Being Own Contactor Saves Cash, Costs Time

Question
My wife and I are planning to retire late this year and are thinking of buying a vacant lot in a nearby new-home community to build our retirement home. I am also interested in serving as my own general contractor on the project to save on construction cost. Is this a good idea and what are the requirements to serve as a general contractor?

Answer
Building or remodeling your home now could be a good, idea especially because prices of many components that go into construction of a house have dropped sharply in the wake of the housing slow down.

Serving as your own contractor can trim another 15-25 percent off your construction cost, but only if you have time to spare and a basic knowledge of the home-building or remodeling process.

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Question
Why would building or remodeling a home from scratch now be cheaper than it was before?

Answer
Because prices for many of the “big-ticket” items that go into the actual construction of a home have fallen greatly.

The slowdown in new-home starts has forced many professional builders, suppliers and laborers to cut their prices. In the last 18 months, the cost of lumber needed to complete a home’s framing has dropped by nearly 20 percent nationwide. Drywall has plummeted an even steeper 40 percent on average, and the cost of wood windows and doors frames is down 12 percent. The price of roofing materials has declined 11 percent, and insulation prices have fallen 6 percent.

And for those like you, who want to buy raw land to build a brand new house, you’ll find that prices are down about 20 percent from eight months ago. That is an important idea to think about, especially if you want to build in a beach side area or other popular community where land prices easily can account for more than half of your total cost.

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Question
What would be required if I wanted to boost my savings by acting as my own general contractor instead of hiring a professional?

Answer
As noted above, you can usually save about 15 percent by acting as your own general contractor and no state licensing is needed, but lots of time and energy are. Experience also helps. You have a better outcome if you have hands on experience to any remodeling job-even the small ones. For example, hiring a plumber to repipe your bathroom or getting bids to reface your kitchen cabinets can help gain the experience of obtaining bids and reading contracts. This will help you move forward to bigger jobs.

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Question
If I decide to become my own general contractor, how much time should I expect to spend on the project?

Answer
Figure spending at least 10 to 20 hours a week in the early stages of the job: You’ll need to interview potential subcontractors, look at their bids, check their references and contact the appropriate state agencies to find out if they are licensed and insured.

You will also need to call around for the best prices on lumber and other materials and get all the building permits required.

After you have chosen all the subcontractors, you should devote at least one to two hours each day making sure the work is being done according to your schedule and specifications. Figure on adding two or three hours per week to write checks and maybe even pick up supplies.

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Question
Will the lender that finances my project be concerned if I decide to act as my own general contractor?

Answer
Possibly. Most banks are scrutinizing loan applications now and many are requiring prospective borrowers who want to act a their own general contractors first to hire consultants to help oversee the work.

 

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