Expert: Richard Taylor, AIA - 8/22/2005

Question
I'm building a 4,200 sqft (plus basement) home in Boulder, Colorado.  I am removing an existing home on the 1.25 acre site.   I have retained an architect that specializes in French Country designs in the area.

I have 12 years experiences a real estate broker/owner, and lender.  I am very tech savvy and have good project management skills.

I am considering serving as my own general contractor, possibly with the assistance of UBuild It, a franchised building consultant company.  They charge $2500 for phase 1 to develop the initial specs along with the architect and 5% of project costs (estimated at about $600-$800k)  for Phase 2 which includes unlimited support and 23 site visits.  

I pay all subs directly and am responsible for all materials, scheduling, etc.  They provide subs that they have relationships with that I may or may not use as well as providing access to builder pricing as numerous suppliers. I like the idea of being heavily involved in the process and I can devote 20 hrs + a week to the project, but I do not want to do any actual construction work nor do I have the skills to do so.

My question is A.) Does the 5% for Ubuild It's services sound fair, or would I be better off just hiring an inspector to assist me with the site visits, etc. (I know of several that would prob charge $100 or so per inspection).  B.) If I were to hire a general contractor I am told they usually charge 10-15% plus costs, but in reality it is my sense that the overall costs is much more because costs includes their overhead, salaries, insurances, etc?

Thanks for any advise.

Andrew Batson


Answer
Andrew:

Thanks for your question!

From what I've heard, U Build It can be a successful and profitable way to build a house for some people (especially basic, simple homes) but there are a few things that you should consider first.  I don't know much about UBI but I can give you some information about building a house yourself.

Although on paper you might save money, your first question to yourself should be whether your time is worth the savings.  It's often true that if you spent the time necessary to build your house working at your regular job instead (and paid a contractor to build the house) you'd come out ahead in the end.  U Build It estimates you'll spend 2-3 hours a day working on your project but in reality you'll find that number may be higher - much higher if you're far from the jobsite.  If you spent that 20+ hours a week for the next 8-10 months selling real estate, what would that be worth to you?

Since you've hired an architect, you're about to learn the dirty secret about house plans - they're NOT an instruction manual for building the house!  House plans are usually just enough for permits - which means there's a great deal of information left out that an experienced builder would know but you might not.  If you want exhaustive detail on the drawings you'll pay more for them than you'll save building the house yourself.  Subcontractors won't fill in the gaps in your knowledge for you.

Subcontractors are most interested in working for repeat clients (homebuilders).  You're not going to get their best price since you're a one-timer, and if they get a call from a builder client they'll put you on hold.  I can almost guarantee you that will happen at some point in the project.  That will set back some of the other subs, and cause expensive delays in the project.

An architect-designed French County house is likely to be fairly complex with a lot of atypical detail; you'll find that your subcontractors will have a lot a questions for you every day - questions that must be answered right now, especially from the framers.  Mistakes in the framing stage will come back to haunt you later.  You should ask your architect what his role should be and what his feelings about owner-building.

Who is responsible for the cost of the house?  Without a fixed-fee contract, you'll take the hit if the estimating is off, prices rise, materials become unavailable, etc.

My understanding of the UBI system is that you will have to use some of their pre-selected vendors and suppliers - are you ok with that?

What are the qualificiations of the people UBI will send out to help you?  Have they built architect-designed homes this size and complexity before?

Are you comfortable being responsible for the quality of the finished product?  As a real estate agent, do you consider an "owner-built" home to have the same market value as a professionally-built home?

If you were to hire a custom homebuilder, you'd pay a markup on top of the estimated cost of the house.  10% would be low but 15% is about right (for my area, anyway!).  That is a blanket markup applied across the cost of the entire project that the builder is responsible for (not the lot cost).  It includes his profit and overheard.  If you have good prints and specifications, you can compare several quality builders and find the best value.  Your architect will have some to recommend.  The number at the bottom of the contract is what you pay the builder to construct the house.

If you guessed I'm not a big fan of owner-building you guessed right!  My experience has been that OB homes take much longer, cost more, have more problems, cause more divorces, and burn up far more of MY time on the jobsite than builder homes.  I look at these "build it yourself and save thousands" deals the same way you look at "no down payment" infomercials.

That's not to say that it can't be done, and done well, but go into it with you eyes open.  It will be harder, will take longer, and will cost more than you think with or without UBI!

Hope this helps!

Richard Taylor, AIA
Richard Taylor Architects, LLC
www.rtastudio.com
www.betterhomedesign.blogspot.com