Own Your Home Free and Clear

Have you dreamed of the day when you no longer need to make monthly payments to the bank on your home? Have you ever thought about building your own dream home? One of the best ways to generate wealth and equity in your home, is to take on the role of the general contractor. The Savings You can generate significant equity by managing the construction of your own home. Let's take a look at how this equity is obtained. General Contractor Fee When you build your own home, you are taking on the role of the general contractor, managing the schedule, budget, and quality. This task will take you time to complete but will save you anywhere from fifteen to twenty-five percent, the typical builder gross profit. Sweat Equity The great thing about building your own home is you get to be in charge. You can decide how much of the physical labor you want to do yourself. If you have the extra time to do some of the labor yourself, you can save an additional five to ten percent on painting, cleaning, and trash removal. Depending on your skill level and time available, you have the potential to save even more money by taking on more of the physical labor yourself. Real Estate Commission When you buy an existing home, there is typically a real estate commission involved. Yes, the seller pays the fee, but in many cases you are paying part of the fee in the sales price. Think about the last time you sold a home. To come up with a listing price, you started with the money you wanted to get out of the home and then added the realtor fee. So by building your own home, you avoid this additional cost you would pay when buying an existing home. Friends and Relatives If you have friends or relatives in the construction business, you may be able to create a win-win scenario for them and you. They could give you a discount if you give them your business. Maybe you have a cousin in the appliance business or a sister that works for a home improvement chain. These savings can add up to two to five percent or more of your new home cost. Tax Benefits One of the great benefits from the U.S. government is the capital gains tax exclusion for primary residences. If you live in your home for two full years as your primary residence you can exclude the gain from the sale from federal tax (up to $250k for singles and $500k for married people). Be sure to check with your accountant for more details and exclusions. With this tax benefit, the equity and time you put into this project is tax free. Starting in 2013 this will save you an additional twenty percent on the gain. Discounted Land With the downtu in the real estate market, there are still developed building lots and land available at discounted prices. People have been reluctant to purchase property to build their dream home because of the difficult real estate market. Now may be a good time for you to grab that piece of paradise for your next dream home. Equity Building When you build a new home for your family and do the things mentioned above, you can generate twenty to thirty percent equity, or more, in the time it takes to build a home. What if you did this every two years to avoid the capital gains tax? Within eight to ten years you could own your home without a bank loan. Easy No, Possible Yes Don't get the wrong idea here. It's not easy to build your own home. This is not a get-rich-quick scheme. If you decide to build your own home, it will require a lot of time and effort. And if you decide to build a new home every two years it will seem like you are constantly moving and planning. There are also risks involved just like any other investment. But you can minimize these risks by getting help where you need it and learning about the requirements for safely building a quality home. To learn more about the licensing and skills required to build your own home, check out this video called build my own home.