Real Estate Investing

So you are ready to build your dream home, and you think you have what it takes to oversee the project yourself. Many a dreamer has thought the same, only to wake up months later, finding themselves eating Ramen noodles under a half-finished roof. For a variety of reasons, custom-building can vacuum up more money and time then you could imagine. No wonder it’s a leading cause of divorce, right?

Still determined? Here are a few things you should know:

Overbudget

Whatever you think your house will cost, plan for more. However long you think it will take to complete, plan for longer. True, you can save up to 20% by acting as your own general contractor, but this can be overrated. For instance, what happens if you don’t know anyone in the building industry and you get ripped off? What happens if you fail to comply with codes and regulations, simply out of ignorance, and must pay a fine? These are just a couple scenarios where a contractor who is in the know can really help you out.

Kiss your free time goodbye

As a general contractor, you would handle all purchasing, scheduling, subcontractor management, etc. Home builders with the skills and experience may choose to save even more money by doing certain smaller tasks themselves like countertop, insulation or flooring installation. This is a tremendous time vacuum. Even without individual DIY projects on your plate, as the overseer you will need to be available around the clock by phone at least. Ideally, you would check in on the job site once or twice daily. In other words, your work productivity and your family life may suffer.

Find the right approach for you

Maybe you’re a paperwork guy, or maybe you’re a muscle guy. Maybe you’re a framer or electrician. Find your niche and help in that way if you want, but essentially just be prepared to manage the daily activity on-site. You are the coordinator, and it generally works out better if you know the subcontractors personally or they were recommended through a friend. More than one home builder has seen a sub leave them high and dry mid-project.

Plan thoroughly

Above all else, fail to plan and plan to fail. Approach your project with a timetable already drawn out, with different tasks scheduled for certain dates along the way. Research the different stages of house building and plan it out like a storyboard. Though upfront planning is important, be prepared and willing to change plans mid-stream. Managing such a large project is all about flexibility, thinking quick on your feet, and being positive, patient and solution-oriented. Don’t get too hung up on the small mishaps here and there. They will occur, but don’t allow yourself to lose sight of the big picture.

Be honest

Push all thoughts of saving money aside and take an honest, objective look at your abilities and skills. Are you a good manager? Do you loathe procrastination? Do you pay attention to details? Do you possess patience and people skills? Are you a good money manager? Are you prepared to dedicate the time needed for such a job? These are the basic factors to consider when deciding whether you should manage your project. If the answers to these questions are yes, then proceed with cautious confidence and enjoy the ride.

In the midst of a shaky market for existing homes, many homeowners are choosing to proceed with building their own custom homes. It’s the classic American dream, and there has never been a better time to pursue it.

As Money magazine reports, building material costs are down significantly. Couple that with acting as your own general contractor and you could see a significant savings of as much as 50 percent. Of course, acting as your own general contractor requires skills, expertise and time, but can save you up to 25 percent.

Over the past 18 months, land prices in some areas of the country have fallen 20 percent. The decreased prices of building materials range from a six-percent decrease on insulation costs to a 40-percent decrease on sheetrock and drywall. Of course, all of this translates into significant savings for you.

This largely stems to the fact that builders overbuilt, then stopped building until the housing inventory thinned out a bit. That leaves supply companies and building contractors scrambling to meet their bottom line, slashing prices and recruiting every “Harry Homeowner” they can find. Just like you would be in the cat bird seat were you purchasing an existing home, you are also presently in the perfect position to negotiate on material and labor costs when building a home.

“In terms of finding land you want at a good price, this is the best market that I have seen in my 30 years of home building,” Carl Heldmann, builder and author of Be Your Own House Contractor, told Money.

So seize the day and watch the blueprint of your dreams become a bricks and mortar reality. You’ll get a smaller loan, which can mean smaller payments or a shorter term. You’ll also get more house and more land for your buck, and ultimately, your wallet will thank you.

So I received a press release yesterday about the weeHouse. Though not a particular fan of press releases (chalk it up to my newspaper background), this I had to share. Alchemy Architects is offering the weeHouse and its appearance is pretty amazing. I’d move into one tomorrow, but my husband is a different story.

Anyway, the web site states that building costs per square foot is about 20 percent less than a traditional custom home. Of course, pricing depends on things like building size and how much customization the buyer requests on the existing prefab model, but the web site is saying $125 to $200 per square foot.

Though hesitant to associate the esteemed name of architecture great Frank Lloyd Wright to these “good, cheap and fast” weeHouses, that’s really what these designs resemble. They are like building blocks laid next to each other or stocked atop each other, with cool features like floor-to-ceiling windows. These homes have a very retro, art deco feel that make you just want to slap some Eames chairs on the front porch and call it done.

I like weeHouses for three reasons:

1) They look cool, and what’s not to love about that boxy Frank Lloyd Wright style?

2) They are eco-friendly. Of course, the houses can be customized to any buyer’s green wishes, but the company tries to use low-emitting paint and other green-certified materials at least. Of course, the very nature of prefab housing is eco-friendly because the product is built in one location instead of trucking laborers and materials all over the place. As for Alchemy Architects, they try to operate a paperless company as much as possible, also good for the environment. All relevant info is posted on their web site.

3) These houses are smaller and more streamlined, yet still appear functional. This from Alchemy Architects’ web site:

We hope to offset the suburban trend towards overbuilding by instilling value in modern yet efficient living.

Former Federal Reserve Chairman Alan Greenspan just said in an interview Sunday with George Stephanopoulos that the housing market would take a while to become buoyant again, but that it would happen when builders stopped overbuilding. For this reason and because of growing concern over the earth’s condition, prefab is the massive wave of the future. And weeHouse is one example of just how exciting that can be. As more people learn the new truth about prefab housing and break out of their long-held preconceived notions, prefab is bound to catch on tremendously.