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Personal Finance > Your Home
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Build your home sweet home
graphic December 26, 2001: 7:31 a.m. ET

Acting as your own general contractor can save you 20 percent or more.
By Joseph Lee
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  • Mortgage rates inch higher - Dec. 13, 2001
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  • House Contracting & Building
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    NEW YORK (CNN/Money) - Berkley von Feilitzsch and her husband, Harry, have always dreamed of building a house of their own. They wanted to create something beautiful that would last a lifetime, but on a budget they could afford.

    So, in spring of 2001, they took matters into their own hands.

    "We decided to build our house without hiring a general contractor to have more control over the quality of work and the pace of construction," she said, noting the cost savings in the end more than made up for the extra legwork required.

    The von Feilitzschs already owned undeveloped property in Northern Virginia, about 60 miles southwest of Washington, D.C. When baby number three came along, they knew it was time to break ground for a larger home. They selected the blueprints for their new pad and immediately set to work hiring independent contractors, coordinating schedules and filing all the necessary paperwork.

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    The von Feilitzschs' new house. (Photo taken right before the Thanksgiving Holiday '01)
    Initially, they said, friends and relatives questioned their ability to manage the project on their own.

    "With my husband working full-time as a management consultant and a new baby on the way, a few people said they thought we were crazy to do it ourselves," Berkley said.

    The von Feilitzschs are among the thousands of people each year who embark on home construction - a souped up version of the American dream. If you're planning to join them, be forewarned it requires organizational skills, energy and patience to spare.

    Is it worth the risk?

    First, building permits and periodic inspections are required throughout the process, notes Robert Metcalfe, author of Housing Contracting and Building. If you're acting as the general contractor to save some dough, you'll have to set those up yourself.

    Deposits also are required for all utilities before construction can begin, and getting your building permits can be a frustrating experience, especially for those who are unfamiliar with the system, according to the Arcadian Home Builders Association (AHBA). Mistakes can be costly and time-consuming.

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    The agency also notes that homeowners may only legally build one home per year, and are required to occupy the home upon completion. Otherwise, they're considered to be professional builders.

    Also, homeowner contractors may not be required to carry workman's compensation insurance under state regulations, but it would be wise to require all subcontractors to present certification of their own workman's compensation coverage, according to AHBA.

    It also is required by law to know that all your subcontractors who employ workers carry workman's compensation insurance.

    Metcalfe warned you should always double check that the house plan you've selected can be physically constructed on your property. Some blueprints, for example, cannot be altered to conform to hilly slopes. This step should be determined prior to purchasing the land.

    A watchful eye

    Metcalfe said organization and constant oversight are the key elements to being a good general contractor. "If you cannot be on the project each day to check on things, then you should not try and be your own contractor," he advised.

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    The von Feilitzschs' new house. (As of Dec. 11, 2001) They expect to move into the new home by the end of March.
    The Feilitzschs, for example, have three boys, age 8, 4 and 4 months old. As Berkley recalled, she had to call in an inspection from the hospital the day her youngest son was born.

    "Our youngest son, Matthias, was born on a Monday morning, and that afternoon I got word that our excavator needed his backfill inspection done as soon as possible, so he could continue without delay," she said. "So I called the building office from my hospital bed and was able to keep things on track."

    Metcalfe said managing the construction of your own home, without the help of a general contractor, can save homeowners up to 20 percent on the price of construction. On a $200,000 home, that's a savings of $40,000. But it's by no means the easiest way to get the job done.

    For the young von Feilitzsch couple, dollars and cents factored heavily in their decision to go it alone. Their house is nearly complete and so far they they've saved between 25 and 30 percent overall. The price of the land, of course, remains the same.

    In addition to the savings, Berkley said the experience helped her and her husband pay closer attention to details, ensuring they end up with exactly what they wanted. They expect to occupy their new house at the end of March.

    "I am a housewife, and building the house has taken a considerable amount of time," she said. "But the greatest benefit is that we get to take part in every decision regarding the building of our new home." graphic

      RELATED STORIES

    Mortgage rates inch higher - Dec. 13, 2001

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    Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

    Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

    Factset: FactSet Research Systems Inc. 2014. All rights reserved.

    Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

    Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.

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