Build a House with No Contractor License

Summary

In this video, Jerome Aldonado shares three ways to build a house without needing a contractor's license. These methods include: 1) becoming an owner-builder, where the individual takes charge of construction and obtains permits; 2) hiring a licensed general contractor as a consultant to assist with permits and oversee the project while reducing liability; and 3) using a cost-plus model, where the developer pays a general contractor a percentage above material and labor costs. Aldonado highlights the benefits of each method and emphasizes the importance of building relationships with contractors to save costs and ensure quality construction.

Takeaways

• 😀 You can build a house without a contractor's license, depending on the state you are in.
• 😀 Some states like Texas and Washington do not require a contractor's license for building homes, making them favorable for construction projects.
• 😀 One way to build without a contractor’s license is to use the 'owner build' approach, where you act as the owner and builder while obtaining the necessary permits.
• 😀 Establishing a relationship with a financial institution is essential if you want to pursue owner-building, as most banks require experience or proof of ability.
• 😀 Hiring a licensed general contractor as a consultant is another way to build without a contractor’s license. They assist with the project and allow you to use their license for permits.
• 😀 Using a contractor’s license as a consultant requires signing an affidavit that limits the contractor's liability, especially regarding warranties and legal issues.
• 😀 If you hire a general contractor as a consultant, you can gain valuable experience and potentially use this experience toward obtaining your own contractor's license.
• 😀 A third method, the 'cost plus model,' involves hiring a general contractor to manage the project for a percentage of materials and labor costs, making it a cost-effective way to build.
• 😀 The cost plus model typically ranges from 10-17% for contractor fees, depending on the location and market conditions.
• 😀 To avoid being overcharged, you should obtain multiple bids for each trade and compare them with the general contractor’s bids to ensure fair pricing.
• 😀 By actively managing the process and understanding the costs of materials and labor, you can save significant amounts of money while ensuring quality work.

Q & A

What is the main topic of the video?

The main topic of the video is how to build a house without having a contractor's license.

What are the three ways to build a house without a contractor's license?

The three ways are: 1) Owner build, 2) Hiring a licensed contractor as a consultant, and 3) Using a cost-plus model with a general contractor.

What does an 'owner build' mean?

An 'owner build' means the property owner acts as the builder, obtains permits as an owner, and manages the construction process themselves. This can be done without a contractor’s license in some states.

How can banks help in the owner build process?

Banks can help by approving loans for owner-builds, provided the owner has a relationship with the bank and meets certain requirements, such as having construction experience.

What is the role of a licensed contractor when hired as a consultant?

When hired as a consultant, a licensed contractor provides guidance and assistance, helps with permitting, and may inspect the work, but does not manage the entire construction project.

Why is it important for a consultant contractor to have you sign a liability waiver?

A liability waiver is necessary to release the contractor from certain legal responsibilities, such as warranties, ensuring they are not held accountable for any issues with the construction.

What is the cost-plus model in construction?

The cost-plus model involves paying a general contractor a percentage (typically 15%) above the cost of materials and labor. This model helps reduce construction costs and allows the developer to manage fewer employees.

How does the cost-plus model help reduce construction costs?

By using the cost-plus model, developers can bypass inflated costs that contractors might charge when bidding the entire project, paying only for the actual materials, labor, and a set percentage fee.

What is the benefit of managing 'paper' in the cost-plus model?

Managing 'paper' means overseeing the paperwork, bids, and contracts, ensuring the project costs are fair and within budget by comparing multiple quotes for each trade and reviewing invoices.

How can someone gain experience towards obtaining a contractor's license using these methods?

By working with a consultant contractor or using the cost-plus model, individuals can accumulate experience working alongside licensed professionals, helping them meet the requirements for obtaining a contractor’s license in most states.