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Wenatchee Owner Builder Financing

By
Mortgage and Lending with Peoples Bank NMLS 500247

2008 seems to be a great year to build your own home in the Wenatchee area. I have seen a large increase in the number of clients requesting owner-builder mortgages.  Some bought land a few years ago and others are buying their lots now.  It looks like people will save some money building their homes this year versus 2007. The reason for this is that every subcontractor and supplier was scrambling last year to keep up with all the projects from their regular builders; this year, fewer builders are starting new speculative projects, which means the subs are a little hungrier and are more reasonable on their pricing.

Construction

Financing owner-builder projects is one of the most rewarding things I can do; I love to see someone build a house and gain a bunch of equity from their efforts.  The key to this is good planning and organization. Without good planning, an owner-builder project can be costly.

 

Not everyone who builds their own home lifts a hammer; some do, but many just organize the subcontractors.  As you price out all the work tasks of your home, sometimes you will find that a good sub with a professional, fast-working crew can often do a task for less than you can do it for yourself.

 

If you are considering being your own general contractor, I have a few tips: I should first qualify that I am only speaking from the experience of financing these owner-builder projects in my market areas; greater Wenatchee, Leavenworth, Suncadia, Okanogan County, and Lake Chelan; things may be different in Western Washington or other areas.  I work for a smaller community bank, so for these loans, I am very familiar with the details as I not only did the upfront analysis, I did the individual monthly inspections and draws, so I have seen the downstream impacts of little mistakes on the front-end.

 

If you have never built a home before, I would suggest hiring a consultant to help you manage the project. Some licensed General contractors will simply do this for a fee, or you can hire one to do your main framing and finish carpentry. By doing this, you have someone to help you look at the overall project.  One advantage of this is that they can recommend reliable subcontractors who will show up on time; many owner -builder projects have been delayed just waiting for a plumber, etc.

 

Looking at it from the subcontractor's side; if they were planning to come to your jobsite today, but one of their regular builders, who will give them 4-5 jobs this year, calls and asks them to come out to one of their projects, where do you think the sub is going to go?

Also, when a sub, say an electrician, is writing up your bid, he doesn't know how well your project is going too be managed; you may call him out to do the rough wiring before the roof is dried-in.  He is not allowed to proceed, so he has to leave and come back another day. He has to factor in these unknowns about your management into his bid.  If a professional is either building your house, or acting as your consultant, that electrician will likely give you a lower bid as he knows he won't have to make extra trips to your jobsite.

 

The things we need to see for an owner-builder project are 1)  a cost breakdown of all major components of the home (foundation, framing, siding, plumbing, etc) with each item backed up by a bid from a licensed subcontractor. 2) A materials list that tells us what you are using, (what type of floors, roofing material, siding, etc) and 3) a set of plans.

 

If you don't have a consultant helping you, the biggest piece of advice is to not rush the planning; ask the subs lots of questions. Does the concrete bid include the rebar and concrete, pump truck, and finishing? For the plumbing bid, does it include the actual fixtures, or just the labor?  Ask lots of questions, get good bids and have some contingency for those unknowns and you should be alright. 

 

 

One last tip for those who have built a home in the past; almost every owner-builder project that I have seen run over budget has been someone who has built a home in the past, and they proceeded quickly assuming they knew how to do it. Inevitably, they forgot the fire-sprinklers, or they priced a generic floor tile without examining it closely; when they switched to what they really wanted, it was another $4,000 , etc.  So the point is, even if you have done this before, take the time to plan.

 

Lastly, have your lender go through all your bids with you to make sure you haven't overlooked anything.  With all the details in place, you should have a great project.

 

Comments (1)

Geordie Romer
Windermere Real Estate / NCW - Leavenworth, WA
Serving Leavenworth, Lake Wenatchee, and Plain
Darel- This was a very informative article about building your own house. You probably should write a post about the availability of construction loans and lot loans now that some of your competitors are phasing out those kinds of products.
Mar 17, 2008 02:57 AM