Building a New Home? Should an Owner Builder Buy a Home Kit to Save Money?
Home kits or material packages can be great tools to help owner builders construct a home, because they bundle the materials together for you and send it as one package.
And, owner builders don't have to spend the time getting cost estimates on those specific items included in the package. There is a myth, though, that these home kits are always a way to save money.
Consider this: when have you ever received a discount for something that provides a large convenience factor? Look at convenience stores - when you buy a carton of milk from a convenience store you expect to pay more than you would pay at a grocery store. Why? The convenience.
The same principle applies to owner builder construction and buying a home kit from a material package supplier. The dealer or manufacturer is taking the time and effort to gather the specs on the materials, purchase the materials, and put them all together in one nice bundle for the customer. The customer will probably pay a little more for this service. In fact, the more materials that are packaged together, the more convenient the home kit becomes. And the more you pay.
This is not necessarily a bad thing. But, if you are trying to cut costs, and you think that a package is a sure-fire way to do it, you better take the time to break down the numbers. Don't just trust that the costs must be lower with the home kit because the dealer told you so.
The main reason that an owner builder typically wants to believe that a home kit supplier provides all of this convenience at a discounted price is the principle of buying in bulk. Most people readily believe the idea that the home kit dealer is operating in such massive quantities that the materials being provided in the kit are cheaper to purchase through the dealer.
It seems reasonable on the surface, but why would a home kit dealer spend all of the time, energy and upfront costs just to pass the savings along to the customer? Instead, if the dealer is going to receive a discount for buying materials in bulk, he has every right to sell those materials at retail prices to you in exchange for the convenience.
For example, imagine a home kit dealer that sells panelized wall packages for a specific set of blueprints. The dealer is selling a package centered on the concept that the wall panels will make the framing of the home easier for an owner builder or a general contractor. Along with this main item, the panel dealer provides some other package items for the customer's convenience - perhaps windows, exterior doors, interior doors, exterior siding, roof trusses, and roof finishing materials.
Overall, this can be a great package for the home, based specifically on the set of blueprints that go with the package. The owner builder no longer has to take the time to figure out the quantity and price of all of those materials for this package. The customer's life just got a whole lot easier.
But, a savvy owner builder should not automatically expect that the overall package price is going to be cheaper than purchasing all of the items separately.
The only way to know for sure is to do a true apples-to-apples comparison on the package you are considering. Make sure you are looking at the exact brand and model for each of the items in the kit.
For instance, don't go looking at prices for solid oak interior doors if the kit comes with hollow doors.
This type of comparison gets difficult, though, because it is hard to put a value on the panels themselves. Sure, you could go price out the amount of materials that go into making the panels, and you would, of course, get a much lower cost than the cost of the panel itself. But, what price do you put on the cost of labor to put the panel together and the convenience factor of the panel itself?
This is the very concept that allows a home kit dealer to charge an owner builder whatever price he wants to charge for the rest of the materials.
There is no good way to determine the value of the convenience factor unless you have already done your own estimates of the materials and labor for the items that are provided in the kit. If an owner builder knows what the convenience factor is worth, then he can make an educated decision.
Until then, don't automatically expect a home kit dealer to take his time and energy rounding up extra materials for your home without charging you for it.
Again, this is not to suggest that an owner builder should not use home kits. In fact, they are a terrific way to control costs and save time. But, you should base your decisions on all of the facts and your own analysis of what is, and is not, important to you for your project.
And, cost alone should not be the most important factor when an owner builder is selecting materials for their new home.
(ArticlesBase SC #510535)
Cost Estimators are evil. Learn the real truth behind budget estimators, and why they only help owner builders to run out of money, ruin their project, and raise their blood pressure. If you are considering being an owner builder to build your new home, you need to know the real dangers of improper budgeting with cost estimators before it's too late.
Definitely! You can build your own home! Acting as your own (GC) General Contractor when building a new home can save you thousands of dollars and help you create instant equity upon completion.
Affordable and secure areas to move - Brooklyn or Manhattan.? I'm 26 years ripened and relocating from west jersey - I'm looking to move to any Manhattan or Brooklyn here's what I want and please read sensibly, if you could suggest some areas base on this stuff consent to...
If Green is so great, whay are we not doing more green construction? What products are available? Where should I start. I answer a lot of these for you.
When you talk about a contract for home purchase, you are usually talking about spending a couple of hundred dollars to have a lawyer do it, right? What if you were able to generate a contract for home purchase at home - by yourself? Would you at least want to learn more about it?
The economy is still mired in stagnation, and the timeshare industry is feeling the pinch.
Some people do not give any thought as to whom will assist them sell their house and purchase a new one. They believe that all real estate professionals are the same. In reality, choosing the right Brampton Realtor may make all the difference. You may follow these tips when choosing your next real estate agent.
Believe it or not, it is possible to draw up your own contract for home sale. The trick however is knowing where to look to find the right template to use. When putting together a contract for home sale, it is important to remember that each transaction is different in their own right.
For one-half of the REI population, the term "private hard money lenders" seems so sweet in the ears. However, for the other half, a mention of these four words alone can send instant fear and confusion into their systems. Private hard money lenders may either be middle man institutions who find borrowers individual investors or they may be individual investors themselves.
If you're looking for the big break that will propel your finances to heaven and help you live the life you've always wanted, then you should better take a glimpse at the world of real estate investors.
While an ordinary homebuyer might be squeamish with the idea of buying a house that has been neglected by its previous owner, a real estate investor is quite the opposite. He knows that even though a property has been foreclosed by the bank or is under financial duress, it is still capable of attracting good real estate deals.
If you're sick and tired of hearing a resounding "no" from banks or seeing a big and red "rejected" sign stamped on your loan application, maybe it is time for you to approach private money lenders for help.
Many families who fix up their homes save money by doing some of the labor themselves. In many cases, it would be a waste to hire a general contractor for simple home improvements that you can do yourself. Therefore, people often get this DIY version of home improvement confused with full scale owner builder construction. Knowing the difference will make finding the right financing much easier.
If you want to build your home with a general contractor or as an owner builder, you are almost certainly going to need financing in the form of a construction loan or an owner builder construction loan. So, before you ever commit to that dream plot of land, you better first understand the zoning implications - not just for your county's building permits but also for your owner builder loan terms.
A good owner builder construction loan will have only one closing to cover the land purchase, construction phase, and conversion to your permanent financing. Therefore, the owner builder loan will have two sets of interest rates: one while you build, and one rate for when you move into your new home. Every owner builder should understand the inner workings of these rates when planning to build.
Who should be using ezines to market their products or services? Every single business owner in America. So, why do so few do it? The short answer is fear. But, if we can take a deeper look into the problem, we can come up with some easy solutions that will jump start your marketing system.
If you are considering co-signing for a loan to help out a close friend or family member, the best advice is to walk away. Don't do it. It could cause real harm to your credit score and to your qualification numbers when you need a mortgage yourself. But, if you must be a co-signor, then make sure you follow these simple rules to ensure it won't hurt you in the long run.
An owner builder construction loan, just like any construction loan, will not have any mortgage insurance payments while you build. So, why is it then that mortgage insurance companies are having a huge impact on your ability as an owner builder to get a loan? The answer lies within the banks' rules for converting you to permanent financing once the home is built.
Everyone knows that you need to have a good credit score to get the best rates and terms on any loan, especially a mortgage. But, many people don't realize that their credit report can cause them to be denied financing, despite having a good credit score. It's more important than ever to understand your entire credit history - not just your credit score itself.
Owner builder construction loans, like the rest of the mortgage industry, have had to tighten their belts to survive in today's lending climate. For borrowers who wish to build their own homes, this translates into tougher guidelines to secure financing. However, there are still four creative ways that an owner builder has available to close on a construction loan without a down payment.
0