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Old 12-18-2012, 08:40 AM   #1
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In order to reduce costs (and because I like the work) when I build a new house next year I'd like to do plumbing and electrical. I've discussed it with a general contractor that is building new homes in our neighborhood and who will be bidding for the job, he is okay with it as long as I get my own permits - I've done the service entrance and the garage wiring under permit.

My question is this: I'm just wondering if there is anything I need to be aware of with structuring the construction loan for the work being done by the contractor. I'm expecting to not be able to fund materials for the DIY work.

The existing house is not actually going to be completely demolished, a 10x10 room is being kept at the back of the house, and this is where the electrical service entrance is... There will need to be new water, sewer and gas connections (These would not be in the scope of my DIY plans)
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Old 12-18-2012, 11:15 AM   #2
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I did something like what you want to do when my wife and I had a log home built years ago. Basically, there's nothing to "structure" in the construction loan. In order you to even get the loan, the GC has to assume total responsibility for completing the house. Anything you DIY will have to be worked out between you and him, and the bank doesn't even need to know about it. You should, of course, come to an agreement on what work you will do and how much he will take off of his price. If something you DIY happens to fail inspection or is not acceptable to him, he will surely back charge you for fixing it.

We are now in our second log home, which we built by ourselves three years ago. My wife was the GC and I was all the subs (that's her version anyway). All was out of pocket so no loan to worry about.

Last edited by md2lgyk; 12-18-2012 at 11:19 AM.
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Old 12-20-2012, 07:22 AM   #3
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I'm not sure about the financing end of it, but make sure doing your own work is legal. Some areas are funny about it, especially electrical work. Also, make sure you can get insurance on DIY work. We found it hard to get construction insurance on our DIY build, and they'll only cover us for one year.
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Old 12-20-2012, 01:39 PM   #4
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Quote:
Originally Posted by MushCreek View Post
I'm not sure about the financing end of it, but make sure doing your own work is legal. Some areas are funny about it, especially electrical work. Also, make sure you can get insurance on DIY work. We found it hard to get construction insurance on our DIY build, and they'll only cover us for one year.
Really?? My wife and I built our log home almost entirely by ourselves. Finished it a couple of years ago. The only things we as homeowners couldn't legally do were the well and septic, which we had no intention of doing anyway. We had no problem getting a builder's risk policy during construction or homeowner's insurance when we were done. As long is it passes inspection, why should the insurance company care who did the work?? State Farm didn't - in fact, our agent has never even seen the place. But I did recently install a wood stove, and he does want to see that, which I do understand since strangely, no permit is required here to install one.

Perhaps the fact that we had no construction loan made a difference??

Last edited by md2lgyk; 12-20-2012 at 01:42 PM.
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Old 12-20-2012, 02:18 PM   #5
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We don't have a mortgage either. I should say that it was easy to get insurance, but nobody wanted to write liability insurance, which is the one that will really clean you out. State Farm was the only one that would offer a complete policy, including liability, but it is only good for one year. For some reason, they decided to renew for another year after first refusing. Come August, the policy runs out again, and I don't know if we'll have a Certificate of Occupancy by then.
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Old 12-20-2012, 02:48 PM   #6
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Interesting. The one-year limit never came up for us, even though it took almost three years to get our Certificate of Occupancy. But nothing was ever said about not renewing the policy. Perhaps because we've been with State Farm for more than 30 years?? Or because we were living in our RV on the property during construction?? Who knows. In any case, liabilty wasn't really an issue since we used no subcontractors.

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