildinh within the next 5-7years.

While I don't have construction background, I was thinking about contracting out the house myself to save money. I wouldn't do much of the work, though we might paint and do some basic carpentry work. Several people I know have done this and saved quite a bit of money on it, though they have construction backgrounds. Does anyone here have any experience with this? Do you have any good resources? I am going to start doing the research on licensing, insurance, contractual risk transfer to the subs, etc.

Any help anyone can give is appreciated!

 

[holymadness]

I'd advise against it, if only because it will be much more difficult for you to inspect the quality of your sub-contractors' work. In cases of structural and electrical work, this can be not only expensive to repair down the road, but unsafe. If you absolutely must, make sure that you get the city building inspector in there at least a few times at different stages of the work to ensure that construction is up to code. Familiarize yourself with the building code and remember that in many cases, it's only the minimum acceptable standard. There are good reasons to go above and beyond it. Also, you need permits for any plumbing, electrical, or structural work. Get them or you'll regret it; they are for your protection. A good resource on this issue in general is Mike Holmes, though his discussions of the code will have a Canadian focus. http://www.amazon.com/Make-Right-Ins...3684940&sr=8-9

 

[dinted voice]

Great point, holymadness. I do personally know the guys who would do the framing and electrical; however, I would be unable to know of the quality of their work. They finished my basement for me and it has been good for a year and a half! Of course, a house is a bit more work.

 

[j]

When I read the title I kind of wanted to come in and just post "hahahahahahahahahahahah" but that would be sort of mean and not very helpful. (Though it might get the point across.)

I think this would be extraordinarily unwise. However, if you know people with construction backgrounds, you might be able to hire someone as a consultant of some sort, not to oversee the whole job, but to answer your million questions, direct how and when things should happen, and to use his contacts to get things done right. Personally, even having worked for a general contractor (remodels, additions and custom homes being our specialty) for years and having written contracts and estimates etc. and seen countless projects completed, I would still not consider building a whole house on my own.

 

[jefe]

On top of the points j and holymadness made, I doubt you'd be able to get the permits without passing some sort of county/state exam. To be your own general contractor in Denver, you have to pass a code exam.

Just hire a good architect and be done with it. It's the right move.

 

[Piobaire]

I am pretty sure you can't just declare yourself a general contractor and start hiring subs, that you need to pass some sort of licensing exam. Building a house is a specialized endeavor. I would suggest you hire a specialist you can trust to do this for you.

 

[j]

Depends where you live. In WA you just pay a fee and boom, you're a general. You can't work for others without being bonded and insured though.

Even so, there are many invisible perks of hiring a contractor with experience and contacts. For example, do you happen to know what kind of coffee your city's inspector likes to be brought at 7:00 AM? Then your application goes at the bottom of the pile, to be looked at in 2-4 weeks, instead of today. It's the little things that make the job go smoother.

 

[dinted voice]

Originally Posted by j

Depends where you live. In WA you just pay a fee and boom, you're a general. You can't work for others without being bonded and insured though.

.

It is similar here as well. Thanks to everyone on the advice. And thanks J for not laughing (out loud anyway!).

 

[crazyquik]

Originally Posted by Piobaire

I am pretty sure you can't just declare yourself a general contractor and start hiring subs, that you need to pass some sort of licensing exam. Building a house is a specialized endeavor. I would suggest you hire a specialist you can trust to do this for you.

I'm thinking this is on a state by state basis. Could you imagine telling a bunch of Texans that they couldn't build their own house? If you can't buy a piece of rural land and build your own house, something is seriously wrong with America. Why did we steal it from the Indians if we aren't allowed to build houses on it? But I digress . . .

I would advise against it though. People I have know that have done this either are subcontractors with extensive business connections, GC's themselves, or serious "mountain men" (my shop teacher from high school built a modest log cabin that he lives in, and seems to love).

The process of building a custom home is hard enough on most marriages, as you agonize over every little detail (with every changed-mind and delay costing money). Before the 'house flipping' shows were popular on cable TV, there were a lot of 'be your own contractor' shows filled with drama.

Good contractors make good money (and live in nice houses

) for a reason. You can consider them blue-collar professionals. Like a lawyer or accountant, you are buying their experience and advice, as well as their managerial skills. You could do your own taxes, but if they are complicated its cheaper and easier in the long run to hire a CPA. You could be your own lawyer in many cases, but lawyers increase certainty and reduce risk in business transactions. Like a lawyer or accountant, you are giving them a big ball of stress and headaches, and they are going to figure it out for you.

Some of your ideas from TV and magazines may not translate well into real life, or that things that sound simple will actually be costly. They will know which subs have a reputation for good work, which ones have a reputation for being sober and showing up to work, which subs won't steal from the jobsite to fuel a meth habit, which subs aren't borderline insolvent, etc. Lots of people have the physical skills to be a builder or sub, but often lack the business management skills and are often teetering on bankruptcy (especially right now).

The last thing you want to do is hire a guy you don't know to do some _____ for your house, you pay him upfront, and then he never comes to do the work. Then you've got a lawsuit in the middle of your construction project, killing your cashflow to build the home, and you're suing a deadbeat drunk carpenter who you won't be able to get anything more than a pickup truck from anyway.

At least in my state, if you are building a home for yourself and plan to live there for 12 months, you do not need a license. If you plan to build for someone else, and it will cost more than $30,000, then you're required to have a contractors license to even bid on the project.

I wouldn't choose a GC without references and without talking to people who live in homes that the person has built. I would rather have golden references than someone with better credentials on paper.

That's my .02. Pretty worthless, but my father's held a GC license for decades (since before they were required!) and I've been around contractors most of my life.

 

[crazyquik]

Also, nothing will be on time, everything will run late. Expect weather delays.

Patience is a virtue in homebuilding, unfortunantly people would rather cut corners, speed up the process, and work on rainy days, so they can make one less payment on the construction loan. When I worked in construction, we rarely ever worked on rainy days. I realize in commercial construction people work 24hrs a day and on rainy days, but screw that. Some sorts of work can be done fine on rainy days, other times you're making more potential problems than it's worth.

A good GC will also oversee the project. If you're the GC, and you hire some plumbers to come in, and you get a bill for 16 hours of work, do you know if they were on the job for 16 or just 4? You have no experience to know how long something should take, and you're probably not physically there to watch. The GC will be on-site much of the time to keep people from taking 3 hour lunch breaks (on your dime) and will have a general idea of how long each project should take.

If someone can't get to your job for a while, that's usually a good sign because they are in high demand. The last thing you want to do is hire someone who can start tomorrow unless the local market has just been slaughtered.

---------------

Paying the GC
However, good GC's, at least here, get paid on a "cost plus basis". So, they get paid a percentage of the cost of the home. So if the material and subcontractor costs are $200,000, and he is working at "20% cost plus", then you'll pay $240,000 for the home. This incentivizes them to spend more of your money, because they then get paid more. The upside is there is absolutely no excuse for not having everything perfect, however if something has to be torn-out and redone a different way, you're essentially getting charged twice for those materials and that labor (unless you negotiate this out beforehand).

So if you ask them to go pick out some polished brass doorlocks, and they have the options of getting $20 for each interior door or $80, they are incentivized to buy the best because they will make more money that way. Instead of shopping around for the cheapest price on something you spec-out, they have no reason but to pay the most for it, in order to inflate the materials cost.

Some will also charge you by the hour for their own 'overseeing' work or 'Superintendent' fee. Make sure your contract with them fully explains the billing arrangement, or else you might pay 20% more than the cost of all building materials and a superintendent fee. And then you'll have bought another lawsuit.

Again, references are worth their weight in gold, and can help you avoid all that goofy ****.

 

[Lucky7]

My oh my I finally get to opine in a field in which I am privy to. What state do you live in? My company builds all types of establishments, including custom homes. It's not as easy as just making a cup of tea. You can definately do it, but please beware of the catastrophies that can arise. How many people do you know that do their own surgery? Not many.

 

[dinted voice]

Originally Posted by crazyquik

The GC will be on-site much of the time to keep people from taking 3 hour lunch breaks (on your dime) and will have a general idea of how long each project should take.


Great point. Also, about the time thing it took longer than expected on our first house (we didn't contract it, but made a lot of the decisions since we worked with the builder). Is there anything this site doesn't have good advice for?

 

[j]

Originally Posted by dinted voice

Great point. Also, about the time thing it took longer than expected on our first house (we didn't contract it, but made a lot of the decisions since we worked with the builder). Is there anything this site doesn't have good advice for?

"Which Crocs with this suit?"

 

[Pennglock]

I think you'd get walked all over by the subs. Without the construction background you're not going to know the appropriate moments to start kicking ass, and will likely expend a lot of ass-kicking capital on issues that are less important.

 

[dinted voice]

Originally Posted by Pennglock

I think you'd get walked all over by the subs. Without the construction background you're not going to know the appropriate moments to start kicking ass, and will likely expend a lot of ass-kicking capital on issues that are less important.
I do know and have worked with the electrical and framing contractors. The electrical contractor also does some gc work and is willing to help. Of course, none of that may matter when push comes to shove and money is on the line.