The bottom line is -- if you want to be absolutely sure that your project is professionally completed then you need to hire a reputable General Contractor.

Here are some questions you should ask yourself before you decide to "do it yourself":

* Do I really have the time to devote to building the home myself?  If the answer to this is "no" then don't read any further.  A construction loan has time limits and if you can't meet the deadlines for completing your project you could be hit with substantial penalties.  Don't put yourself or your home in jeopardy if you're just planning on being a "weekend warrior"... that won't work.  Hiring a reputable General Contractor will help insure that your project is completed on time without experiencing any costly penalties due to extensions on your construction loan.

* Do I have the necessary expertise to do this myself?  If you have no construction experience whatsoever, then you really need someone with experience at least assisting you with your project -- if you decide to do it yourself.  Building a home can be stressful, but doing it yourself without any experience can quickly turn your dream home into a nightmare.  Be sure you look carefully before you decide to leap.  At the very least you should have an experienced builder erect the shell and dry it in.  Then you might be more able to hire subs to finish out the interior.

* Do I have the working capital necessary to do this myself?  In most cases (other than payments for the log materials package) you will need to have the work in place before you can obtain a draw.  You will need some working capital to help float your project until the draws can be disbursed.  You may also run into areas where your actual costs come in higher than what you allowed for in your budget.  Make sure that you set up a "contingency reserve" in your building budget to protect against cost overruns.  Working with a reputable General Contractor will typically minimize this exposure since they have a much better handle on all the costs that go into the construction of your home.

* Do I have the ability to manage sub-contractors?  Alot more goes into building a home than just the construction project itself.  Managing sub-contractors is just as much of an art as it is a science.  Proper scheduling is critical.  You must schedule your sub-contractors well in advance in order for them to put you on their schedule.  A flooring guy may not be able to come out for weeks due to another project so you need to coordinate with him long before your flooring is ready to be installed.  What do you do if a sub-contractor walks off the job or isn't doing a quality job?  If you're not prepared for things like this your project can get bogged down in a hurry.  Hiring a General Contractor to manage these issues removes the added stress of those types of problems.  A General Contractor would know exactly when to schedule and exactly how to handle the dynamics of working with the sub-contractors he hires.

While we're not trying to discourage those of you who dream of doing this yourself, we just want you to be looking at all angles -- preparing yourself for the good and the bad.  We feel it's our job to educate you on all the issues so that you can make an informed decision on what's in your best interest.

Let us know if you have any additional questions with which we may assist you in your decision.

Our 2-time close program, however, is designed with the Owner Builder in mind!  You will enjoy UNLIMITED DRAWS in this program whereas most construction loan programs will limit you to around 7 or 8 maximum!

Already started work?  No problem with our Owner Builder construction loan!

COMPARATIVE ANALYSIS:

2-Time Close Option as Owner Builder VS 1-Time Close Using a GC

At Log Lenders of America, we feel the best thing we can do for our customers is to educate them on the different financing options available to them.  By doing so, we provide them with the ability and the confidence to make the decision that best fits their individual needs.

(IMPORTANT NOTE:  PLEASE BE SURE TO ALSO READ THE ANSWERS LISTED FOR QUESTION #1 -- SHOULD I HIRE A GENERAL CONTRACTOR OR TRY TO DO IT MYSELF?)

Over the years we have had many customers ask about the benefits of acting as their own General Contractor (aka Owner Builder).  Below is a comparative analysis designed to assist you with those questions – to help you understand which option is the most costly; to help you understand which option is the best for you personally.

FINANCING OPTIONS:

One-Time Close Financing w/GC required:

Loan Amount = $200,000

Approximate Closing Costs = $8000 (4% estimated)

General Contractor Fee = $30,000 (15% on average)

Total Costs = $38,000 (19% total estimated)

Two-Time Close Financing as Owner Builder:

Loan Amount = $200,000

Approximate Closing Costs (Interim Loan) = $10,000 (5% estimated)

Approximate Closing Costs (Perm Loan) = $4000 (2% estimated)

Total Costs = $14,000 (7% total estimated)

As you can see by the example above, on a $200,000 loan amount you would save approximately $24,000 by acting as your own General Contractor (Owner Builder).  Even though the financing costs are roughly $6000 higher using the 2-time close option, you still save approximately $30,000 on the fee that a General Contractor would charge to manage the project for you.

The main difference between the two options is simple – the one-time close option is less costly from a “financing” standpoint due to lower loan fees, but the overall costs are much higher since a General Contractor will charge you on average 15% to manage your project.  The two-time close may cost more in loan fees, BUT you will save an additional 15% in overall costs by not having to hire a General Contractor to manage your project.

Our Owner Builder program also allows you to have UNLIMITED DRAWS… whereby the normal one-time close program limits you to 8 or 9 draws throughout construction.

Which is best for you?  It all depends on you and what you want to accomplish for your individual project – lower loan costs or lower overall costs, but the difference is quite dramatic when you look at both side-by-side.

Our overall construction loan will be maxed out at 80% of the appraised value (the value of the project once it's finished).

If the value in its current state is at least 20% over your current construction loan balance (what you've drawn thus far) then we'll be able to pay off your current lender and get you back on track!