Help me decide: Owner-Builder vs. GC

[Grace Simpson]

This is my first project that I'm doing on my own - 425sf addition + upgrading existing house. Permits are at the final stage and I need to decide on a contractor. I've checked references and visited their work on other homes but am still agonizing over this decision.

My choices (all were referrals and all are very nice people):
1. Expensive GC who I have confidence in but I'd rather not spend the extra $ unless it's highly advisable.
2. Less expensive (smaller) GC with mixed references. I'm not thrilled with work I've seen but I think that is b/c the homeowners chose cheap materials.
3. A very experienced sub with good-looking work. In this case, it would make sense for me to get the permit as an owner-builder and I'd save $, but I'm inexperienced. 

I have a close friend who has been advising me but has been out of the country for a few weeks. Advice appreciated!

[Jason Wray]

Grace,

If you plan on getting a construction lon or use financing most Banks & Lenders do not allow the owner to the work unless you have a GC license, but again even still some will not allow. If no financing I would use bigger pockets forum and seek out a GC based on the area. Simply ask around in the California forums and you might get lucky.

If not I would simply do some calling and some quotes and let them bid each other out to try and get a good quote. If you do use financing the banks keep record of approved builders and GC's in your zipcode.

[Grace Simpson]

Hi Jason. Thanks, I don't need a loan. I have bids from 5 GCs. I've been living in the house over a year so I have the option to be the GC.

[William Hutch]

Do you feel comfortable managing the project in your own? 425sqf isn’t much. Does the city require you to have a GC or is under a required size threshold? What is the scope of work and how many subs will you need?is the $$ associated with the GC that much more? If you’re happy taking your time and if it’s simple I’d say go for it. Better to try and fail then not try at all. 

[Brad S.]

That would depend on a few factors:

How confident you feel in managing the project (as @William Hutch mentioned).
How confident you are in recognizing building issues/concerns, and pointing them out.
How much time you have to oversee and research how things should be done. Remember there is a difference between work done to code (good enough) and work done per best practices. There are certain ways of doing things, which are just fine, but they may not maximize the use or performance of something. For example, an experienced plumber may suggest putting hammer arrestors on a plumbing system, to help alleviate potential water hammer problems (knocking noise) and prolong the life of components/fixtures/appliances, but the local building code may not require them.

It would also depend on what you are doing the work for and how the deal #'s pencil out. You said you live in the house, so if it is for personal use only, that might play into the decision, and/or if you have a lot of room in the deal financially and have enough to pay for the higher priced, possibly better GC, that might be part of the decision also.

In my experience, higher price doesn't always mean "better," but may mean more attentive and experienced and more and/or better resources (like better sub's, etc). 

That said, there is a lot of value with very good sub's, and can end up saving significant $, since there is no mark up. Some GC's are only as good as their sub's and other's are better than their sub's and are worth their weight in gold - it all depends.

I've don't most of my projects with sub's for many years and have learned to recognize many things that may need more attention, etc. Certain trades I wouldn't skimp on, like electrician, plumbers, etc, but sometimes you can get away with bringing them in to do the finish only, or you can pay a licensed trade or GC to come and inspect the work prior to closing up walls, etc. You can also pay a good home inspector to check on things as they are going and/or prior to closing up walls. Also, remember that city building inspectors or looking for minimum standards and may or may not be best for what you're trying to accomplish. But a good skilled worker, whether GC or sub's, can be invaluable.

With all that said, to try and save money, I would see if you can find a good home inspector referral, many of them are or were GC's themselves, and pay them to check out important work that you have done. That might be a good compromise. And you can get some good referrals from experienced local realtors/brokers, or here on BP, or nextdoor, yelp, etc.

[Brad S.]

I left out the most important thing - NEVER overpay a deposit for work not yet completed, that money and person/s sometimes have a way of disappearing in certain situations like that. 

You can also arrange to get the materials yourself and shop around for better pricing, which can help keep costs down. You can ask the Sub's, or whoever you are going to do the work, which materials they need and price them out at other supply houses. Or you can find someone to do a "takeoff" of the materials needed for the job, based on your plans and then send that out for bids. There are people and companies that will do takeoffs for you, for a fee. So, that may consist of getting a list of the lumbar needed for the build, etc. Also, some suppliers will do a takeoff for some of the materials. Not sure if Home Depot or similar will do it though, but they may be able to point you in the right direction.

But, this is easier with experience and knowing about other suppliers. It is more straight forward for certain things like the lumbar for your addition. You can send out the plans

[Matthew Paul]

Ok , you are the homeowner doing an improvement to your house .  I will be straight to the point , you have NO EXPERIENCE dealing with the trades , the order in which work has to be done .  Number 1 is a GC , a professional , he has the contacts and provides you with a finished product . Expensive ?  What isnt ? been to the grocery store lately ?

Number 2 , with mixed references , well that says it all .

Number 3 an experienced sub ? In what , is he a roofer ? A framer ? a drywall guy ?  A painter ? 

If  You cant afford to do it right , how can you afford to do it over  ? 

[Stuart Udis]

@Grace Simpson I believe you answered your own question when you said you weren't thrilled with the work you saw from the less expensive GC. The way you describe it, it seems like its more than just inexpensive material selections.  With respect to managing the project on your own, this proposed addition will require multiple subs, not just one. Given this is your first project, are you sure you are ready to self manage? 

Then there are warranties and the ongoing and trailing liability. What happens if there are defects? Will you file a claim against yourself? If you use a properly vetted, reputable and experienced GC, statistically it seems less likely there will be issues compared to a fact pattern where  you self manage  the work as a first timer. In the event you use a GC,  you should be listed  as an additional insured (both professional liability and commercial general liability) which protects you moving forward. Perhaps I am getting ahead of myself, but  what happens when you sell this property and a defect is uncovered by the next owner? If you self manage and hold the permit, they will come after you. As a side note, make sure all subs, regardless of whether you opt to self manage or utilize a GC list you as additional insured as well (not to be mistaken as a certificate holder).

[Alan F.]

Quote from @Grace Simpson:

This is my first project that I'm doing on my own - 425sf addition + upgrading existing house. Permits are at the final stage and I need to decide on a contractor. I've checked references and visited their work on other homes but am still agonizing over this decision.

My choices (all were referrals and all are very nice people):
1. Expensive GC who I have confidence in but I'd rather not spend the extra $ unless it's highly advisable.
2. Less expensive (smaller) GC with mixed references. I'm not thrilled with work I've seen but I think that is b/c the homeowners chose cheap materials.
3. A very experienced sub with good-looking work. In this case, it would make sense for me to get the permit as an owner-builder and I'd save $, but I'm inexperienced. 

I have a close friend who has been advising me but has been out of the country for a few weeks. Advice appreciated!

 Here's a link to check contractors licenses https://www.cslb.ca.gov/onlineservices/checklicenseII/checkl...

If you're going to sell be mindful of AB 968

Best of luck

[Jacob Sherman]

The gc is really the rolodex of subs to work with . If the sub is trusted and you feel comfortable can go owner builder route 

[Shannon D Delay-mogilinski]

Take the cost hit and use the good GC.  A GC is much more than a rolodex.  As a GC by trade, they also provide you with one pivotal point of liability coverage as well as being contracturally obligated to meet your deadlines, quality standards, plan implementation, and inspections with the municipality.  

You could be looking at 8-12 subs that you will need to individually contract and negotitate with.  (I'd advise against signing whatever subs hand you)  If you GC yourself, you need to put that under a corporation, get insurance, and create your OWN contract the subs signs (who will then need to get you their W9, insurance naming your co. as additional insured, and their license depending on trade--make sure it is all current and active!!)...You need to set a timeline you provide that is referenced in their contract too...All this before anyone picks up a hammer.  

YOU can GC absolutely, but if that is what you want to do going forward, use this good GC as an example before you launch--many of us are happy to mentor others--ask and see if you can make this part of your arrangement.  GCs absorb liability and run the risk of absoring problems on the jobsite, so yes they are expensive, but they buffer poor subs on a job.  Without that, I'd set aside at least 10% of your budget for this purpose if you do it on your own.  Good luck!!

[Joehn B.]

Good points made above about making sure you have time to manage this.  I've done a few owner additions and can say it is not only cheaper but a rewarding experience.  yours is small enough, perfect for you to get your feet wet!  

[Sherry McQuage]

Quote from @Matthew Paul:

Ok , you are the homeowner doing an improvement to your house .  I will be straight to the point , you have NO EXPERIENCE dealing with the trades , the order in which work has to be done .  Number 1 is a GC , a professional , he has the contacts and provides you with a finished product . Expensive ?  What isnt ? been to the grocery store lately ?

Number 2 , with mixed references , well that says it all .

Number 3 an experienced sub ? In what , is he a roofer ? A framer ? a drywall guy ?  A painter ? 

If  You cant afford to do it right , how can you afford to do it over  ? 

 Hello Grace,

I don't know you...and I am also a female.  As much as I hate to admit it, many subs don't...respect women and will lie/deceive/misrepresent things, especially when they know you're new to this type of thing.  Hiring an experienced home inspector (who used to be a GC) sounds like a good idea.  

You will learn a lot no matter what route you use.  Also, since you are living in the property that you'll be renovating, please make sure you are not leaving yourself (and your possessions) at risk of theft or worse.

Hiring the expensive GC that you have confidence in will cost money.  Going with the less expensive GC will cost money in ways that can be really frustrating and expensive.  An experienced sub with good-looking work probably needs to be tried at a later date, not on your first addition/upgrade.

You could also keep asking people for other GC referrals..."if you think it's expensive to hire a professional, wait until you hire an amateur," ---Red Adair

Best to you!

[Grace Simpson]

Thanks to (most) all of you for the responses! Thought I'd give an update.

I was second-guessing myself so I continued to visit additional projects/referrals and uncovered some dirt on the negative reviewer -- an investor who had since partnered with the sub and stood to gain! (who btw, would have handled the entire project, not just a few trades) Such a small community -- everyone knows each other and even about my friend's project 20 miles across the bay. (same architect)

I dug into the weeds for allowances on all FF&E, which was like pulling teeth but I wasn't going to let it go and it made a difference in comparing bids. I'm very happy with my choice, they are doing some additional scope at no cost b/c we're friendly (it's in writing), and the framing inspection is scheduled for this week!

As I mentioned, all (6 total) builders were good people and from trusted referrals. I wouldn't work with anyone who was disrespectful or treated me as if I know nothing about my own project.

Thank you, again, for the advice.

[Alan F.]

Quote from @Grace Simpson:

Thanks to (most) all of you for the responses! Thought I'd give an update.

I was second-guessing myself so I continued to visit additional projects/referrals and uncovered some dirt on the negative reviewer -- an investor who had since partnered with the sub and stood to gain! (who btw, would have handled the entire project, not just a few trades) Such a small community -- everyone knows each other and even about my friend's project 20 miles across the bay. (same architect)

I dug into the weeds for allowances on all FF&E, which was like pulling teeth but I wasn't going to let it go and it made a difference in comparing bids. I'm very happy with my choice, they are doing some additional scope at no cost b/c we're friendly (it's in writing), and the framing inspection is scheduled for this week!

As I mentioned, all (6 total) builders were good people and from trusted referrals. I wouldn't work with anyone who was disrespectful or treated me as if I know nothing about my own project.

Thank you, again, for the advice.

 Congrats Grace, glad things are working out. To wit all C series specialty contractors can be a prime contractor directly to the customer. A subcontractor is any contractor that works under and is paid by the prime contractor. Hope you have many more successful projects.