Should You Be Your Own General Contractor

There are many reasons you might want to be your own General Contractor when building your new home. However before you jump in and decide to take control, there are a few things to consider. But, if you think you are up to the challenge, it can be a very rewarding experience.

The first issue would be is it legal? In some parts of the country you need to be certified or have a license to act as a General Contractor, even for yourself. It is best to check with your local authorities and zoning people to see if there are any requirements you might need to meet.

If financing your home you may find that the banks will require your home to be built by a licensed contractor in order to obtain financing. So check those requirements first.

The two main reasons people act as their own General Contractor or Owner/Builder is to have control over the project and to save money. There are pros and cons to each of these. It depends on what is important to you.

Saving Money

A General Contractor will typically add 12 to 20 percent to the cost of a job to cover his fee. When building a new home, that can be a fair amount of money. However, they do work for their money. However keep in mind those savings will likely be lessened in part as subcontractors will charge you as an owner builder a higher fee. Any real savings you may see will be replaced by your sweat equity.

Being your own General Contractor or Owner/Builder is not a full time job, but you do have to be available. You will be committing a minimum of two or three hours a day. Some days will require your full time presence, especially as completion nears. This is a commitment because it will last anywhere from 8 to 16 months, depending on the size of your project. You must be onsite when needed and available at short notice.

You Will Need Subcontractors

The control comes with your ability to hire the right subcontractors. You will need carpenters, plumbers, electricians and other trades people. The most important will be your masonry contractor. He is the person that will build the foundation and rough structure, so always start with them.

Finding qualified trades is crucial. Some trades may be able to help you find the other subcontractors you will need. When looking for a carpenter, or any other trades people, always ask friends, family, neighbors, or check the yellow pages. Also make sure to contact your local home builder's association for references.

Always check the subcontractors references (customers, suppliers, banks, and others). Make sure you get several estimates from a variety of subcontractors. Make sure they are licensed and insured. Do your homework and research very carefully before you hire anyone.

Remember, you are a one-off for them. Subcontractors take on many jobs at the same time. Most of their builder clients will be building more homes in the future, so they might get preference over your project. Also dealing with an owner builder is more time consuming than a builder. Make sure you are ready for a bit of frustration. Also for this same reason they will charge you a higher fee than for a regular contractor they work with. It is always best to work with a licensed contractor.

The key to working with subcontractors is good planning, constant communication, and being flexible and patient. Most subcontractors take a lot of pride in their work. Use that to your advantage and help them do the best job they can.

General Contractor’s Insurance

As the General Contractor you will be assuming the risk of the construction. Your bank will probably insist that you have valid insurance on hand at the time you close the loan. You need to be insured before any material or workers arrive on your lot.

Prices tend to vary between insurance companies. If you have homeowners insurance, ask them for an estimate. When the home is finished, you can usually convert the insurance from construction coverage to regular homeowners. 

The Buck-Stops-Here

If you choose to be your own General contractor, don’t be blinded by the idea of saving a lot of money or having control over your project. Remember that when things go wrong (and they always do - to some degree), there will be no one to complain to, except you. All the decisions, both large and small, will be yours to make. You will be the voice of authority over the whole project.

It is really up to you. Anyone can learn what they need to know to be their own General Contractor. It comes down to time, commitment, and persistence. If you don’t have all three you might be better of letting someone else take the responsibility. We feel it should only be tackled by someone with some construction knowledge. Making a mistake in the process can cost you much more than any potential savings. If you do choose to do it yourself, your new home will be so much more than just another house. You will have an intimate knowledge of its construction and a connection to the craftsmen that did the work. That pride in accomplishment is hard to put a price tag on and can be worth all the time and energy that goes into it.