Question

Does anyone have any experience in building a house without a contractor and obtaining a loan? So far with the research I have done it seems pretty tricky, but I thought I would reach out. For reference, we have gotten the property we would be building on as a gift, after my family home burned down in the Camp Fire, otherwise, we probably wouldn’t be building.  

Answer 1

Since this is in CA, id definetly recommend a contractor. There are so many regulations, you could really risk getting yourself into a compliance mess. Especially in that area, id assume the County is going to have code enforcement making sure any rebuilds are done right.  

Comments

@haar844 since the fire rates for contractors have become outrageous if you can even find one. We would be using my grandpa as a project manager who has been building houses for as long as I can remember and is a licensed electrician. He will be building his own home and ours at the same time if we can get a loan. In California he can build 6 houses a year without a contractors license.  

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@salomone i would double check that with the County and make sure there arent going to be issues with all the required permitting, and if your grandpa would still qualify as the needed "competent person" I thought was required. You're going to want to have a good relationship with them anyway, in case something does go sideways. Better to get all possible concerns they may have with your plan up front.  

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@haar844 thank you for your insight!  

Answer 2

We have built two homes owner builder. You’ll have to get a building loan first. It’s fairly complicated, you need to have all of your project costs estimated then the bank will give you a checkbook to pay the subs. They’ll usually only lend 50% of the total value so if you own the land outright you may be OK. We used a small, local bank. After you’ve gotten your final inspection, you can refinance the whole project at a better rate.  

Comments

@overdue that is what I have heard. The difficult part is that it is sounding like most banks will not give you a building loan without having a licensed contractor

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@salomone not sure about now - we did ours a few years ago and were able to but things may have changed. You could use a hard money lender just to build and then refinance. You’d be paying a higher interest rate but for a short period of time. If you have access to a HELOC on another property, you could use that too.