When we hear the term owner builder, all kinds of different images come up in our minds. You may be picturing the introvert up in the mountains wanting to create a simpler life by building a small cabin away from it all. The idea being, by physically building a home with your bare hands you could save big money and avoid the every day pressures that life puts on us. This is actually partly true. Owner builders are those that take on the general contractor role for their building projects to save money and get complete control of the project.
So when it comes to taking on the general contractor role, what exactly are we talking about? By becoming the general contractor for their own projects, these folks are accepting the responsibility of the budget, quality, schedule, safety, hiring,… etc. This is a lot of responsibility but along with it comes complete control. Instead of having to go with a limited selection of plans, lots, or options, the owner can choose whatever they want.
In addition to having complete control, the owner builder can save quite a bit of money. The general contractor markup in today’s post recession environment is somewhere between fifteen and twenty percent. And in addition to the typical general contractor’s markup, self builders can also save by doing some of the physical labor themselves. Even if they don’t consider themselves handy, owner builders can take on the cleaning, refuse removal, and painting to save an additional three to five percent. One other way the owner builder saves is through bargain shopping. Land hasn’t been spared in the recent real estate debacle. This has opened up some opportunities for people to save big money on the building site for their dream home.
Because of these savings, the number of owner builder permits pulled in the U.S. is expected to increase of the next few years. According to the U.S. Census Bureau and The Department of Housing and Urban Development, forty-seven thousand owner builder permits were authorized in 2011 for new single family homes. And that doesn’t include all of the people that remodeled or added on to their own homes.
Some people still wonder if it’s still possible to save money as an owner builder. After all, don’t the builders have a cost advantage because of their relationships with suppliers and subcontractors? There is some truth to this but consider how much of the material that goes into a new home are commodity items. Things like lumber and concrete are both commodities that have very little room for negotiation. This levels the playing field for all people wanting to build.