In today's environment, can an owner builder acting as the general contractor for their own home really save money? Don't professional builders have an edge over the guy that builds just one home? With the downturn in the real estate market, is the hassle worth it? Here we dive deep into the recent financials of a large home building company to see what the potential is.
When we say owner builder, we are refering to you managing the building process, not necessarily doing all the work yourself. Most people don't have the time, tools or know how to do most of the physical work when building their new home. If you do, then your savings will increase dramatically. So for this discussion, we will assume you will subcontract out most of the work on your new home...just like the professional home builders do.
Where do the big savings come from for the owner builder? Professional builders, also called general contractors, make money by marking up the cost of labor, materials and lot. So in essence, if you can find out what the typical builder gross profit percentage was last year, you would know what your savings would be as an owner builder.
In this video, we analyze the gross profit percentage, cost of goods sold and revenue of an actual home building company to give you an idea of what you can save. Building your onw home as an owner builder takes time and considerable effort. This video should help you better understand the potential savings that come along with your hard work.