The 24 Percent Secret: Why You Should Build Your Own Home

[00:00:00]What if I told you that you could save 20 to 25% or even more on the cost of a brand new custom home? And no, I'm not talking about cutting corners on materials or downsizing your floor plan.

[00:00:11]I'm talking about firing the middleman, taking control, and acting as the owner-builder. Today, we're breaking down exactly how much money you can save by managing your own build today, the hidden markups the big builders charge, and why stepping into the general contractor role for your new build might be the best decision you've ever made.

[00:00:29]To fully understand the savings, we first have to look at how the big production builders make their money.

[00:00:35]Take NVR, for example.

[00:00:36]>> [snorts] >> They are a massive, successful, publicly traded home builder, but their business model is incredibly simple. They buy developed lots, they hire out the physical labor to subcontractors, and they manage the build. That's it. All of their net net income comes from general contracting. In a recent earnings report, NVR showed a markup over the cost of labor and materials of 24.4%.

[00:00:58]Think about that. For every $100,000 of actual lumber, concrete, and labor that goes into a house, they're charging an extra 24 grand just for managing the process. One other really key thing to keep in mind here, guys, is that many builders include a superintendent cost line item in the gross profit number, as well as a sales cost. Now, these two line items alone add up to $10,000 or more in some cases. Now, obviously, this is not an expense for the owner-builder, so the realized savings will be even higher than shown in the public builder numbers. When you hire a custom home builder, you're paying a very similar markup. It's called a GC fee, or general contractor's fee. But when you become an owner-builder, you're the general contractor. You manage the schedule, you order the materials, and most importantly, you keep that 20 to 25% in your own pocket. Now, some of you might be saying, "But I can't match the negotiating power of a large builder for labor and materials." And that's right.

[00:01:54]You're only building one home. But I would ask you to look at some of the other big money savers that you have the time to implement for your build. Now, take materials for example. I've seen owner-builders find closeouts for doors, light fixtures, and flooring, and many other parts of the materials for the home that amount to giant savings. The big builders just don't have the time to search for those types of deals. And if you and your friends are willing to put in some sweat equity, meaning you actually do some of the physical work yourself, like painting, landscaping, installing trim, those savings can skyrocket.

[00:02:25]These are just a couple of the examples of how an owner-builder can increase their savings potential.

[00:02:30]But, keeping your hard-earned money isn't the only reason to act as your own GC. There are three massive benefits to building it yourself. First, total customization. You get exactly what you want. No builder's going to tell you that you have to pick from package A or package B, or that you can't build your own custom home plan, or that you can't build build over on Old Hickory Road.

[00:02:52]You also get total transparency. As the general contractor for your own build, you see every single invoice and every material order. There are no hidden fees or surprise markups on your tile or your countertops. As the builder of your own project, you scrutinize every last penny on every invoice. Trust me, that leads to savings. Also, quality control. Let's be honest, nobody cares more about your home as much as you do. When you're the one walking the site and checking the work, you ensure the quality meets your standards. Now, I want to be completely straight with you. Is there risk involved? Yes.

[00:03:26]Is it a complicated process? Absolutely.

[00:03:28]You're managing budgets, timelines, permits, and trade personalities. It is a real job, but here's the absolute truth. With the right training, the right tools, and a solid plan, anyone can do this. You do not need to have swung a hammer for a living to manage a construction site. You just need to be organized, willing to learn, and ready to take control of your financial future. So, if you're ready to learn exactly how to manage your own build, minimize your risk, and keep that equity for yourself and your own pocket, be sure to check out some of the owner-builder resources and classes that are out there. Thanks for watching, and I'll see you on the next video.