Owner Builders ask me this question all the time.
There is not a simple answer and of course it depends on how disciplined, organised and prepared the owner builder is.
Just last week, I got a call from one of my students who is doing an owner builder project on the Gold Coast. The block is quite steep and there are substantial earthworks and concrete foundations required to accomodate the design.
She told me she had three quotes from concrete suppliers ranging from $260.00 per cubic meter (delivered) to $176.00 per cubic meter delivered. Thats an eighty four dollar difference, by simply making three phone calls.
Lets use these figures and consider an average home of standard design at around 280 square meters floor area including the garage. We could assume a minimum of 6 cubic meters required for the strip footings and 28 cubic meters for the slab.
A total of 34 cubic meters.
An owner builder saving $84.00 a cubic meter can potentially put $2856.00 in their pocket or borrow that much less.
Now I know, a well organised builder will probably pay the lower of the prices, but if his mark up to cover profit, overheads and administration is a modest 15% you will still effectively pay $202.00 a cubic meter.
At that figure the saving is $26.00 a cubic meter or $884.00.
Now this is only one item of the hundreds of opportunites that owner builders have to save money, and this is a commodity item where the prices between suppliers is reasonably constant.
The big money is saved on one off or designer type fittings and fitments that with a bit of shopping around can realise huge savings.
I recently purchased a front door on behalf of an owner builder client and foud prices ranging from $4200.00 to $1800.00 for the same quality and design. We ultimately purchased the door for $2720.00 from the supplier who originally quoted $4200.00, saving the owner builder $1480.00.
So yes, owner builders can and shohuld save money when building their own home.
Owner builders should save between 15% and 30% when building a custom home, however it is very difficult to compete with project builders who have their prices and margins trimmed to the bone.
A final note for anyine thinking of becoming an owner builder and building their own home;
On a standard home loan of $300,000 over 25 years at 7% interest, every dollar you save in the building of your own home will save you roughly the same amount in interest payments over the term of the loan, effectively doubling the savings.
Not bad hey?
Don’t forget to visit our website at www.ownerbuildercourses.com
Happy Building
Rick
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