COMPARATIVE ANALYSIS:

2-Time Close Option as Owner Builder VS 1-Time Close Using a GC

At Log Lenders of America, we feel the best thing we can do for our customers is to educate them on the different financing options available to them.� By doing so, we provide them with the ability and the confidence to make the decision that best fits their individual needs.

Over the years we have had many customers ask about the benefits of acting as their own General Contractor (aka Owner Builder).Below is a comparative analysis designed to assist you with those questions – to help you understand which option is the most costly; to help you understand which option is the best for you personally.

FINANCING OPTIONS:

One-Time Close Financing w/GC required:

Loan Amount = $200,000

Approximate Closing Costs = $8000 (4 per cent estimated)

General Contractor Fee = $40,000 (20 per cent on average)

Total Costs = $48,000 (24 per cent total estimated)

Two-Time Close Financing as Owner Builder:

Loan Amount = $200,000

Approximate Closing Costs (Interim Loan) = $10,000 (5 per cent estimated)

Approximate Closing Costs (Perm Loan) = $4000 (2 per cent estimated)

Total Costs = $14,000 (7 per cent total estimated)

As you can see by the example above, on a $200,000 loan amount you would save approximately $34,000 by acting as your own General Contractor (Owner Builder).Even though the financing costs are roughly $6000 higher using the 2-time close option, you still save approximately $40,000 on the fee that a General Contractor would charge to manage the project for you.

The main difference between the two options is simple – the one-time close option is less costly from a “financing” standpoint due to lower loan fees, but the overall costs are much higher since a General Contractor will charge you on average 20 per cent just to manage your project.The two-time close may cost more in loan fees, BUT you will save an additional 20 per cent in overall costs by not having to hire a General Contractor to manage your project.

It’s also important to keep in mind that a General Contractor does not go out to your project and hammer each nail – he simply hires ‘sub-contractors’ to do all of the work for him.As an Owner Builder you would not be expected to hammer each nail either – you would simply hire out the sub-contractors yourself instead of paying someone 20 per cent of your budget to do that for you.

Our Owner Builder program also allows you to have UNLIMITED DRAWS… whereby the normal one-time close program limits you to 8 or 9 draws throughout construction.

Which is best for you? It all depends on you and what you want to accomplish for your individual project – lower loan costs or lower overall costs, but the difference is quite dramatic when you look at both side-by-side.