Owner-Builder Book News - Oct 2008
Mark A. Smith, Editor Vol. 7 Number 3 - Oct, 2008
NEW IN THIS ISSUE
- New Books Released On Amazon
- Video Blog On Amazon
- Annual Owner-Builder Survey Results
- Featured Owner-Builder Interview
New Books Released On Amazon.com
The Owner-Builder Book: Construction Bargain Strategies books are now available for purchase on amazon.com.
In these books, moneysaving ideas are not usually provided at face value. O-B's argue the pros and cons freely. Some ideas clearly work better in certain circumstances. You will have to judge if a bargain strategy presented here will help you. With nearly five hundred strategies offered, some will change your project for the better. Sometimes the savings will be small - a few hundred dollars. Some strategies will yield tens of thousands in savings. Usually, listening to other O-B's will make your project smoother and better.
Vol. 1 Vol 2. Vol 3.
Video Blog On Amazon
Mark has posted a few videos on amazon's blog feature talking about how much you can save by owner-building, along with the need for eliminating the middleman.
Check out the videos, leave comments and expect more to come.
Click here for the video blog.
Annual Owner-Builder Survey Results
by Mark A. Smith, Managing Editor
It surprised us on viewing this year's survey results to learn that owner-builders for 2008 report a savings of 31% over general contractor bids for their projects. Logically, general contractors are dropping their prices for building all over North America, but evidently the cost of materials and subcontractor labor have also gone down, on average. The result is a reported savings just a little less than our three-year average of 32%.
Another thing that bears out the silver lining to the economic cloud is the fact that O-B's in 2008 did 44% less of their own tradework than in 2008. Since subs are less busy, it's a bargain to use them instead of doing self-work. Hours devoted to self-work on a project averaged 343, down from 555 hours in 2007. Note that the saving per hour of self-work performed were at $105 in our survey - only down $6 from the 2007 average of $111 per hour, but higher than the 2006 figure of $90 an hour. Owner-builders are apparently cherry-picking their self-worked tasks for maximum benefit and minimum effort.
And the big picture is stunning. O-B's currently report a net worth increase of 55% after completing their project. The path to wealth is still available for those who will plan and overcome obstacles. Proving this financial independence is the reported 4.6 years average earlier retirement from employment due to an owner-builder step-up strategy.
But the greatest thing is the satisfaction and peace of mind that derives from building and enjoying a quality home. I've been in myowner-built home for 12 years, and the feeling lasts and lasts.
Featured O-B Interview
Previous Owner-Builder Interview for Ken in Orangevale, CA
[Editor's note: This is a long read, but very intriguing. Ken fulfilled a dream on retirement and owner-built a beautiful home near the island of Fiji. This kind of remote management with difficult local conditions puts owner-building principles to the test. Read on.]
What type of construction?
Post and beam
How many dead days did you have where nobody did anything?
15 - 20 week days
How many finished levels in your most recent owner-built house?
What finished square footage did you build?
2,000 - 3,000 S.F.
Do you want to say anything more about your house style or construction?
This house is on a beach lot carved out of jungle on a remote island in Fiji. All materials were brought in by boat - there are no roads, no phones, no electricity or other utilities except what we have built in. Eleven workers camped out for 7 months cooking food over wood fires. Propane fridge on a pallet provided storage for food that was shipped over weekly on interisland ferry. No power equipment other than saws and an electric drill were used. 2.6 KW genset provided power for tile saw, skill saw, electric drill, chop saw, recipro saw, sabre saw.
This project required hand digging 54 holes dug 5' deep x 4' square for sinking poles to support the home. It also required hand digging over 70' of 4' deep foundation footing and 12' high concrete walls; hand bent and hacksawed rebar for the wall. The house has about 1,100 sq ft inside with veranda on four sides to provide over 3,000 sq ft under the roof. 30' high interior from floor to roof with exposed beams in main room. 8' exterior doors and all cabinetry were custom made and brought over on the ferry, offloaded into a 23' skiff and then hand carried over the beach for installation. Hardwood floors, two bedrooms, two tiled bathrooms with large tiled showers, hardwood cabinetry, solar hot water and electricity, two ceiling fans in great room and one in each bedroom, screened handmade wooden louvers extend from 10" above floor level to 7' high on great room and bedroom exterior walls provide plenty of ventilation.
Fresh water from artesian spring 1,300 meters away up the hillside gravity feeds into 1,900 gallons of storage. Inflow is controlled by modified toilet tank valve. Outflow pressure system is an auto on/off pump system powered by (220v 50Hz) inverter and battery bank that is charged by solar panels on roof. No grid is available, so we have backup 5.5KW genset. Sewerage is an underground Australian recycling system that cleans all water to reuse it on gardens.
What was your overall as-built construction budget, not including land?
$100,000 - $200,000
How much did you spend in U.S. dollars per finished square foot?
What was either appraised value or street value on completion?
How much did you save altogether vs. appraised or street value?
How many hours did you spend as a couple, counting planning and construction?
> 1,000 hrs.
Were you working when you owner-built?
Who took primary responsibility in your family for the work?
What trades did you do yourself?
Plumbing and cabinet installation.
How much did you save on the trades you did yourself?
$10,000 - $30,000
How long did your self-work trades take?
How many bids did you get for each subcontracted trade, on average?
Did you get bids from generals?
Have you had it appraised?
Was yours a starter, step-up, custom, or dream home?
What's the difference in your mind between a starter, step-up, custom, or dream home?
Starter = first home, smaller, not fancy, for two people.
Step-up = next home, larger, more room for family.
Custom = lots of room, built-ins, special features not necessarily attractive to others (pool table room, music room, home gym, etc.)
Dream home = the one on the best lot with the best view and just exactly what I want in it. Close to the outdoors and maybe a bit impractical for many people.
Did you get materials separate from labor on any of the trades?
What were special features in your house?
Solar electric and hot water.
Views of jungle out three sides.
Views out to the beach out three sides.
Wraparound veranda providing shade and dry retreat from tropical showers.
Outdoor showers and foot wash faucets at both front and rear to be used before coming onto the veranda deck.
Custom 15' fish cleaning station with large double stainless sink and stainless drain board.
8'x 14' main entryway at the front.
12' wide stairs up from grass onto the veranda.
Custom traditional Fijian style sinnett wrappings on all veranda posts and beams: magi magi.
Custom traditional Fijian style sinnett wrapped cross beam of old growth coconut tree log in great room.
All hardwood floors with epoxy finish.
Custom 8' built-in armoires in both main bathrooms.
Unlimited views across open ocean.
Things or approaches you invented?
Water tanks use modified toilet tank valves to control inflow from artesian mountainside spring.
Super bargains you got?
There are no super bargains on any materials in Fiji - it's all overpriced and they do not haggle on prices, but to the surprise of my building crew supervisor, I was able to negotiate a flat 10% off of retail pricing. We got a real deal on three things:
1. Custom Fijian sinnett work called magi magi. This is a dying art, but we were able to find a 76 year old man willing to do the job if we would also hire two apprentices for him so he could pass this craft on to future generations. The two apprentices were almost 60 yrs old, but they all three worked 5 days per week, 7 hours per day. This job cost us about $4,600 USD and a similar job on the main island at upscale resorts would have cost well over $30,000 USD. I got this deal because the old man is the village school headmaster's father. The old man did the job so cheaply I almost felt bad.
2. I donated $200 USD to the school as a "fundraiser" and let 20 villagers hand dig the 54 4' x5' holes for the posts that support the house. The old man liked this help for his son's school and that influenced his bid for the magi magi work.
3. I held another $200 fundraiser for the village church and that got me 53 people with shovels to dig holes for water tanks and sewerage tanks. It took them two days for only $200.
4. I got a good deal on labor because my job supervisor hired locals as fill-in labor when he didn't need skilled labor to dig holes, carry logs, hand mix concrete, etc.
Ways to save money?
Supervise this kind of work crew every day. If I could have been there every day, I think I would have saved at least $10,000 in wasted materials, $20,000 in overpriced materials, and maybe $20,000 in wasted labor time. The job was over 5,000 miles from my residence, so it was impossible to be there enough of the time.
What are the qualifications to be a good O-B?
I am glad I know how to do most of the work and that I am a good negotiator. Patience is definitely a virtue. Being organized is a requirement, and having an understanding partner (my wife) was a critical part of success.
Did you have contract problems?
Did you get liened by anybody?
What percentage of O-B's do you think get liened?
1% - 5%
How much time did it take to construct?
How many trades were involved on your job?
What time of year did you start?
Any reason you chose that time of year to start?
What do you consider the rules of good work?
Properly planned deliveries of materials to keep work flowing without delays.
Properly planned tasks to eliminate wasted time.
Having the right tools for the job available when needed.
What were your most important tools?
Shovels and saws and a good genset to run the saws. The veranda deck would have been a disaster without the chop saw. The lot clearing would have take much longer without a chainsaw.
What anguish or fear of loss did you go through? What was your worst fear during the project?
The worst fear was that the job wouldn't be completed at all. Initially we had a contractor who was to do the job. He absconded with about $8,000 USD we stupidly paid up front to cover the beginning materials and labor. He never paid the laborers and they threatened to take off back to the main island with the tools (I had to furnish all tools) and the materials that were on the job site. I ended up as the O-B with a good crew supervisor only after a lot of talking and convincing to keep the crew. Two of them left with some of my stuff and have never been seen since. The original contractor spent the money and I will never get any of it back. My supervisor tells me that he has since gone to the contractor's home and gotten some revenge by beating the man up pretty badly. They do things differently in Fiji.
What help did you want but couldn't get?
A decent plumber. I had to do it myself because their attempts at plumbing were dismal. I will be redoing some of the tile to repair lousy grout work, too.
What do you consider the most desirable features in a custom home?
What features in your house save operating costs?
Solar power vs. a genset. There's no grid. Generator fuel is roughly $8 USD per gallon, so no way would I want a generator for power.
Solar hot water saves battery power.
Next time, I'd use gravity feed for the water instead of the pump.
What features add the most value to your home - rate them.
1. View outside from any angle from any room.
2. Open air feeling inside
3. Large veranda
4. Low louvers letting breeze flow air across floor in the tropics was a great idea.
What owner-builder laws exist where you live?
In Fiji, one must get basic permits for the sewerage from the health inspector, a building permit and that's all. They don't care who builds it.
Did you get a construction loan without a contractor?
Built with own funds
How did you get funding?
We paid cash for all goods and services as we built. We both work at decent jobs.
Do you have a step-up strategy?
What do you do for a living?
Now retired. Formerly contract heavy lift helicopter pilot, sales manager for boat manufacturer, and retired Army helicopter pilot.
How much combined time did you spend planning?
200 - 300 hours
How many times are you planning to do this?
Are you organized?
What suggestions do you have for O-B's to get organized?
Share and refine checklists with whoever will be living in the house with you.
Treat getting and staying organized as an integral part of the job - every day.
Are you a good shopper?
What suggestions do you have on finding good prices?
Know what you want and what you need. They aren't always the same thing. Shop for closeouts and overruns. Always ask for a discount. Get a discount and be loyal to your supplier for deeper discounts. Pay your bills on time - all the time.
Were there any schedule items that took you a lot longer or shorter than you thought they would?
On this house nothing was done on time. It was all done on an hourly labor basis. That's the way they work in Fiji. "Island time" has a new meaning there. The rains, the shipping of materials, and the labor problems were tremendous. This was all managed long distance; it involved getting things done by phone once a week and by visiting 10 times over 7 months.
Did you use a designer, architect, stock plan?
What are the three best things you did?
1. Let the architect provide elevations and floorplan.
2. I did the rest of the design.
3. Negotiated materials and labor costs.
The three worst things that you did?
1. Paid a contractor some upfront money.
2. Failed to fully realize how costly some materials are over there - blew the budget on tile.
3. Let my wife talk me into burying the water tanks which required a water pressure pump vs. gravity feed.
What is a good way to get discounts on lumber?
Buy in bulk with a good plan for what you'll need and allow plenty of time for the supplier to get the goods to you. If he has to rush, you'll pay more.
What is a good way to get discounts on cabinets?
Know what you want and be reasonable when you ask for a discount. Know what the job is worth by checking around for prices. I bought with no cabinet hardware other than hinges - saved money installing handles and pulls myself.
Any problems with the inspector? Items that caused you to fail an inspection?
Where did you get good help and advice?
From the job supervisor.
What did you find to be the top five biggest expenses in the budget? How much, and how to cut back?
1. Tile was too costly by 40%.
2. Freight to get materials over to the island was 20% more than first budgeted.
3. Devaluation of the US dollar vs. the Fiji dollar killed us. The Fiji dollar rose from 48 cents to 62 cents US in 6 months.
4 & 5. Materials, labor, freight, and food went up with the devaluation of the dollar. We paid for laborers' food because they were stranded on a remote beach during construction. Everything had to be freighted to the site.
Did you find a wide range in the prices you were bid for different things? What are some examples?
Did you get a bad surprise on property taxes?
No - I expected the tax assessment I got
Were utility costs in the new house a surprise?
About what I expected
Was there anything you traded for materials or services?
I repaired 2 outboard motors on boats for the gravel/broken coral used for concrete.
Did you have any problems getting your building permit?
How did you find good subcontractors? Any suggestions?
It took a year because they are just slow.
Did you hire anybody from out of town?
Did you buy any materials from out of town?
For two trades
Were there aspects of your home that were improved because of your owner-builder involvement?
Yes. The plumbing works. The kitchen was flipped ro the opposite side of the great room, offering a better view from the kitchen window. I extended the roof overhang by a foot to offer a place to run a clothes line out of the rain on the veranda.
Did you incorporate anything in your design to facilitate a hobby?
A fish cleaning station and a room devoted to hang drying scuba gear. Outdoor showers to wash off after a swim in the ocean.
Were you ever lied to by a contractor? Examples?
Yes. The first guy was a flat-out crook who spent our money and promised to repay us but who refuses. It's more difficult and expensive to take him to court, so we we're out about $8,000 USD.
Beside yourself, who in your family got involved in this project?
How did you find other owner-builders to network with?
What websites did you find helpful when you built?
Were there disappointments with your project that could have been avoided? How?
Too many to mention. I should have been on site more. That's all.
Were there things that came out right because you were involved that might have been messed up if you had used a general contractor?
How did you mark your lot for the excavator who dug your foundation?
200 lb test fishing line strung between coconut trees; 30' of clear plastic tubing filled with water for a level. Handheld GPS. 50' steel tape.
Who built or installed your mailbox?
don't have one
What were major causes of delays that occurred in your construction?
Weather and unreliable inter-island ferry.
What was the age of your previous home?
20 - 25 yrs.
How much more activity was there at end of project than in the middle?
How many days when only a single sub was on site?
More than 50 days
What are some examples of day to day problems you had to solve?
Communication across 5,000 miles of ocean to the job super who had to go by small boat to get to a public phone. He was in a time zone that is one day less 4 hours ahead of my time zone. Trying to pay bills with wire transfers before materials will be released to the inter-island ferry that goes only once a week when it runs on schedule.
Would you be willing to upload or email us photos of your project?
Have you owner-built more than once?
How much management time did you and your spouse spend during the construction phase?
400 - 500 hours
What were the benefits of your time on site?
I got things done properly. We were using poor drawings and suffering from misunderstandings caused by different cultures. The electric receptacles were being installed in all the wrong places. The backsplash on the cabinets was to be integral with the cabinet, but the receptacles were being installed so they'd end up behind the backsplash. The kitchen sink wasn't centered. That caused the cabinets to be off center, too.
Suggestions for controlling the job?
1. Be on site more.
2. Have better drawings.
3. Don't necessarily believe the sub when he nods and says he understands - especially if he's Fijian. He only wants to say what makes you smile.
Did you use a computer?
Yes - some
Would you be willing to help another owner-builder?
Yes, I would talk on the phone
Did you install a water softener?
What was your planned schedule when you started out?
If you had a general contractor estimate, how much did you save vs. average estimate?
How much bigger was your new house than your old one?
Apples to apples, what utility savings did you get in your new house vs. old?
Did you incorporate active solar panels (PV) into your home?
Did you have a written schedule for construction?
How much would the trades you did yourself have cost in the marketplace?
How many trades did you do yourself?
Did you read The Owner-Builder Book before you built your house?
Was your project a new house or a remodel and addition?
How old were you when you built - average age of couple?
What was your household income when you built (current dollars U.S.)?
$200,000 - $300,000
Was your project urban or rural?
In the country
What's the population of the community where you built?
How much calendar time from when you first did some written planning to groundbreaking?
One and a half to two years
Do you know your credit score?
What is your credit score?
750 - 800
How much cash or equity did you have built up for the project?
$150,000 - $200,000
How many houses did you own prior to this one?
What did you choose for wall insulation?
What is the R-value of your walls?
At the time you built, what was the land worth that you built on?
What did you pay for the land originally?
What was the air conditioned or heated size of your former home?
2,000 - 2,500 s.f.
What is the air conditioned or heated size of the home you owner-built?
1,000 - 1,500 s.f.
If you have a step-up strategy, how many builds until your home is mortgage-free?
Mortgage-free on first owner-build
What was your net worth as a couple before you owner-built?
What was your net worth as a couple after you owner-built?
Will your O-B step-up strategy cause you to retire earlier from your work?
I'll be able to retire a year earlier
How much construction industry experience did you have before you owner-built?
No experience in the industry whatsoever
How many books about contracting or the trades did you read when you owner-built?
Did you use any personal friends as subs?
How many houses have you built, remodeled or added on to as an owner-builder?
How many children do you have?
How many children lived at home when you owner-built?
How many bedrooms did you include in your owner-built house?
How many bathrooms did you include in your owner-built house?
1 - 2
How many air conditioning units did you include in your owner-built house?
If stick-built, did you use 2x4 or 2x6 framing?
How much combined time did you take off work when you built?
How many tools do you own?
More than $8,000
Do you have experience using spreadsheets for budgeting or scheduling?
Is your occupation "blue collar" or "white collar"?
Did you take pictures of the job when you owner-built?
A few pictures
Do you eat out often?
< Once a week
Are you a coupon shopper?
10% - 20% of the time
How much TV do you watch?
two - three hours
How many vehicles do you own?
Do you own a truck?
How many covered vehicle spaces did you provide in your owner-built house?
How much formal education do you have?
How much personal use do you make of the Internet?
Did you use a contracting consultant or an owner-builder program?
If you used a contracting consultant or O-B program, what did it cost?
Didn't use one
Why did you consider owner-building in the first place?
It was going to be too costly too hire a contractor.
What was your original construction budget, not including land?
$100,000 - $200,000
What were the impact fees for you to build?
If ever you move from your O-B house, how long will you have lived in it?
We'll never move
What did the plans for your project cost?
$3,000 - $4,000