Architect engineering worker working in office. shot in studio.Here is a question that comes up frequently, “I want to act as my own general contractor for my renovation project. Lenders I call are telling me NO. Why is this a problem?” First off, just saying no is not the most productive response to the question. Answering the question as an educational opportunity is much more helpful.

My conversation with the caller starts with their level of experience or credentials, and if they are licensed. Construction and renovation financing is more readily available today than it has been since the housing market troubles years ago, but lenders or banks are still looking at the elements of risk that might be layered in each and every transaction. When a client does not have the level of experience or credentials needed, lenders are not going to be interested in lending money to the project. A licensed general contractor or builder will be required for the project to be considered.

A general contractor or builder will provide the project management skills which allow them to be the conductor of the entire process, from start to project completion. These individuals are licensed, have a history in construction and renovation work, can provide the necessary builders risk insurance, and generally work with a group of subcontractors that they trust to get the job done. They also know how to write a contract, prepare plans and specifications, prepare a sworn construction statement, and manage the draws needed to pay for the work as it is completed. The draw process requires the collection of paid invoices and lien waivers to prove all goods and services provided to the project have been paid in full.

A general contractor or builder has knowledge of building codes and the inspection process required by the city/county. They will make sure timelines are met every step of the way, and can manage contingencies to keep the project on budget.

All of this information is necessary when explaining to a client why being their own general contractor may be a problem. When every detail is examined, having a professional on the job is worth every penny! – Randy Cullen, NMLS #326128

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