Wealth Creation: The Building options you have as an Owner Builder.

Property is still the best way of creating wealth. To maximise the investment return when building, will depend on the price you paid. E.g. the difference in price for a builder-built home and Owner building yourself.

You have a number of options in ways to owner build, to suit your skill and confidence level, which are as follows:

1. Use a Registered Builder as a Sub-contractor to manage the build. As project manager you have his expertise in purchasing materials, choosing sub-contractors and you save by paying the suppliers and tradies directly. While the Builder can be paid by the hour, day or a small percentage of the job. You will have a contract with them and he will provide you warranty insurance for his role in the project. You will save a smaller percentage than if you project managed the project, but if you are not experienced this may be the option.

2. Use a Registered Builder to Lock Up. In this way, all the structural work has been done, he has supplied you with Warranty Insurance and leaves you to manage the Interesting part of the project. You will save the margin on the Lock Up to completion component of the project.

3. You have the knowledge and experience to manage the job yourself as an Owner Builder.

4. By calling in favours, and with sufficient time to manage the job with help from your friends e.g. A Builder, Consultant.

5. Kit Home

Wealth Creation: Decision time.

White board your options. Set out all the costs associated with each option. However you also need to assess – Could you work with that builder, would you be more comfortable managing, do I have the time?

Wealth Creation: Summarising the advantages of Owner Building.

1. Money saved upfront by borrowing less – You save on interest.

2. Greater, tax free, return if you sell in the future. Compare same homes e.g. $400 000 for a builder to build. By just saving 15% on the builders price your investment is $340 000, a saving of $60 000. Now in 7 years you sell and the home has doubled in value. $800 000 less $400 000 cost = $400 000 tax free. If you owner built $800 000 less $340 000 = $460 000 tax free.

3. You build the home that you want, not what you are given!

Wealth Creation: Conclusion.

Depending on which option you take you need to be aware whether you are using a builder or Owner Building, there are hassles and problems that will need to be solved.

So our motto “If you fail to plan you plan to fail” is very appropriate.

TIP: Finding Sub-contractors If you are going to use sub-contractors to build part of the house (For example an electrician) you need to be trying to identify good ones at this stage and start lining them up/getting in prices. There is no substitute for a good recommendation from other Owner Builders who have used them. Don’t try to hire people direct from the internet or via Yellow Pages! Most people recommend that you get three or four sub-contractors to prepare a formal price, then you choose one which offers the best all round solution for you. Remember it may not be the lowest price that matters; quality, reliability, experience and speed of construction may all be factors to consider alongside the bottom line cost. Your negotiating skills will be important here – it is often possible to haggle a bit and get a keener price.

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