owner building - pros and cons

Hi Guys. I am interested in hearing peoples thoughts with regards to the pros and cons, opportunities and risks with owner building ones own home. A friend of mine is thinking about it (and I have done it) but I dont seem to be able to convince him...

Off the top

Pros
===

- Save money (i reckon 30 pct on an over build of say 400k?? anyone agree)
- More control (over design, changes and tradies)

Cons
===

- need some expertise (need certain skills, like organizational, finance, building....or do you)
- more monetary risk


Skills / Attributes needed
===================

- Most important is a desire and a drive to do a good job i would have thought..


Please add....

Many thanks
Aussie
 
Biggest downside: can't finance the build, have to have cash. (Unless things have changed since I last checked it out.)
 
tradies generally charge retail prices for owner builders because they don't know what their doing and take 3x as long and can be quite difficult. not being rude just saying. if its for PPOR then just pay the tradies cash and you should get a better price
 
As an owner/builder am I right in assuming that should anything go wrong with the building in future you are liable? Some people might see this as a downside?

Interested to see the responses here as I'm looking at doing this soon.
Aussierogue, did you still have to engage a builder in an auditing role to ensure the work was all completed to relevant standards/codes?

Cheers,

Colin
 
apparently some offer owner builder loans

http://forums.whirlpool.net.au/archive/2138269

@tj22 - I eascaped those dodgy trader issues by having a mate whose a tradie either provide referees - his other mates, or help me actually negotiate with a tradie that he didn't know.With places like 'service seeking' an owner builder can get a prettu good feel for whats a good price or not.

Yes I agree cash is a good incentive..
 
As an owner/builder am I right in assuming that should anything go wrong with the building in future you are liable? Some people might see this as a downside?

Interested to see the responses here as I'm looking at doing this soon.
Aussierogue, did you still have to engage a builder in an auditing role to ensure the work was all completed to relevant standards/codes?

Cheers,

Colin

Hi colin

Like a normal builder an owner builder in Victoria must get the house signed off by the Surveyor (get an occupancy permit). This can only be done when you have all the other trades certified (plumber and electrician and wet areas)

And yes this stuff then needs to be guaranteed for I think 6 years. Which means if you sell you are guaranteeing the work...but that is standard stuff and if you have all the sign offs not a problem

The surveyor sign off along the way
 
From a finance perspective you can go 65% on owner build if you are not a registered builder and 80% if you are a registered builder.

Couple of issues associated with owner builds:

1. You need to warranty the work which can be a can of worms
2. Potentially the lack of industry contacts could mean higher prices than your project home builder that is supplying heaps of jobs to the contractor
3. Also the lack of industry contacts could mean delays which you will need to wear by paying more interest on the loan.

Owner builds are not as easy as they sound particularly if you are a first home builder. Could be potentially disastrous so tread carefully.
 
Thanks TFS

the info about finance at 65 pct is interesting...thanks

I think the other points can be over come but yes the person needs some skills and the ability to organise.



From a finance perspective you can go 65% on owner build if you are not a registered builder and 80% if you are a registered builder.

Couple of issues associated with owner builds:

1. You need to warranty the work which can be a can of worms
2. Potentially the lack of industry contacts could mean higher prices than your project home builder that is supplying heaps of jobs to the contractor
3. Also the lack of industry contacts could mean delays which you will need to wear by paying more interest on the loan.

Owner builds are not as easy as they sound particularly if you are a first home builder. Could be potentially disastrous so tread carefully.
 
Often owner builders go well over budget if they aren't experienced.

Brokers will be able to make comment on other baknks policy... But some useful info on CBA construction loan which many don't know is available.

You're able to borrow funds for up to 10 'out of contract items' as long as the total of these items doesn't equal more than 20% of the original build contract.

Example $300,000 original build contract, allows you to have up to 10 items totalling $60,000 (20%) as out of contract items. These items can be for non-structural items - landscaping, paving, driveways, window treatments, air conditioner, pools, kitchens, bathroom etc. The same work fully completed by a builder could be $400,000, so savings yourself $40,000 (10%)

I find that by doing these items yourself you can usually save yourself a decent amount of money, also by having these items included which are left off alot of contracts you will find your valuation stacking up alot better.
 
Often owner builders go well over budget if they aren't experienced.

Brokers will be able to make comment on other baknks policy... But some useful info on CBA construction loan which many don't know is available.

You're able to borrow funds for up to 10 'out of contract items' as long as the total of these items doesn't equal more than 20% of the original build contract.

Example $300,000 original build contract, allows you to have up to 10 items totalling $60,000 (20%) as out of contract items. These items can be for non-structural items - landscaping, paving, driveways, window treatments, air conditioner, pools, kitchens, bathroom etc. The same work fully completed by a builder could be $400,000, so savings yourself $40,000 (10%)

I find that by doing these items yourself you can usually save yourself a decent amount of money, also by having these items included which are left off alot of contracts you will find your valuation stacking up alot better.

Hey brady,

If you do the bathroom or kitchen or most other internal things yourself then you automatically void the builder's warranty so you need to be very careful with this.
 
Hey brady,

If you do the bathroom or kitchen or most other internal things yourself then you automatically void the builder's warranty so you need to be very careful with this.

Yes need to be specific with these, not too often these are done outside the original contract. Would always recommend discussing changes with the builder, as sometimes access and other things can also be an issue.
 
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