The Owner-Builder Book 376
| The Owner-Builder Book | |
| author | Mark and Elaine Smith |
| pages | 314 |
| publisher | Consensus Group, Inc. |
| rating | 9 |
| reviewer | Jeff Lewis |
| ISBN | 0966142837 |
| summary | How to save money by being your own general contractor. |
So a few years latter when I decided that I could afford a new home, I asked my friend how he had built such an amazing house for so little. He pointed me to "The Owner-Builder Book." When I saw the subtitle to the book, I was a little suspicious: "How you can save over $100,000 in the building of your custom home." I had seen a few too many infomercials making similar promises, but my friend had done it, so I figured that I could too.
Now, a year later, I have completed building my $550,000 home for $320,000. Much of my 41% savings can be directly attributed to this book:
Chapter 1: You Can Save $100,000
Chapter 2: Learn The Wealth-Building Secret
This is the pep-talk part of the book written to give you incentive
to read the next 300 or so pages. This chapter talks about how custom
homebuilders know and use the ideas in this book all the time. Ever seen
an ad for a "builder's own home"? Why are they always the upper-end
homes? Hmm.
Chapter 3: Contractors Aren't What You Think They Are
Chapter 4: You Can Manage Better Than a Contractor
Chapter 5: You Will Profit By Building a True Custom House
These chapters dispel myths about contractors. Hint: A contractor is
very simply a project manager, and usually not a very good one at that.
Among other things, they rarely shop around for better material prices.
They usually use the same lumberyard that they have always gone to. I
saved over $20,000 just by telling my framer that I was going to purchase
the materials from a different lumberyard, all he had to do was give me
the list.
Chapter 6: Conquer Details Room By Room and Save 20%
Chapter 7: How to Get the Subs on Your Side
Chapter 8: How to Build a Budget That is a Powerful Miracle Tool
Chapter 9: Commando Shopping Techniques
Chapter 10: How to Schedule the Work at a Savings
These chapters talk about how to actually save money: The key points are
planning, getting down the details of exactly what you want, (i.e. I want
two phone outlets in every room with two strands of cat5 and coax.), and
make sure to shop around. As an example, I had bids ranging from $5,000
to $15,000 for my electrical. One would assume that with 5G's you would
get less than with 15G's, right? Not necessarily: for $5,000 I got
everything that I wanted, plus I was able to add a bunch of outlets that
I hadn't thought of at the last minute for free cause the subcontractor
was a nice guy. Now I love that TV above Jacuzzi tub.
Chapter 11: How to Make Your Lender Swoon
Chapter 12: Paperwork Before You Begin
Chapter 13: Six Months to Victory
These chapters help you get the paperwork ready that you will need
throughout the process. Remember contracts with liquidated damages and
lien release forms! I only had problems with one subcontractor that my
wife had been responsible to get fill out our contract with and had never
done it. But, luckily their own contract, which my wife had signed with
them, covered most of what we needed. I even got to keep an extra $2,000
dollars because they didn't have time to come back and stain the stairs.
Let's see, $50 in stain and supplies, 3 hours time. Yeah, I'll take the
$2,000.
Chapter 14: Smooth Execution Saves Money and Improves Quality
Chapter 15: Mistakes You Can Avoid And Successes You Can
Achieve
These chapters drill into your head what planning and details mean. I
had one major problem over the course of building my home. The truss
company built my trusses wrong. It took them three more tries and fourweeks to get me a completed set. Because of my contracts and planning, I
cut the cost of the trusses by almost half, but the time hit was the most
damaging. My total time to completion was 7.5 months. I had planned for
6.
Chapter 16: If You Decide to Use a Contractor
The final chapter discusses how to choose and work with a general
contractor if you decide that being your own general is too much for you.
Conclusion
Don't leave with any illusions: this book will not build a custom home
for you. By planning and following through on the information in this
book, you too can build your dream home.
The first page of each chapter is available online at: http://ownerbuilderbook.com/book/Ch1.cfm, and a free CD-ROM with software templates for budgets, contracts, the entire book in MP3 format, and a previous edition of the eBook in PDF format is available. You can purchase The Owner-Builder Book from bn.com. Slashdot welcomes readers' book reviews -- to submit yours, read the book review guidelines, then hit the submission page.
Re:Contractors... (Score:3, Interesting)
Actually, I just heard about a contractor in Edmonton that was dismissed by the company he worked for, for just that reason. He apparently was buying really shoddy goods and customers started to complain to the company. He very quickly was removed from the industry (and blacklisted from what I have heard.)
A whole nother story (Score:2, Interesting)
New Home Construction (Score:2, Interesting)
My big question though after reading this post is if you DIY the home yourself do you still get a warranty? Probably not. Most states require a home builder to guarantee the structure up to 7 years. Second, I imagine it is very tough to get financing for this type of DIY construction. Let alone getting financing for the land. Usually a bank requires collateral and you will not have that much if all you have is a pile of lumber.
I recommend contracting with a home builder for new construction but just don't layout cash to the first who comes along. Look into them and ask around. Most of all make sure you are comfortable laying out that type of cash to someone you do not know.
A *lot* of hard work (Score:5, Interesting)
The only way this was possible in the first place was that my parents have a good friend who is a (very good) building contractor. He sort of tutored them along. Still, there were plenty of problems. My folks paid a premium for the "best" masons, who left mortar stuck all over all the face of the brick. Dad had to spent days with a rented acid washer cleaning up the mess. The guy who laid the marble in the foyer screwed up so most of it has cracked over time. My granddad fell off the porch roof that he was shingling. Luckily his paratrooper training kicked in-- he tucked, rolled, and was fine. But mostly it was the countless little things that just add up.
Was it worth it? Certainly my parents have a much nicer house than they otherwise could have afforded. But I think it put a huge strain on my parents' marriage. My parents were able to do things exactly the way they wanted, but later they discovered that some things they thought would be really cool just weren't. (The bathroom setup though good in concept has proven to be particularly sub-optimal.) We had to live with my grandparents for a while during the construction and that was pretty hard sometimes.
Basically, I don't think my dad would do it again.
Location, location, location (Score:2, Interesting)
Re:Amateur vs. Professional (Score:3, Interesting)
A Contractor Tale (Score:3, Interesting)
This was not the only project this contractor had going. He probably walked with similar sums from a half-dozen to a dozen other projects. So at least in Florida it looks like the cards are stacked so as to allow any contractor to at any point cash out with on the order of a million bucks without penalty. Thank the gods we don't have the kind of government which stifles initiative!
Re:A *lot* of hard work (Score:2, Interesting)
There was also the issue of the shower stall being a load bearing member...
Re:I suppose.... (Score:3, Interesting)
If you have a full time job, forget it. This is a full time job, and then some. My wife and her father weren't working and we still spent many nights up until after midnight.
Contractors, in general, just cannot be trusted to do anything correctly. It's not their home and they'll cut corners anywhere they can. They really have to be managed full time and you have to know their trade nearly as well as they do. If you've been in the game for a long time you can build up a short list of those that can be trusted. But if you're a first-timer then you're just going on uneducated instincts. Good Luck.
A good contract with every contractor is very important. There were several things that we inferred from the contracts we signed, but when it gets right down to it, it's a legal thing and a contractor will end up using it against you if he has to. If you don't know enough to add in everything you really need, you'll either do without or you'll pay extra because it wasn't in the contract. You need ALL of the details. Plus, they generally are willing to let you threaten to take them to court. They know that the legal fees are just not worth it to you to take them to court over a couple thousand dollars. Plus, you don't want the delay. You just want your house completed.
I could go on. In the end, however, we ended up with the dream house we set out to build. I truly don't think it would have been possible without the substantial amount of knowledge and experience we had on our side though.
Also, I agree with another poster. Design your house around your comfort and the house's ability to function. In the end you're the only one that actually lives there.
BEWARE! (Score:5, Interesting)
If you take a typical tract home (built by an experienced, if average, builder) with basic finishes (paint, carpet, vinyl, MDF trim) and standard items you can expect $80/SF for the house and $20/sf for the land/improvements/utilities to purchase the house...we'll use this $100/SF number as a good basis number.
The contrator is only going to pay about $55/SF to build your house in material and labor. That means he's going to make $100 on a $75 investment. Remember, he'll have to pay $3-5 to market/sell, $3-5 in interest expenses, and his time and liability exposure.
You'll be competing with this guy for subs and materials. He'll probably only use one material supplier (or just a few) because HE GETS A DISCOUNT! Sometimes is overt, like 10% across the board. Often it includes perks like free job-site delivery, or extras such as a boom truck on drywall deliveries. It's only a couple of percent, but it adds up. You'll be paying full price. His subs, to whom he supplies work on a regular basis, will get to his job before yours - even if you called them first. So what - it's just time right? Well, if you're paying 9% on a construction loan, time is money.
Don't forget that you're going to need flexible job hours - often your low bidder sub (and even some high ones) aren't nearly as particular with their work when they're not being checked. A neighbor-owner/contractor had the felt left off his roof assembly by his roofer. He found out when a shingle blew off and there it wasn't! He got the roof replaced for free, but only after several weeks of arguing and calls to the building department. You don't need to be there all the time, but you do have to be able to check in on them.
Finally, if you don't understand how buildings go together, you could be in for a nasty suprise. A contractor generally started as a carpenter, and has seen lots of houses go together. He recognizes when something is not-quite-right. You won't. Trust me - you'll miss something. Did you check to see that the all the hurricane clips were installed, installed properly, and in the correct quantity before the drywall went up? Do you know what the right one looks like - there are different types!
Which leads me to liability. If you build your house and it doesn't work the way it's supposed to (it leaks, sags, cracks, or worse) you are the one responsible. Sure, you can try and strong arm the subs to fix it if its one discipline. But what if the problem is not obvious, such a coordination issue (framing to siding, or plumbing through the roof?) Normally, you'd stick it to the General Contractor - they're required in most states to warrant their work for a year. Guess what - THAT'S YOU! YOU are responsible, financially, for those problems.
Finally, if you're getting a $500,000 house for $300,000, you're doing your math wrong, or aren't comparing apples to apples. Most building products are commodity items. Same time, same area sales won't vary by more than 5% or so. You'll save the GC fee of, say, 20% to 25% of the cost of the construction, but you'll pay a little more for everything you get. That cost may be direct, such as paying $30 for every delivery or not getting the 15% volume builders discount at the Midtown Tile Hut, or it may be indirect such as the time it takes you to run around and compare prices, or wait two weeks for the electrician to get around to you because he has higher priorities.
Oh, one more thing. That lot you just paid $45,000 to buy? The buider paid $5,000 or less because he bought ten acres and cut it up into 10 lots. Don't forget the whole picture. If you "built" your house on a lot you owned and spent $120k, and the neighbor paid $160k for the identical house next door, you've just spent all your time and effort for the exact same thing as your neighbor got for signing a check. Don't laugh...I bought my 8 acres for $55k two years ago. The land next to me (11 acres) just sold for $90k. No well, no septic. The builder down the street (and a good friend, I might add) bought 35 acres of the same farm three years ago for $35k and is putting up six houses. He just bought 55 more acres down the way for $130k, and is getting about $50k for the timber on the land, then he's going to divide it up into 5 acre chunks and build some more houses.
Re:That's nice, but... (Score:2, Interesting)
I think when the original poster mentioned an existing structure and not an empty plot of land, one would assume that the building was not wanted. After all, this IS an article and thread about building your own home.
Also, one could read the paper, look for the next big building fire in your hometown. It is very possible that a person can offer very little money (say just the cost of what the land is worth) to buy the land and burned remains. This way the former owner collects their insurance and doesn't have to spend a dime to repair the property (which often is a full rebuild anyway when there is major structural damage). You would be VERY surprised how often a property owner is interested in this type of situation when approached.
So how do I know any of this stuff? I am not only a property owner, a person who HAS demolished an entire burned structure to the ground (when I was a teen, I took that on as a 2 week summer gig - just me, one hired hand and 4 full size dumpsters) AND I am a state licensed Public Adjuster (the second youngest ever in the state of MA). A public adjuster is one that works for insured (you) against insurance companies and their adjusters to maximize your claim for a %. I have had to write estimates (construction costs and contents) for more burned houses than you can imagine, with countless more before I was licensed (my dad had the same occupation and who was the lucky guy to provide free manpower to him). Thus my insider insight.
There are countless building auctions every day in every state. Many of them are absolute auctions that can provide for some unbelievable deals. I know someone who bought a 3-tenement house for $100 (plus a few hundred in back taxes) a few years back. A search on Google containing "auctioneer" and your state's name is likely to provide you with quite a few results. By contacting these folks, you can get a mailer from each of them once a month with all of their auctions for the next month or so. Definitely worth checking out.
I suppose my first post was short and to an incomplete point for brevity, thus did not relay the above.