Home Plans And Home Designs - Building at cost
Doityourself.com community forum was created to provide answers to all questions related to home improvement and home repair. Doityourself community can help you find information about how-to topics on small fixes to large remodeling projects. With comprehensive how-to content and expertly moderated community forums DoItYourself.com makes it easy to tackle even the most complex home improvement projects.View Full Version : Building at cost
thehusker
09-26-05, 09:04 PM
My wife and I might have the opportunity to build a home at cost, or very close to it. Family friend builds homes. We'd like a walkout ranch, unfinished basement, 3 bedrooms, slighty more upgrades than a starter home (wood floor in kitchen, some cermamic tile, ect). A local builder who a few friends and family members have used starts out at 160K for what we'd be looking for.
Question is - How much do builders usually make on, let's say, a 160K home? We're ballparking how much cheaper we'd could build for using the family friend (i.e. lower mortgage payment :). Thanks in advance.
Question is - How much do builders usually make on, let's say, a 160K home? We're ballparking how much cheaper we'd could build for using the family friend (i.e. lower mortgage payment :). Thanks in advance.
Brian Garrison
09-27-05, 11:50 AM
thehusker,
normal profit is between 10-20%. This is above his wages. The percentage you are giving the contractor is for risk. You as an owner builder will be assuming all that risk if you do not have a licensed contractor. My guess is that the family friend building at cost is not licensed or is not going to use his license as building for wages is with your license at risk does not make any sense.
I hope this answers your question.
Brian Garrison
General Contractor/ Professional Building Designer
normal profit is between 10-20%. This is above his wages. The percentage you are giving the contractor is for risk. You as an owner builder will be assuming all that risk if you do not have a licensed contractor. My guess is that the family friend building at cost is not licensed or is not going to use his license as building for wages is with your license at risk does not make any sense.
I hope this answers your question.
Brian Garrison
General Contractor/ Professional Building Designer
thezster
09-27-05, 08:32 PM
Is your "friend" going to act as the G.C.? Or simply advise you on the steps to take?
Not only does the "profit" of a contractor include his risk.. it also includes his expertise. Building a home is a scheduling nightmare for the uninitiated. It involves finding quality materials, sub-contractors, getting permits, checking work - rechecking work - and rechecking work. It requires visiting the job site at least once daily to ensure standards and progress - both of the individual subs, and of the entire job. It requires some knowledge of building techniques, materials, and code requirements.
That's not to say you can't do it.... Just be prepared for more time/work/frustration than you've ever dealt with before. AND...... a great feeling of accomplishment if, er.. when.... you pull it off...
Not only does the "profit" of a contractor include his risk.. it also includes his expertise. Building a home is a scheduling nightmare for the uninitiated. It involves finding quality materials, sub-contractors, getting permits, checking work - rechecking work - and rechecking work. It requires visiting the job site at least once daily to ensure standards and progress - both of the individual subs, and of the entire job. It requires some knowledge of building techniques, materials, and code requirements.
That's not to say you can't do it.... Just be prepared for more time/work/frustration than you've ever dealt with before. AND...... a great feeling of accomplishment if, er.. when.... you pull it off...
thehusker
09-29-05, 08:36 PM
He will be the general contractor, and he's built a few homes. He's also buddies with several reputable contractors, possibly business partners. Thanks for the cautionary advice. We will definitely keep these things in mind as we "explore" opportunities with him and make sure we aren't making a mistake. Aside from your input already, what are some other things we should check up on/questions we should ask? Thank you very much for your advice.
thehusker
09-29-05, 08:40 PM
In addition....Saying "by cost," I might have exaggerated a bit. It's better to say we'll get a pretty good deal on the house, possibly. I'm just trying to gage, assuming he's reputable, how much we could save.
thezster
09-29-05, 08:46 PM
Assuming he's reputable??? That makes me nervous...
If you want to know how much "could" you save.... ask him! He alone knows what type of markup he's going to charge for his time/expertise. Your materials/sub-contractors/permits/etc., are going to be pretty close to "even Steven" assuming all your potential contractors are reputable businessmen. On the other hand, if he's not "reputable" - is he going to use licensed subs - substitute materials - provide insurance coverage....?
If you want to know how much "could" you save.... ask him! He alone knows what type of markup he's going to charge for his time/expertise. Your materials/sub-contractors/permits/etc., are going to be pretty close to "even Steven" assuming all your potential contractors are reputable businessmen. On the other hand, if he's not "reputable" - is he going to use licensed subs - substitute materials - provide insurance coverage....?
Jillypad
12-20-05, 10:45 AM
OK, so I am acting as the general contractor on my own home. And breaking news....IT IS NOT THAT DIFFICULT.
Yes, the contractor may have expertise, but he does not have your best interest in mind. Period. You are working with his profit margin on his working schedule with people he likes to work with and materials he has/hasn't shopped for. Through reading, visiting lumber yards and supply houses, and tirelessly meeting with subs in all trade areas, taking referrals from friends and relatives, and also visiting new construction, I have been quite successful in building on my own. Insurance was no problem, I am able to shop my materials and don't have to take the 'standard' or the 'upgrade' from a builder (neither of which sometimes were what we wanted), and we can do the work we know we can tackle when the time comes. Don't get me wrong, there have been bumps along the way, but overall I wouldn't hesitate to do it again.
To give you an idea of overall savings.....our plans were quoted by builders at anywhere from $169,000 to almost $300,000 (same set of plans, five different builders that we approached). Our estimated cost to build (we are about halfway through, so this is a good estimate) is $130,000.
I would totally suggest going for it.
Yes, the contractor may have expertise, but he does not have your best interest in mind. Period. You are working with his profit margin on his working schedule with people he likes to work with and materials he has/hasn't shopped for. Through reading, visiting lumber yards and supply houses, and tirelessly meeting with subs in all trade areas, taking referrals from friends and relatives, and also visiting new construction, I have been quite successful in building on my own. Insurance was no problem, I am able to shop my materials and don't have to take the 'standard' or the 'upgrade' from a builder (neither of which sometimes were what we wanted), and we can do the work we know we can tackle when the time comes. Don't get me wrong, there have been bumps along the way, but overall I wouldn't hesitate to do it again.
To give you an idea of overall savings.....our plans were quoted by builders at anywhere from $169,000 to almost $300,000 (same set of plans, five different builders that we approached). Our estimated cost to build (we are about halfway through, so this is a good estimate) is $130,000.
I would totally suggest going for it.