7 Things to Consider Before Being Your Own General Contractor

It's no secret (or overstatement) that being your own general contractor could save you tens of thousands of dollars when you build a new home. But when you consider the task at hand, it's not so simple as taking on some additional responsibilities and making a few phone calls to contractors in exchange for a few bucks saved.

To complete the job, a good general contractor must become a master of researching, event planning, coordinating, and budgeting, among other skills—and if they don’t, they may not save as much money on the project as they hoped going in.

Here are seven things you should consider about how to be your own general contractor before signing yourself up for the job.

Understand the scope of the work

If possible, contact a reputable home improvement contractor for a free estimate, says Michael Martell, owner of highly rated Stellar Home Improvements in Escondido, Calif. This should help you understand the cost, materials and tasks associated with the project, he says. You might decide to hire a general contractor after all, depending on what you learn, he says. Expect a general contractor to charge around 10 percent of a project’s cost, Martell says.

If not, you’ll start the project with an understanding of its scope.

1. Understand the Pros and Cons

First, consider these benefits and drawbacks to see if you have what it takes to be a general contractor.

Benefits of Being Your Own General Contractor

• Save money (around 20% to 30% of your estimated project's cost when done well)

• Build exactly what you want

• Build a network in your area with quality local subcontractors

• A challenging but rewarding experience

Drawbacks of Being Your Own General Contractor

• A high-stress job with many responsibilities

• A significant time commitment

• A significant learning curve that, if not managed correctly, could lead to overspending

• Lots of research and planning required

• Licenses and permits are likely required

• Likely to affect other areas of your life (job, personal life)

• Poor budgeting could negate potential savings

2. Compare Cost Differences

The primary reason most people look into being their own general contractor is to save money when building a new home. So, it's worth asking the question: how much will you actually save?

A local general contractor typically marks up your home's project by 10% to 30%, depending on project length, location, and customizable features of the new property. This fee covers the time they'll spend coordinating subcontractors and compensates them for their expertise and networking capabilities—the latter of which can really affect price (see tip #7).

Reputable general contractors don't charge per hour, but will work for between $300 and $500 per day.

3. Decide on Your Level of Involvement

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A good way to think about being your own general contractor is to think of it as becoming a project manager. You'll be tasked with seeing things through and managing "employees" and the odds and ends that sometimes make leadership a challenge.

First, you should also consider the number of hours you can commit to the project. If you're juggling a full-time, nine-to-five job, you may need to think long and hard about taking on this responsibility (or at least plan to divvy up the project for practical reasons).

It's also important to know what you don't know—or just what you aren't very good at. If you're good at making phone calls but don't feel like you have enough experience to set a budget for your project accurately, it might be worth paying a general contractor for a few days of their time.

4. Research, Research, Research

Whether you do it yourself or hire a home improvement expert, educating yourself is crucial. Keep those reading glasses handy, because you're going to need them.

Topics in which you'll need to be well-versed include (but certainly aren't limited to):

• Determining which items you should pay a premium for and which you shouldn't

• Fair subcontractor rates in your area for every project you are planning

• Which local businesses are reputable (and available)

Reading information online can help, but it's probably a good idea to find someone you can talk to who’s been where you're planning to go. Ask them what they'd have done differently knowing what they know now.

5. Learn About Permit and Code Requirements

Another area you'll need to read up on when becoming your own general contractor is your area's permit and code requirements for building a new home. Every state, county, and sometimes even town, has different guidelines you must follow—otherwise, you could be fined or have your project shut down.

In many states, you must hold a general contractor license, which requires you to pass a written test in advance. States vary, but the exam typically costs around $200 to $250. Only about a dozen states (Colorado, Connecticut, Kansas, Missouri, and New Hampshire, to name a few) don't require you to take an exam.

6. Hire the Best Companies for Your Budget

You'll spend many hours researching, talking on the phone, and planning materials purchases so that the best companies in your area can carry out the work you're looking for. It's best to start this process as early as possible so your top choices still have availability.

Keep in mind that some subcontractors may consider a first-time general contractor a high-risk move on their part. Because they don't know what to expect from you (or may think you don't know what you're doing), you might get quoted a higher fee than an experienced pro in your area. This could actually be a reason you decide you should hire a general contractor.

7. Create a Schedule and Stick to It

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General contractors are like masterful event planners. Coordinating jobs, purchasing materials, and keeping your subcontractors flowing towards your goals are all part of the job. Being strict with your plan but flexible when things come up is a skill you'll need to become adept at during this process.

You'll want to ask questions in the early stages about each subcontractor's work process. Learn how they complete their work, how long it takes, and after explaining the project you're putting together, see if they have any specific requests or accommodations you must work around. Planning could save you from many headaches and keep money in your pocket!