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Being an Owner-Builder: Should You Build Your Own Home (Literally)?

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Are you considering being an owner-builder? You’ve just bought the perfect piece of land and are ready to build your dream home. Most people will use a licensed general contractor (a “GC”) to build their home from the ground up.  But some people – those who wish to be an “owner-builder” or “owner-contractor” – will plan to physically build the house themselves. Opinions seem to be pretty mixed about whether it makes sense to be an owner-builder. It’s safe to say that being an owner-builder can be like an adventure – where you may have good, bad and unexpected experiences. What it’s going to come down to is: Do you really want to embark on the owner-builder adventure, and is it really going to save you money?

Shovel, Boots and Sweat - Some of the Tools of an Owner-Builder

Why Build Your Own Home as an Owner-Builder?

The role of an owner-builder can vary dramatically. A skilled (and handy!) person who chooses to be an owner-builder could literally build their own home nail-by-nail, pipe-by-pipe, wire-by-wire and shingle-by-shingle.  But this usually is an extreme scenario.

Often, when considering being their own builder, the owner is taking on this extra responsibility largely in an effort to save money.  Some still want to work with a contractor in some capacity, but also want to physically handle some of the work on his or her own. Others want to exclude GCs altogether (and their fees), and intend to directly oversee all the skilled trade subcontractors who do the actual field work. Builder fees vary, but in some cases the fees can make up about 25% of the cost of building a new home. That’s definitely a big number, and is the primary motivator for most owner-builders.

There certainly are fascinating accounts of people building their own homes.  From a man’s “hobbit house” that he built in Wales for under $5,000 to the “wikihouse” that can be framed in a weekend by two people using pieces of timber that snap together, there are many creative concepts that can help bring home design and building to the masses.

Whether it’s a hobbit house or a traditional home, anyone considering building their own home needs to focus on more than just the GC’s fee and must look at the whole process to understand whether it really makes sense for them.


The Reality (and Risks) of Being an Owner-Builder

If you are considering the owner-builder route, you need decide whether you are ready to take on the role, the risk and the responsibility.

Even though you may be highly skilled in carpentry, you may not be able to install plumbing or wire the house to code.  So in most cases you will at least have to subcontract some of the work. This is where your dream home can start to become a big headache. Likewise, eliminating a general contractor often shifts the risks and responsibilities to you when things go wrong.

For the owner-builder, these building problems can develop for many reasons and have a range of impact on the project, its cost and your home’s long-term value:

  • Risk of out-of-control construction costs and blowing your budget
  • Inability to control your schedule properly, causing costly time overruns and delays in project completion
  • Complicated construction issues, requiring solutions that may be beyond your capabilities
  • Failing to build to local code (and the unbudgeted costs of correcting issues)
  • Many of the best subcontractors won’t work with owner-builders
  • Banks may not want to give the best terms on a construction loan without a licensed builder on the job
  • Being taken advantage of by shady contractors
  • Mechanic’s Liens filed against your property by subcontractors or suppliers
  • Difficultly refinancing a construction loan (especially when off schedule)
  • Foreclosure or other loan-related distress caused by budget and cash flow problems
  • Depressed resale value when home is not built by a known professional

And if you are thinking that an easy solution is to just get a licensed contractor to work with you as an owner-builder, remember that there are a lot of headaches for the builder when setting up the relationship that way. As one contractor noted about working with a potential owner-builder, “they end up taking so long that 3 month projects drag out to 8 or 9 months, quality suffers because of the items they do, and we struggle to get the projects completed.” And now that the home building market has picked up there just is not as much incentive for busy builders to work with owner-builders and risk being caught up in the related problems.

You also need to be able to properly estimate the cost of materials and labor in building the new home, as well as the construction schedule. This is something that you need to make sure that you do not over, or especially under, estimate. Estimating job costs, materials and the schedule accurately is essential in knowing whether you have the correct budget to finish your new home and for obtaining a loan.

There also are other costs associated with building your own home, such as having to purchase specialized insurance. You should have both construction insurance and general liability insurance if you are an owner-builder, and in some cases you even could be responsible for worker’s compensation coverage for laborers too. As an owner-builder you must do the legwork to make sure each of your subcontractors keeps their insurance coverage in place. Banks will require proper insurance coverage for you to get approval for a construction loan.

And being the owner-builder means you are responsible. So, even if you are getting help from a contractor overseeing the project, you are responsible for the integrity of the completed home and will be liable if anything goes wrong (like an injury on the site). In addition to managing and scheduling subcontractors and pulling all permits, you are the person who must order materials, ensure they are delivered to the site in a timely manner and pay the suppliers. You must keep the site free of hazards and be sure it complies with all safety requirements. In some circumstances you also could be considered an “employer” for tax purposes and would be obligated to register with the state and federal government and be liable for the administrative and withholding responsibilities of an employer. Likewise, are you prepared for handling the administrative responsibilities and indirect costs like processing permits, plan review, HOA approval, meter installation and connecting utilities and costs related to impact fees or possible fines for storm water management violations?

In some states there are laws that govern owner-builders and attempt to keep people from skirting construction licensing laws. For example, California regulations state that to meet the exemptions to be a non-licensed owner-builder an individual must own the property and in most circumstances will have limits on both the number of homes it can build and sell and when it can sell those homes.

These are just a few of the things that you will need to consider when building your own home as an owner-builder. Outside of all these practical, legal and financial issues, you also should take into account that being an owner-builder can cause a tremendous amount of stress. You have to ask yourself the question “When do I have time to do this?” Chances are you are not going to be running over to the jobsite on your lunch break from the office in order to help pour a footer for your foundation. Just building after work as daylight permits, and on weekends leaves very little to no time for a personal life and the demands of family. Of course these personal constraints can not only affect your mental well-being and happiness, but also can throw the whole project off schedule and result in serious construction delays.

Granted, the scale of the project can make a difference. If you really just want to build a one room cabin, then the task may be manageable if you have the right skills and patience. But the bigger and more complicated the home design, the more daunting the challenge will be for an owner-builder.

Be sure to include plenty of contingencies in your budget for mistakes and miscalculations – things that are inevitable for someone who is new at building a home on their own – so you can thoroughly evaluate the financial costs, along with the intangible and personal costs that we’ve described. Only then can you conclude whether being an owner-builder really is going to “save” you anything.

If you’ve decided to take a shot at being an owner-builder, then we wish you the best. There are websites that can provide support and advice for owner builders, as well as many construction consulting firms that are specifically designed to assist a person who decides to be an owner-builder.


The Value of General Contractors

Ask people who have tried being an owner-builder – or subcontractors and municipal inspectors who have worked with owner-builders – and many believe that being an owner-builder almost is more trouble than it is worth. It is for these and many other reasons that most people will hire a reputable builder with years of home building experience under their tool belts to build a home for them.

Of course, just because you hire a licensed general contractor does not mean they are going to do a great job. Just like in every profession, some are better than others so check references and do your due diligence first.

But when it comes down to it, there are so many benefits of working with a skilled, licensed builder as your general contractor — ultimately, a quality builder can add a lot of value to your home and the homebuilding process. For more details, read this article about the benefits of working with licensed builders.

Each person has different skills, free time, patience, needs and financial ability. Ultimately it is up to the individual to decide if they want to go the owner-builder route. So if you still are feeling ambitious and plan to build yourself, then by all means have at it! We’d like to know how it turns out for you.


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  1. Thomas Zelkovich says

    Eighteen years of owning my company and thirty years in the business, I have dealt with owner-builders numerous times. For those who think they are going to save a bunch of money by doing it themselves, please reconsider. Spending an additional 20% to hire a general contractor will let you sleep at night nightmare free!!!

  2. says

    Hi Steve. You do a good job in this article of letting people know about the potential problems associated with becoming an owner builder. However, there’s very little here that talks about the positives. Sure, owner building isn’t for everyone, but over fifty thousand people will make it happen in the U.S. this year. And for people that think it’s only about the money savings…they’re missing a whole lot of good reasons to take on the challenge. Maybe a future post should talk about the good stuff. Just my two cents. Stop by and see us at Armchair Builder if you need some positives. Take care.

    • Walter says

      I bought a lot last December. This is my first time building. I designed my house myselft. It took me 2 months to get the building permit. I had to deal with watershed, wetland reviews and cultural preservation review. I spent time going to the house of the development and back and forth e-mails.
      My neighbor next to me built with a proffesional architect and contractors. It took him 2 years to get the permit. So I think there is a good side of being a owner-builder

  3. Wisdom says

    Just don’t borrow the money from a bank and you can avoid half of the problems from being a owner-builder. Don’t hire subcontractors, do the work yourself and get help from friends and family. If you do your research and come up with a detailed plan long before you start purchasing anything or doing any construction work. You will find that building your own home isn’t as complex as those in constuction industry make it out to be.

  4. Sam says

    My wife and I have built 3 homes with no contractor with us doing the majority of the work . We didn’t have a problem selling them .

  5. says

    In my opinion, construct own home is too difficult task for every home builder. Construction of a home is a very difficult task when if you are choosy. I mean we can’t make our imaginary thinks.

  6. hayley cuvler says

    you can save 25 to 40% off the top by doing the home yourself. you don’t have to build the house yourself you can just take the place of the contractor and save a lot off the top. put that money in your home instead of paying someone all that money upfront before you even start. I am building my own home and I pulled my own permits and if you can organize your checkbook you can build a home. I am a truck driver over the road and I set up who I want to do the steps and when it is done I come home see it, then pay them and move to the next step. when you get to the inside of your home you can do some things. but the money you saved by being your own contractor can pay for a lot of stuff. so if you can organize and shop and decide what you want your home to look like, you can do it.
    I see these houses that are for sale out here in the world and I know what they spent for to build those houses I really see how much they over charge. you can build your home for 1/3 of what the large companies charge. and your home will be work 3/4 more than what you actually spend.
    so I say build it yourself……….why give the money away? spend it on your home.

    • james says

      hi Hayley. I am very interested in owner builder but a little apprehensive. Where do you even begin with owner builder? There is the foundation, structure, plumbing, etc. How do you find people in doing these work? Please advise.

      • JustMe says

        You have to have some experience in construction, I worked at six sites in my twenties doing concrete, masonry and everything else. BTW, I worked with asbestos lots of times, didn’t have any problems.

        I’m sure the numbers of owner-builders will be growing because of the insane amount of interest ppl have to pay these days.

        If you have never done construction, a DIY home building project may not be for you.

    • Cheryl Rachetto says

      Hayley, you are correct about what you said regarding savings. If you can read and follow plans, are a good manager with people skills, and have watched construction work, you can be an owner/builder. We have just sold property with a 1031 exchange. The problem we are running into in Idaho is that the exchange needs to be named co-insured along with our company to begin our project. Insurance companies do not want to insure an owner/builder….just a licensed contractor, even though Idaho does not require that you be a contractor to build. Have just tried the insurance co. Buildit for the owner/builders insurance and hopefully will get insurance soon as we are to close on our property this next week. Any further ideas about our insurance issue?

  7. Daniela Adams says

    Great article and an interesting insight. I definitely see the benefit of building your own house. My best friend’s parents built their own house, and I think it is just an incredible feeling of owning something that you built with your own hands. Of course, my friend’s parents still hired some people for different jobs, sometimes you just have to have specialists on your team to make your dream house become a reality!

  8. says

    Sometimes, permits are missing project valuation, we controlled for this by calculating average valuation as a function of total project valuation and the permits that did include project valuation.

  9. Connie Kufner says

    We have contracted builders in the past and what a nightmare. Our family might be moving and we really like our house layout. After being stung two times with crappy builders’ we are contemplating on building ourselves. It has nothing to do with saving money. It has to do with having the job done right by saving us the time and frustration. Any thoughts??

  10. John says

    I am a home builder myself in Florida , I think a lot of people out there are always wanting to find the cheapest person and the old sayin is you get what you pay for. Right? I agree with try and find several builders to consider . There is a lot of builders who are all about money and don’t care about you. The world has changed a lot these days and honest people who still take pride in their work are hard to find. Now on this whole thing about cost saving by hiring your own subs. This is tricky . I’ve been in the Home construction field as a Electrician for 16 years and developed many many relationships with subs over that time. I no longer wanted to be just a piece of the home but I wanted to be the man building the whole house. So I become a Contractor after taking my test and activation of my license I was a project manager for a company for a couple years and now have started my own company as a New Homebuilder . My relationships with all my subs allows me not only to have them do the best quality of work for me cause they know I will get on their butts if they don’t do it right or I will make them redo it or fix it and since they do work for me and respect me I also get lower prices than not just other bigger builders but especially if just some guy that had enough money to buy a lot and build his own home who cut out the Contractor. Subs will not only give individuals higher prices but they will also take advantage of any lack of knowledge you may have in that area of your build. Trust me when I say us construction workers know if your knowledgeable or not about everything and I mean both ends . Not just the field work but the engineers, architects ,etc…So if I’m getting my subs doing better quality work for 10-20% cheaper than they would just a owner builder then when you add my 15-20 % fee flat rate in just the home cost you will actually build your home cheaper and with better quality and the only headache you will have is picking out colors and add-ons or etc.. Trust me when I’m telling you that you want a Contractor to build your home and also you won’t ultimately be liable , he will or I would in my case . So I hope it all makes sense to everyone here . I’ve met some of the best guys through my years in the field and paid my dues working hard hand and hand with everyone that is a sub. So when they know they are working for a builder who was just like them for many years there is a sense of respect you earn and the subs don’t just see that contractor as born with a silver spoon . This my friends is why the most important part of your home building choices is just finding the right Contractor that has the experience and that isn’t afraid to get his hands dirty . They will treat you right . I could say more but I will leave it as that but I can’t see one positive about being your on builder unless you are in and have been in residential construction for many years and have developed lots of relationships and ones that where you have earned their respect . This is a selfish and greedy world today and there not a lot of people out there that want to try and walk in your shoes and consider your feelings and money. I still am a true believer building your own home is better than buying someone else’s problems and just do it with the right builder who you get a good feeling about . Don’t pick the cheapest guy. Okay I’m done :) wish all of you the best . Wish I could build all of you a home . Good luck :)

  11. Keith says

    I will be building my next home as the home I’m living in was built by a customer builder with a great reputation and I’m not ever dealing with these headaches again. I want a home that every decision was not based on what it costs, but on what the total cost of ownership will be. Most builders don’t care about the structure and and subsystem issues that will turn up in 10 or 20 years if they can just make a couple of thousand dollars more.

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