Owner Builder Projects:
Financing and Construction Support.

Owner builder house construction is a growing trend in the United States. There are several reasons for it, but the major one is the most obvious – cost savings. The cost savings comes in two forms and can be substantial. One form of savings is the elimination of the builder or QC as the middleman. This typically can save you 10-30%. In addition, many owner-builders, about 30% are reasonable skilled in construction and to a significant amount of the work themselves. Taken together these two forms of cost reductions can save a consumer15-40% on their new home.

When we first assembled the House Building Guide, we suggested that most people avoid owner-builder programs. The reason was simply – most people don’t have the time to do manage one. We used to say also, that most people don’t have the expertise - - but that is no longer the case, because there are now some excellent owner-builder program available. These programs overcome the two major obstacles that owner-builders encounter: 1) Finding financing for owner builder projects, and 2) Finding construction support assistance.

There are several excellent owner-builder companies today. These companies can generally be divided into two categories. Firms that make their money by charging a consulting fee – and firms that get paid by selling you materials and marking these up.

There are benefits to the consulting approach in our opinion. The biggest one is that you will know exactly what your cost will be. With companies that sell materials, you will never know your exact cost, because you have no way to know, how much they are making on the materials they sell you.

Another advantage to the consulting approach is flexibility. Firms that sell you materials, require that you buy materials through them, and they may also require that you choose from one of their gallery of plans – which may not be very large.

Regardless of which approach you choose, both types of companies should be able to help you put financing in place. This is very difficult to do because most banks will not lend money for owner builder projects. And the second thing that these companies should provide is construction support throughout the building process.

The overall cost of these programs range from a low of 2.75% to a high of 7-10%. This may seem like a lot, but when you remember that a builder will typically mark up everything he touches by at least 15%, you can easily appreciate the savings potential.