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General Contract Your Own Home

Updated on March 25, 2014

The inventory of existing real estate has been shrinking over the past several months. Each day that goes by it seems there are fewer good quality homes, in the neighborhood you want, on the market. A great way to get the home of your dreams is to general contract your own home.

What Does General Contract Mean?

When we say general contract, we are referring to you taking on the role of the general contractor for your new home build. As the general contractor, you have complete responsibility for the schedule, quality and budget. You will hire subcontractors to handle the physical work that you don't have the time or the desire to do.

Why Go to All The Trouble?

Savings - You can save significant money by contracting out your own home. Not only will you save the 15-22 percent gross margin that the general contractor normally makes, but the owner builder also saves another 10 percent or more on real estate commissions, sweat equity and friendly relationships.

Real Estate Commission - Typically, the real estate commission is paid by the seller. Because of this, the seller typically adds the realtor commission to the net proceeds they want out of the property to come up with a sales price. This means you get stuck paying part, or all, of the commission when you buy an existing home. When you build your own home, you save the real estate commission on the value of the house.

Sweat Equity - One of the great things about contracting out your own home is the control you have. Since you make all the decisions, you can decide if you want to tackle some of the labor yourself. From painting to cleaning, you can save additional money on your new home by doing some of the actual work yourself.

Friends and Family - Do you have a family member or friend in the construction industry? Maybe your uncle is a lumber salesman or your aunt is an electrician. By working with them on your new home, you can save good money and send business their way.

Tax Benefits - One other great benefit that comes with owning your own home are the tax benefits when you sell. If you live in a home for two years, it is your primary residence, and you are married, you can exclude up to $500k in capital gains from the sale.

So, let's say you build your home and the total cost is $200k. You sell it after three years for $300k. You would pay no federal tax on the capital gain you realize. In essence, the work you put into building your home is tax free.

You can take on the role of the general contractor and build your own home. All you need is a little help and some extra time and you too can save money and get exactly what you want.


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    • Armchair Builder profile image

      Michael Luckado 4 years ago from Hawaii

      Thanks Robert. Have a great holiday season.

    • Robert Erich profile image

      Robert Erich 5 years ago from California

      Armchair builder, this is a great article! I have spent some time doing my own home repairs - and it certainly does save you money. But being the general contractor for your own home - that's completely brilliant! Well written article and very useful. I have shared this article with my followers and you have a new follower yourself! I look forward to reading more of your work.