Is being an owner builder worth it?

[ej89]

Hey everyone,
I've been shopping around with a design for a house to fit my 320sqm block in The Ponds. I was wondering whether it'd be worth managing the project myself?
Got quotes for 215-235 from project home builders.

House is 172sqm big...I have attached the floorplan..

Anyone have any experience being an owner builder? Did it save you a lot of money?

Also, to the brokers out there, how do the banks go with owner builders? Any issues?

 

[Ausprop]

I understand it is too hard if you need finance, however if you have cash you can slice off up to approx. 40% of the build price. tho it can be stressful and time consuming.

 

[Bhp19]

Very interested in this thread but more from a PPOR perspective.

 

[Ausprop]

there's a whole world of debate on the subject. Having looked into it for some time it would seem that the savings are available. The typical argument against goes along the lines that you pay more for supplies and trades than a volume builder.

 

[ej89]

I understand it is too hard if you need finance, however if you have cash you can slice off up to approx. 40% of the build price. tho it can be stressful and time consuming.

So banks won't give normal progress payment loans?

 

[Shahin_Afarin]

I understand it is too hard if you need finance, however if you have cash you can slice off up to approx. 40% of the build price. tho it can be stressful and time consuming.

The real issue is that what do you do when you make a mistake? Who covers this? What sort of warranty are you going to provide thereafter? How do you even know you have made a mistake until its too late?

 

[Ausprop]

So banks won't give normal progress payment loans?

ask a broker on here but my understanding is no. Apparently OBs get carried away and lose control of costings etc and it freaks the banks out

 

[Shahin_Afarin]

I understand it is too hard if you need finance, however if you have cash you can slice off up to approx. 40% of the build price. tho it can be stressful and time consuming.

owner build with no licence is max 60% and a lot of lenders don't like it.

however rams will do it if you have a fixed priced building contract (provided you are a licensed builder) at 80%.

 

[Ausprop]

The real issue is that what do you do when you make a mistake? Who covers this? What sort of warranty are you going to provide thereafter? How do you even know you have made a mistake until its too late?

what warranty of any real value do you ever get from a builder and was it worth the extra cost?

just get engineer sign off at every stage.

 

[Shahin_Afarin]

what warranty of any real value do you ever get from a builder and was it worth the extra cost?

just get engineer sign off at every stage.

Of course because if the scheisse hits the fan during or after construction then you can chase the builder.

Let me give you an example - I'm building 4 townhouses. Builder hits the water main by accident (long story) and the bill comes to $161k. He is covering it. If I was doing it then thats a mistake I would need to cover.

The point is that people think building is easy and its not. Just like any other profession you need to know what you are doing.

 

[Shahin_Afarin]

BTW the engineer signs off on very high level stuff and doesn't inspect a number of other important elements.

 

[Ausprop]

Let me give you an example - I'm building 4 townhouses. Builder hits the water main by accident (long story) and the bill comes to $161k. He is covering it. If I was doing it then thats a mistake I would need to cover.

if you were OB who would have hit the main? presumably a subbie?

 

[Shahin_Afarin]

if you were OB who would have hit the main? presumably a subbie?

Very possible yes. Its a long story but accidents like that could happen and even more so when you don't know what you are doing.

Good luck to all the first time owner builders out there but its something that my risk appetite wouldn't handle.

 

[bob shovel]

Of course because if the scheisse hits the fan during or after construction then you can chase the builder.

Let me give you an example - I'm building 4 townhouses. Builder hits the water main by accident (long story) and the bill comes to $161k. He is covering it. If I was doing it then thats a mistake I would need to cover.

The point is that people think building is easy and its not. Just like any other profession you need to know what you are doing.

161k!!? Did he rip up half a km of pipe!??

 

[Shahin_Afarin]

161k!!? Did he rip up half a km of pipe!??

They were drilling piers and concrete went into the sewer and affected 198m of piping.

 

[bob shovel]

Wow! what work was required if you care to share? Was it a large main or was it deep? That's a huge bill and I've done sewer works in the past so curious to know more.

 

[Brady]

Banks don't particularly like owner builders. Especially inexperienced ones.

I have a family friend who would let me 'owner build' under their supervision/licence which would allow me to obtain finance easier. But at this stage I don't believe the risk is worth it. I don't have the experience at this stage happy to pay the premium to a builder for a fixed price and the risk be on them.

 

[Scott No Mates]

They were drilling piers and concrete went into the sewer and affected 198m of piping.

Not quite 1/2 km.

A common occurrence though. I have heard of cases where footings have taken an extra 10m3 of concrete. Not a cheap exercise in itself but ripping out a concrete filled sewer was another story.

 

[perthguy]

Of course because if the scheisse hits the fan during or after construction then you can chase the builder.

If the builder still exists... my BIL was building in Perth in the last building boom. Builder went broke. Job went to another builder. Next builder went broke (took on too many jobs). My parents built in Melbourne. Builder went broke. They wound up in front though because the building company had build towards the next progress payment but my parents never had to make that payment.

The point is that people think building is easy and its not. Just like any other profession you need to know what you are doing.

That's true. If builders can't do it, how are the rest of us supposed to

Of course I exaggerate. There are many competent and profitable builders. Just as there are some individuals who can manage an owner build.

 

[Bhp19]

The typical argument against goes along the lines that you pay more for supplies and trades than a volume builder.

Easily alleviated by sourcing multiple quotes for both trades and materials, and possibly asking the trades to supply the materials so as you get their trade discounts.
Even better if you know people in most of the required trades.