Who has done a new Residential home build on their own?

Question

Have you done this on your own without contractors and a builder? What did it cost you and/or how did you successfully cut costs? Permits or no permits?

I'm in Texas, and have acquired a nice piece of 1/2 acre of land. My team wants to build a home on their own, and we have many years experience rehabbing down to the frame and electrical, so while it is more challenging I am willing to face this type of challenge. It will be all cash no financing. Have you stopped building now due to lumber prices increasing? What about contractors the City insists on you hiring when you do better work yourself? I'd really like to avoid the bad experiences of ppl not showing up, bad jobs, taking my money, etc. If you're a Contractor on here don't take offense - I know that you have to run a business too and have your own mark-ups to survive, however, at this time I am not in a position to pay such ppl.

Right now the lot is outside the City Limits but they have this semi-bad thing called annexation...where the City will eventually zone the land as Residential, then you have at least $5k in permits to pay not to mention the long process of plan approval, permits, etc. Part of me wants to save to make this happen but part of me wants to go ahead and try to follow City protocol.

This is one of my dreams but possibly it's out of reach even though I am a very savvy and disciplined person with excellent budget ethic so maybe this is actually do-able?

Anyone that has new build experience can help if they have anything to contribute here! (Please, no mean ppl...as there's always a troll somewhere!)

Jason Grote · Answer

Hi Michelle, I'm in Texas as well and have the same story as you it seems. I did stud out remodels for about 10 years and then delved into new construction. We have recently built 4 houses on 1/2 acre lots just outside of the city of Austin. Concerning the building expenses, if you have the funds to build and the budget makes sense with the margin (if you're selling), that is what matters. I am actively building because the area has appreciated to off-set the increase in materials and labor. If you want to build to city code, use a 3rd party inspection company and have them do all of the inspections that the city does. That also helps to keep your contractors honest in their work. I have not heard of a city requiring you to use particular contractors, but I am in the Austin area. If you have any other questions that I might help with, just ask!

Teri Feeney Styers · Answer

@Michelle S. I have done both major rehabs and ground up construction. I have never skirted required permits or planning. It is a pain and does slow the process - but in my area they can shut you down, fine you, etc. I make submissions that adhere to the zoning, setbacks, etc. If you are selling, there may be a state law requiring a longer term warranty on the work. In Colorado there is a one year and six year threshold for new construction. My GC carries the proper insurance to cover this (I carry a builder's risk policy & umbrella coverage during construction). In addition, if you sell to an FHA buyer there is paperwork and warranties involved there. I will also note that as a broker I am constantly looking up permits (or lack thereof) for my investor buyers. I just don't want the liability for myself, my buyers, tenants, etc. for work done outside the local regulations.

Jason Bott · Answer

@Michelle S. we just set up the insurance for a client in South Dakota who is a contractor and wanted to be his own GC on his personal residence. There were not many insurance carriers interested in taking on this risk. Traditionally, if there is an issue with the build, and a claim is made on the Builders Risk policy, the insurance carrier looks to recoup some of their losses by going back after the GC's insurance policy. When you build your own place, the insurance company is taking on much more risk and prices the policy accordingly.I would suggest budgeting about 2x's the cost of a traditional Builders Risk policy.Best of luck with it.

John Mocker · Answer

Michelle, From an Insurance standpoint you will need: 1. Builders Risk policy (have your agent shop this as there are more markets for the Ground up Builders Risk compared with Renovation Builders Risk) 2. Liability - you have exposure both from the land and also from the construction process. You can shift some of that to the contractors with proper contract requirements (hold harmless & indemnity clauses, Additional Insured status, 30 day notice of cancellation/changes, etc. Even with all that, you will still need coverage (review it with your agent and attorney) 3. Workers Comp. - if you paying any one directly or if you are using subs without coverage you should check with your agent to see if you should have your own policy. The Workers Comp. laws in the state will impact the decision. Again, proper contact clauses and proof of insurance can reduce your exposure but check with your attorney and agent. Just a thought, would modular construction help with the city requirements as the company is handling most of the process.

Michelle S. · Answer

Thank You all for the responses! Good tips and experience! It looks like it will cost me around $5k in permits. I work very hard getting costs down in any area, thus yielding a $90k profit on each rehab I've done so far. I am very concerned with starting the build and not being able to finish. I have just enough cash, but even the best in real estate say there's always more cost involved than what you initially project. I will be sure to research warranty requirements here on new builds. The Engineer/Drafting designs = Any ideas how to get this down from $3k if I already have plans in mind? Any framers in the DFW TX area less than $15k?Who can pour a least expensive foundation here?Do we seriously have to pay for a high dollar soil test prior to foundation?

Tom Wagner · Answer

This is something I'm considering longer term. I think a lot of floor plans have wasted space and that building your own property would be a good way to both live in your dream home and make sure there is no wasted space.