Duplex development - Owner builder vs License Builder

[bumblegoodie]

Dear All,

As iam still a newbie in development knowledge, may i ask the more experienced developers if they had ever built their development using the owner builder method?

would it be more cost effective if you manage the whole build and get contractors in?

I call up a chippy not long ago and he suggested this option to me. As he doesnt have a builder license but is very experienced (over 15 years in building houses) he can project manage for me as well and said approx. $1000 per sqm.

Your thoughts thanks

 

[A Jeremy]

Your best bet is to weigh up the costs of undertaking the project as an owner builder and comparing it to the cost of using a builder. You also need to take into consideration your diminished earning capability during this time if it will be affected. It will probably take longer for you to complete the project as an owner builder if you have no prior experience which can lead to increased holding costs as well as costs related to missed opportunities.

Finally you have to consider that a builder is a person who is experienced with construction and will typically do a better job than an owner builder. On the other hand if you are looking to move into a long term supervisor or builder role than this will provide an invaluable amount of experience and understanding of the construction process.

 

[Kate Ashmor]

Will you sell in the next few years?

If you intend to sell a property constructed as an owner-builder, keep in mind that there are additional legal requirements. These vary depending on your State, but can include insurance, obtaining a building inspection report when selling and providing additional warranties in the contract. The insurance requirement can last for some years following completion.

Also, some states prohibit owner-builders from constructing more than one dwelling every few years.

If you intend to sell, best to clarify the legal differences along with other differences.

Good luck!

~

Note: the above is general information and should not be considered as legal advice.

 

[westminster]

I think in most states you can only do one owner build at a time and you need special insurance if you want to sell it within 7 years. It's really not designed for developers.

I wouldn't recommend anything like that for an inexperienced person.

 

[Shahin_Afarin]

Go with a project home builder. Why?

1. It will be cheaper than doing it yourself particularly if you don't know each and every single trade and in what order to use them and how quickly in advance to book them it particularly in Sydney.

2. You need to have the building insured and if there are any issues with the building you will need to fix them. Yes you can go back to that particular trade but imagine chasing tradies and there is not guarantee you can get a hold of them. Nightmare.

3. Time. It will take considerably less time for you to give it to a custom home builder than doing it yourself. This will result in a higher holding cost.

4. Finance. Banks understand all of the above points and you will have severe LVr restrictions which means you need to fork out more money.

You use project home builders for simple constructions like duplexes and use private builders for more complex constructions like apartments, townhouses w/ basements, etc.

 

[bumblegoodie]

I think in most states you can only do one owner build at a time and you need special insurance if you want to sell it within 7 years. It's really not designed for developers.

I wouldn't recommend anything like that for an inexperienced person.

thanks mate for the note. My aim is definitely sell it and not hold it for seven years. =)

 

[bumblegoodie]

Go with a project home builder. Why?

1. It will be cheaper than doing it yourself particularly if you don't know each and every single trade and in what order to use them and how quickly in advance to book them it particularly in Sydney.

2. You need to have the building insured and if there are any issues with the building you will need to fix them. Yes you can go back to that particular trade but imagine chasing tradies and there is not guarantee you can get a hold of them. Nightmare.

3. Time. It will take considerably less time for you to give it to a custom home builder than doing it yourself. This will result in a higher holding cost.

4. Finance. Banks understand all of the above points and you will have severe LVr restrictions which means you need to fork out more money.

You use project home builders for simple constructions like duplexes and use private builders for more complex constructions like apartments, townhouses w/ basements, etc.

Thanks Shahin. Great answer and i bet you are both an experienced developer and broker.

I guess if i am building for the purpose of my PPOR then is ok but as for investment then the answer is definitely no.

As you have quoted using "project home builder" what do you mean? could u give some examples?