I have received the question about 8 times in the last week as to why I chose to not use a General Contractor to build this. So I thought I'd lay it all out here.
So we tried that approach. Here's for better or worse, is our saga. I tell you i lead a cursed life.
Our county requires registered General Contractors with license and bonding/insurance as builder on record. Or you can do it yourself. Now, there's currently 11 such Contractors in my county. We purchased this lot in 2015 from my grandparents. Got it paid off and ready to go in 2019. We contracted with one of the above contractors finally in late 2019.
We were to break ground March 20th, 2020. March 16th, I get a call from the bank. They stopped us due to the gov shutting everything down due to covid. They told us it'd be no more than a 30-day delay. That turned into 6 months before they, or any bank, would green light us. Which went past the 12 months to break ground rule the construction loan had. Because of that, not only did material skyrocket by over 300%, the contractor I had signed with, used the clause of "lack of financial institution approval" to get out of the contracted price and timeline.
Talked to many lawyers on it, nothing we could do. We lost 4K in closing cost and 1500 in escrow funds to that contractor and bank.
Now we were able to find approval through a different bank easily. Problem was, so was everyone else with the low interest rates. This caused a massive backlog in new homes to be built by the contractors in our area. 3-5 years in some cases. So we made the decision to wait it out to see if the backlog would die down. That was our mistake. We didn't expect prices to continue to soar out of control. The house we had planned for by 2023 was now 6 times more costly to build than in early 2020.
So we went back to the drawing board, downsized our plans (initially, but I'll get to that in the minute). We got rid of the basement, decided to build in the 1400 sq ft range, simplify plans. We contracted with a 2nd builder, reputable and previously on the county accepted builders list, who was to break ground in spring of 2023. After taking our deposit, we never heard from him again. Finally after paying a lawyer to contact him, he backed out in September of 2023, though he had to refund our deposit plus pay my lawyer fee, which he did (I learned from my first one). So now, I was without a contractor again... All the remaining ones in our county, were and still are, booked up schedule wise until 2027 and beyond.
But in the good news, last year, the county got a new BZA board and director and voted to repeal the county issued building license for contractors. This opened up dozens of new GCs I could chose from. But, timelines were still in the 2027 and beyond range.
I broke my build out among 5 different subcontractors but I interviewed with probably 30. I then researched the reputations of each, I got burned on one with the basement to start with but that was because he won a big DOT contract worth 3 million profit to him, so cant compete there. Funny thing is, all the home builders around here, they all use pretty much the same subs. Then they mark up the materials by 30%, then do the same thing to sub contractor's labor, then at the end, they charge a 20-40% "project management and overview fee"... I could go on and on and on but I'll explain the cliff notes version.
After interviewing MULTIPLE prime GCs to build the entire thing, ones, the price for the scaled down, single story ranch on a slab... over 600,000 dollars. We managed to get approved for that amount but I couldn't believe it. So I requested each contractor provide me with an itemized quote, to include subcontractors, materials and their own labor. Over half complied with that request. What I found shocked me, it shouldn't have, but it did. I found that these contractors all basically used the same subcontractors. Especially for concrete, septic, HVAC and electrical. Framing subcontractors varied the most. But I also found that each one of these General contractors, took whatever the sub charged, added 30% AFTER invoicing. Then for materials, they all charged 30% on top of whatever lumber yard/store charged. They did this for equipment rentals, hauling fees for stone etc. then that went into a "subtotal" cost. Then after all that was marked up, they added an average of 20-40% on top of the subtotal for the final total. So I started asking for what roles the GC actually performed. It was all project management. All they did was hire out the subs and place orders. no physical labor on the project whatsoever. To give you an idea of what that does, see below, random numbers provided for clarity.
Framing labor rate: 50,000. GC adjusted rate. 65,000
Materials: 50,000. GC adjusted: 65,000
Equipmental: 10,000, GC adjusted rate: 13,000
Septic: 12,000: GC adjusted 15,600
Driveway: 5000 GC adjusted: 6500
Electrical: 12,000, GC adjusted: 15,600
HVAC: 50,000, GC adjusted: 65,000
Subtotal: 189,000 subcontractor and materials to house move in ready.
General Contractor adjusted fee total before final cost: 245,700
Final project Cost with GC additional 30% average included. $319,410. Or a final profit margin of 59% for the GC!!!! Who only handles the paperwork which has cost me all of maybe 8 hours of time to do. I do an inspection after each stage, there's probably another 5 hours so far. Add in a few phone calls to the contractors, maybe another 4-5. By the end, I'll probably have actually 40 hours total of onsite "GC" work.
Now, I asked if the adjusted fees for each line item were in case of cost or material overruns. The answer was a resounding NO. So if say the materials ran over to 60,000, I would pay an additional 30% on top of that, making it 78,000 for materials, thus raising that end total to 342,000 dollars. This also eliminates any incentives for the GC to keep cost at original estimated amounts as every dollar that went over the estimate, just increased exponetially what the GC makes. All while still having to pay for all required permitting, insurance fees for construction and such. So I went F that. I asked my bank if I could be my own GC and subcontract the labor out. They instantly agreed.
So now, we're back to our original plan and we were able to increase to a full basement, plus an attached garage. When we got the apprasial back from the bank, who sent it out to GCs to get an estimated cost to build, I'm saving over 60% and will come in way less than that 600,000 for 1400 sq ft we reduced too. When finished, I'll have hit 4100 sq feet of living space, plus 600 sq foot attached garage. If the numbers continue to hold, I'll be pushing a savings of 67%. I'll share the final numbers when done since they're public information in our county anyway as I have to report it to the Auditors office when completed.
Ours problem hasn't been the subcontractors either. We ran into an unexpected materials delays on the septic, trusses, metal and HVAC. That delayed us 6 weeks, now the weather has turned. Basement is fully done, but we can't frame when its raining and lightning every day for the passed 2.5 weeks. The freshly turned earth surrounding the basement perimeter is clay and after over 6 inches of rain, is a nearly impossible to walk, I sank to knees in it on Friday. The forecast this week is Monday and Tuesday rain all day, up to another inch. Then half a day of rain Wednesday. Dry on Thanksgiving and thru Sunday. Next week, undetermined yet but hopefully itll either dry or freeze.
We've managed to maximize the sq ft too without increase material cost by eliminating a random cut in from the original plans. and by going from 8 corners, to 6, we not only gained 400 sq ft in both the basement and the first floor, but also saved about 3% on my insurance too. Moral of the story, if you're willing to take on the management portion, which I do daily for work way (i manage gov construction projects), it's possible to save a fortune. I'm also getting the best possible interest rate since my equity in the home is over 30% right off the bat. The anxiety of the portions I can't control is what's driving me nuts. The weather that is.
Hopefully I made this as clear as mud.
