Home Building advice do I need a GC ?

[saltman]

Thanks, some more good ideas. I will look into insurance. My idea was to have every contractor who works on my job list me as additionally insured. Not pay him in full until final inspection and to issue lien releases then.

I did get a great loan prior to getting my building permit. It's through Farmer Mac, which is a part of Fannie May and Freddie Mac. It is a Land Equity Loan so they just give you the money to do anything related to your land. So I have no typical bank Construction Loan limitations.

 

[Builder]

Here is my 2 cents worth. I am a plumbing contractor. I have been one for 26 years. I feel I do very good work. I will NOT work for a home owner contractor. If I can't get out of it, I bid in a very big cushion.

The generals I work for have schedules that have proven out over the years. When they call me to work, they are ready and the other subs haven't installed things in my way. Home owners usually aren't completely ready, won't admit it to me if I ask, some don't even have their paperwork done so money is not available, I can go on and on.

If you do it yourself, please do your homework, the good subs deserve it.

Excellent points from the "other" side of the coin. I am a builder and I wouldn't waste my time trying to build my own house if I was a homeowner because of many reasons, but the main ones are:

Subs that work for homeowners mostly are hacks-otherwise they'd be busy working for GC's. As a homeowner, you wouldn't really even know he was a hack. I know some of you know good subs and that's a big help. However, good subs know that working for a homeowner is usually a waste of time, they will be delayed and ask all the wrong questions and drive them nuts. My subs are the best and will not work for anyone else but a builder.

You must understand that 90% of homeowners that hire their own subs to build a house don't really know what they're doing or what they're even looking at, so they can get taken advantage of. Don't expect the building inspector to be a quality control agent-no, that is what the GC does. Most homeowners don't know to pull diagionals on foundations & framing, how to check for plumbing defects that inspectors miss, improperly installed stucco, head flashings on windows, etc. You won't know they're a problem until the subs are paid & gone.

YES, you can save money, but at what cost to you? I've already seen a 5,000 SF house that was GC'd by a homeowner that was 9 years old have all the stucco & 40 windows & doors torn out & replaced because the stucco was applied improperly. He told me he had no idea that only one layer of 15lb felt wasn't enough. He didn't know that flashing needed to be applied in lots of areas that were left un-flashed. Cost to him to fix was ~$105,000 out of his life savings. How do I know? I did the work for him.

So what did he end up saving by GC'ing it himself?

Just be very careful here. Builders are just like any other cross section of people-doctors, lawyers, teachers, engineers- there's some bad ones and there's a lot of good ones. The cheapest ones rarely fit into the 2nd category and usually have a good backlog of work.

One advantage you would have at the present time is new construction is DEAD. You can get a builder for cheap now. I'm lucky to have work and 2008 was a great year for me. However, a lot of "prominent" home builders in my area are out of work or out of business.

 

[EddieWalker]

...I did get a great loan prior to getting my building permit. It's through Farmer Mac, which is a part of Fannie May and Freddie Mac. It is a Land Equity Loan so they just give you the money to do anything related to your land. So I have no typical bank Construction Loan limitations.

I've never heard of this. Did you do it online, or was there an office that you went to? What was the process like? Did they ask you what you were going to build or use the money for? How did they come up with a loan amount? Did they appraise your land and then base it on a percentage of the value?

Anything that you can offer about them and the process would sure be appreciated.

Thanks,
Eddie

 

[Nissan197]

Thanks, some more good ideas. I will look into insurance. My idea was to have every contractor who works on my job list me as additionally insured. Not pay him in full until final inspection and to issue lien releases then.

I did get a great loan prior to getting my building permit. It's through Farmer Mac, which is a part of Fannie May and Freddie Mac. It is a Land Equity Loan so they just give you the money to do anything related to your land. So I have no typical bank Construction Loan limitations.

I know I had problems finding a bank to give me a construction loan. I had to go with Farmer's Credit in my state who was more than happy. Same thing with builders insurance. My insurance company would not insure me but another large insurance company would. Of course once I was finished they were all calling me wanting business. I was very lucky where several of my subs did not want payment until they were completed with the job. I was very green, but I feel like the majority of the subs were very happy to have a job and answered all my questions and offered advice. Of course when I built was when the bottom of the housing industry fell out and subs were hurting to find work. Many of the subs were referrals from a full time GC and other were friends of friends who would work on my house as a side job. It was a lot of work, but very worthwhile and a great feeling of accomplishment once it was done.

 

[saltman]

I got bids first to see what it would cost to build and then asked for a dollar amount close to the building cost. Zion Finantual was the Broker for the Fed's. You can google Farmer Mac and get some results.

Yes they appraise your land and the entire process takes a long long time compared to a regular loan but worth it if you don't want all the construction loan fees and being hand tied. They really don't care what you use the money for, but it's suppose to be for your "farm" or agriculture.

I think some of the issues with contractors here is a little different, we have no work in California people can't select who they they work for or who they will not. You who live in other states are lucky, the media isn't reporting what's going on here but it's really really bad and sad. Unemployment is understated here at 11% it's more like 15%-20%. My work is down 50% since November. There is little to no new construction in San Diego County right now.

Good news is my brother who is a GC in Washington may be coming to run the show.

 

[MtnViewRanch]

Thanks, some more good ideas. I will look into insurance. My idea was to have every contractor who works on my job list me as additionally insured. Not pay him in full until final inspection and to issue lien releases then.

I did get a great loan prior to getting my building permit. It's through Farmer Mac, which is a part of Fannie May and Freddie Mac. It is a Land Equity Loan so they just give you the money to do anything related to your land. So I have no typical bank Construction Loan limitations.

If you do this, you should be up front with your subs about it. I worked on a job that did this, and the guy that graded the job was left with ZERO profit for 2 years. Hardly seems fair. I know that I would be very very unhappy if this was done to me and I did not know ahead of time that you were going to withhold $$$$$ long after I was complete and the job had not gotten Final yet and was no fault of mine.

 

[txdon]

I found it was very difficult to get started without the total package. GCs have a relationship with the good sub-contractors and they in turn continue to do a good job because they want continued business from the GC's homebuilding company. My GC comes out about 3-4 days a week and lines up each contractor a week or two ahead to keep the project going. He catches potential problems and answer all my question on the best way to do things. He knows from experience what will hold up and what will be a problem in the future. The contractors work with each other not against each other and usually know each other. If you are the GC they know you are a one time customer and they might not be accustom to who is responsible for what. If they do a job you don't like, they just won't use you as a reference. Several sub-contractors come out about 2 to 5 separate times each during the construction and I would not know who would be responsible for different aspect of the house. The cornish guy vs. the trim guy vs. the framer or the painter vs. the cabinet guys vs. the trim guys, etc... When I want to do something a little extra The GC will tell me if another sub-contractor down the line will be doing that so don't waste my time or tell me to go ahead and the best way to do it, or that another contractor will do it for $200 for something that would take me 3 weeks to do.


A GC who has been in the area for many years and built hundreds of custom homes retired and on his last job was having trouble getting the subs to be reliable because they knew it was his last home and they would not be working for him any more. That kind of sealed the deal for me to get a G.C.

If you plan on the house taking 2-3 years does that mean the rough in plumber and electrician will be around to finish out, or can they offer you a solid bid that far in advance?
Lots of things to think about, good luck!

 

[Builder]

I found it was very difficult to get started without the total package. GCs have a relationship with the good sub-contractors and they in turn continue to do a good job because they want continued business from the GC's homebuilding company. My GC comes out about 3-4 days a week and lines up each contractor a week or two ahead to keep the project going. He catches potential problems and answer all my question on the best way to do things. He knows from experience what will hold up and what will be a problem in the future. The contractors work with each other not against each other and usually know each other. If you are the GC they know you are a one time customer and they might not be accustom to who is responsible for what. If they do a job you don't like, they just won't use you as a reference. Several sub-contractors come out about 2 to 5 separate times each during the construction and I would not know who would be responsible for different aspect of the house. The cornish guy vs. the trim guy vs. the framer or the painter vs. the cabinet guys vs. the trim guys, etc... When I want to do something a little extra The GC will tell me if another sub-contractor down the line will be doing that so don't waste my time or tell me to go ahead and the best way to do it, or that another contractor will do it for $200 for something that would take me 3 weeks to do.


A GC who has been in the area for many years and built hundreds of custom homes retired and on his last job was having trouble getting the subs to be reliable because they knew it was his last home and they would not be working for him any more. That kind of sealed the deal for me to get a G.C.

If you plan on the house taking 2-3 years does that mean the rough in plumber and electrician will be around to finish out, or can they offer you a solid bid that far in advance?
Lots of things to think about, good luck!

Good points.

A house left unfinished for that long of a period of time is succeptable to damage from the elements. I would not like to see my builder's paper, framing or sheathing left exposed to the elements that long. Even things like radiant floor heat tubing is not to be exposed to sunlight for more than a few weeks before it begins to break down.

A slow moving jobsite is a recipe for trouble.

 

[saltman]

I understand the basics having worked as a framer during the summers in college. I don't anticipate the house taking 2-3 years but it may take more than a year and if it goes longer than that it's ok, I am saying I am in no hurry thats all.

I do realize you cant leave lumber sitting out in the elements exposed and my idea is to get it sheeted, sided and roof on with all windows and doors in place by winter. Our winter here is normally Feb-March and then it's spring.

I would pay all trades at the end of their final inspection not at the end of the final for the house. If they need to come back then I would simply withold a small retention but put a time limit on it. I am a business owner and I certainly don't want to put anyone out of business or make them suffer just because it's taking me too long to drywall or do some of the interior.

One of the GC's has come back again with a pretty sweet deal so I am confering with my brother in WA who is GC to see if he wants to do it with me or I'll hire the GC here.

 

[Tractor_Jim_CT]

Hi Saltman,

I have about 150 acres in Acton, CA - how difficult was it to get a permit to build? When you put in the foundation, is there earthquake standards you have to meet? My land is zoned agricultural as well and I have a stream that flows all year long from springs so water is not an issue.