Is owner building for me? Some questions answered
Here's a scenario - you have received your building quotes and all are well above your expectation. Then you pose the question; is owner building something to consider?
Deciding on whether to be an owner builder isn't something anyone should enter into lightly - not only does it require considerable time and effort but if not planned and executed properly, it can prove costly in time and money.
Add to this the financial, legal, and occupational health and safety risks and the romance of building your own home can quickly become a nightmare. Any potential savings you had planned on have been chewed up in cost blow outs and additional interest. This is a story heard time and again from people who have tried owner building their custom home.
There is more to building a new home than organising trades and checking on progress to and from work. As an owner builder you assume the role of builder, site supervisor, project manager and customer which is a big responsibility. Building requires a big commitment in time and effort, which is difficult to manage with a 9 – 5 job. You will be at the mercy of your trades. When questions are asked they will want clear instructions and answers on the spot as they are unlikely to wait around for you.
Understanding the owner builder process
Before you even get to the building stage there are critical parts of the process that need to be handled such as the estimation, planning, permits and sourcing of materials.
Today custom home designs can be quite complex and great care and knowledge is required to understand plans, engineering documentation and the vast range of modern, cutting edge materials now common in most luxury home designs.
If there is one thing that the building industry is renown for, it’s blaming someone else when something goes wrong. Trades all too often will blame their poor workmanship on the trade work prior to their part and leave you to foot the bill to rectify. Lack of building knowledge, process and expertise can leave you vulnerable to being taken advantage of when things go wrong.
Many trades love owner builders as they can exploit their lack of expertise. They will often charge higher than normal rates or get away with less than desirable work. It is not unusual to hear horror stories where cash deposits are paid and little or no work has been done. Further complications can arise when delivery of a specific material you sourced does not arrive when required.
Although owner building your own home can be rewarding, and savings may appear to be made – consider the following before embarking on this journey.
- Do you understand all the relevant Insurances required on a building site?
- Do you understand the OH&S regulations that apply to new home sites, and what is required from your contractors to comply?
- If you are looking to sell your home within six years and six months of completing your building work you will also be required to take out domestic building warranty insurance to protect the person who buys your home. This insurance covers non-structural defects for two years and other defects for six years. After six years the property is no longer covered by domestic building insurance. As this insurance its being taken after the works are complete you will require a defects inspection report not more than six months old from a registered building practitioner in order to get a policy issued.
- As the owner and builder you assume all risks on site which is certainly something you need to give serious thought. This includes variations, budget blow outs and more serious issues of legalities and building code violations. These risks are normally assumed by a builder as part of a fixed price contract.
- Banks are harder to deal with when it comes to financing owner built constructions. Some will not lend at all, others have much more stringent guidelines including requiring more cash from you up front to put toward the building.
- You need to manage all stages of the project; from design, to tender (sub-contractors) to chasing the sub-contractors to complete the work on time at an acceptable quality.
- If the project is large enough that it can't be worked on over the weekends, somebody is going to have to work on the house in lieu of a normal job. The loss of income impacts on the actual savings you were hoping to make by building yourself.
The owner builder budget
- Everyone who builds has a budget, but problems during the building process might mean that you run out of money. It’s easy to overspend on extras. Bad weather can cause unavoidable delays. And tradesmen might not turn up when they say they will, delaying the next tradesman's piece of work and the whole process. A lot of things can mean your building job takes longer than planned and if that happens, your budget could be in trouble along with your deadlines.
The building plans
- Can you read the building plans, cross sections, elevations and specific architectural details? Do you fully understand foundation plans, steel connection details and how they apply to the built form? Can you explain the plans in detail to any specialist worker you engage to tackle a particular part of the building work? If not you face delays, even more frustration and worse, the possibility that mistakes can be made in the construction of your home. These all add cost, delays and stress to the building process.
- Construction is not rocket science, but it is often hard and tiring. There is also a lot of expertise behind every trade. If you decide on owner building, a significant amount of time will be spent learning how to do things.
- A long construction time may limit the opportunity to do other things that were not foreseen initially. An incomplete house may not be a liquid asset that is easily sold if the need arises.
- All too often owner builders will move in to an unfinished home. Living in an unfinished house for a long time can be stressful to almost all relationships and the downfall of some.
Avoid the pitfalls and choose a better solution
If all these pitfalls seem overwhelming, it’s because they can be. But remember, there’s an alternative. If you work with a professional builder such as Renmark Homes you’ll avoid the paperwork and hassles, get your house built quickly and stay on budget. Even though a builder may appear more expensive, he assumes all the risk which should take a lot of stress out of building. The secret is to engage a top quality home builder – one with expertise, experience and a long list of happy customers.