After much experience with clients deciding to “Save” money and sacrifice everything else including their sanity, marriage, sobriety, children, and life; I have this stern warning to people who actually think that they want to be an owner-builder and build their own home. It is not worth it. Find some help, even a site supervisor, to assist you with your building project. Let me say it again. Find some help, even a site supervisor, to assist you with your building project. It may save your life. Building a home is not easy. Organization, time lines, payments, corrections, delays, and so much more should be done by someone seasoned in construction management.
There are many different ways to build a home and we are going to introduce you to the two most popular and safe ways to do it.
You may have heard of “Turn-Key” construction or home building. This is where you hire a Licensed General Contractor to build your home. There are some builders that will build the exact home you want; and then there are others who only build certain floor plans and they will only build in certain places. Either way, turn-key construction means that you agree on a certain home for an agreed upon price and the builder takes it from there. You are contacted when draws (money) are needed to pay a completed phase of the process. You are notified when any major decisions are being made or if the building is being altered in any way. Besides that, you are usually given weekly or monthly progress reports and they will let you know when to plan on moving in. Depending upon the builder, the area, and options you choose; the turn-key price of a home can average anywhere from $90 or more per square foot. That means that a 2000 square foot home normally costs at least $180,000 and could cost as much as $600,000. There are many other factors to consider. If you are building in a high-end community, the appraised value (how much this home is worth on this piece of property) of this home could be $500,000. Some builders get a pre-appraisal for the home and property and give you a price according to that figure. So the builder may charge you $490,000 for that same home that would have cost $180,000 in a neighborhood with less value, fewer home options, etc.
The “Site Supervisor” home building plan is in place for people who want to build their own home. A “SS” is usually a General Contractor or Builder who has other building projects going on, but assists clients who go with this plan. These clients that choose this program either want to save a lot of money on the original home they planned on building, or they want to build a much bigger home with the same budget they would have spent with a turn-key home. This program is not so easy. The client needs to know that they are ultimately responsible for the construction project. To save this money, the homeowner must work with a “Site Supervisor” who assists them in building their own home. The “SS” would help them arrange a budget, schedule the construction job, and deal with the subcontractors. The “SS” is usually available for phone consultation and is always there as a coach for you and your project. Although this plan requires more involvement, it is very beneficial in the end if it is done correctly. Your home can cost as low as $70 per square foot. Homeowners in this program have built homes for as little as 65% of the appraised value. That means that their home was worth 35% more than what they paid for it. So if a home is worth $200,000, you can sometimes get it completed for as little as $130,000. That is $70,000 profit instantly. This is where your home really becomes an immediate and future investment with a great starting point.
Whichever way you choose to go, be careful and make time to plan everything out.