Bob Hinz always promised himself he’d have nothing to do with the business of building homes—right up until he founded custom-home construction firm HomeWrights back in 2002. But like many successful entrepreneurs, the son of a home-builder noticed a big problem in the industry—a major lack of transparency—and a creative solution he just couldn’t ignore: Let homeowners in on the process.
In its first year of business, Denver-based HomeWrights helped a half-dozen homeowners learn how to become their own general contractors. The next year, that number grew to 28. Seventeen years later, Hinz and his team have more than 300 Front Range projects in their portfolio—and a time-tested owner–builder model that’s worked for doctors, lawyers, real-estate investors, and moms of three. Here, Hinz tells us how (and why) building your own home isn’t as crazy as it sounds.
5280 Home: Before we get into how HomeWrights’ owner–builder model works, tell us more about the problem it solves.
Bob Hinz: I have believed for a long time that the custom-home construction industry is not engineered to be a transparent industry. If you’re building a custom home, your builder might say to you, “Here’s the cabinet supplier; go choose your cabinets,” and it’s a blind process because you don’t know how much you should spend on cabinets. So, you make a selection and the cabinets get designed, and then the builder says, “Oh, by the way, they cost $6,000 more than we expected.” That is the problem we were aiming to solve. If owner–builders are running the project, helping to establish the budget, making the choices, and seeing every invoice and paying every bill, the likelihood of those things happening goes way down.
In what ways do you help owner–builders through the complicated pre-construction process?
Most clients come to us with some kind of a design concept—they’ve seen a house in a magazine or in person, or they want to copy the design of a house they’ve owned previously. So, our first step is to give them an idea of what building it is going to cost. Then we’ll help them find an architect or designer draftsman; navigate engineering, soils testing, surveying, zoning laws, and easements; hold their hand through the process of getting a building permit; connect them with—and help them create contracts with—our terrific network of trade contractors and suppliers; assist with all the building permit inspections; and create a plan from step A to step Z.
How about budgeting—and navigating the inevitable budget changes that will arise?
Before any of our clients go to permit and finalize their construction loans, we’ve probably revised their project estimate three or four times to make sure we really are on track and that their preferences are properly represented in the budget. We also help with revisions throughout the process. So, if a client initially says, “I’m absolutely fine with vinyl windows throughout the house,” then later realizes he’d much rather have some beautiful wood windows, we can help him navigate that line-item change from $6,000 to $26,000.
Do your clients receive contractor pricing for building materials, even though they’re doing the ordering themselves?
I don’t think that contractor pricing is hard for anybody to get. If you were to walk into a plumbing-supply house and say, “I’m going remodel my entire house,” you might be able to talk yourself into contractor pricing. Even so, we have those contractor pricing relationships set up with lumber yards, window companies, etcetera, so there’s no extra work for our clients to do. They get the benefits of special pricing across the board, wherever it’s available.
Given the construction labor shortage in Denver, do individual owner-builders find it difficult to compete for labor with established, professional general contractors?
No, because even though one of our clients may be building a home for the very first time, HomeWrights isn’t. The client has our experience backing them up. Right now, we have 37 homes underway, and all of the trade contractors know that. We offer them a clear pathway to an abundant number of jobs; we’re their bread and butter, and they treat us and our clients pretty well.
Scheduling and coordinating all of the people and materials that go into a custom-home project can be a really hairy process. Do you offer tools to help clients manage it all?
We create a project sequence for each client, and we use Microsoft Excel as a scheduling tool. But what really makes the difference is not the software, but the day-to-day interaction we have with each client. We’re there to explain why, for example, you need to have your faucets and shower valves selected before you even start to frame the house.
What about quality control? It seems that a novice might not recognize a mistake until it’s too late.
We’re on the job site with each client at least once a week, and sometimes two or three times a week, so hopefully we’re the first ones to notice the mistake. But if a client notices it first, he or she can ask us to check on it and get it corrected.
Who is a good candidate for your owner-builder model—in terms of skills, personality, and experience?
Anybody can do it, but as my wife says, you have to be willing and able to manage a checkbook, manage a calendar, and make friends. That said, the best clients we’ve had over the years are the people who are confident, courageous, and who do a lot of homework up front.
How much time should owner–builders expect to spend on their projects?
We go to great lengths to make sure people realize that this is a difficult task that’s going to occupy a lot of their time for the next 9 to 12 months. The time spent per day varies from person to person, but the generic answer is that you’re going to need to spend somewhere between 12 and 20 hours a week doing this. But at the end of a year, if you have made $125,000 in equity—or in some cases, $300,000 or $400,000 or $500,000 in equity—that’s a pretty good part-time job.
Speaking of money, how much can your clients expect to save—compared to working with a traditional builder?
You’re probably going to save about 10 percent. However, you’ll probably take that 10 percent and put it back into the house with better cabinets, fixtures, flooring, nicer stairs, and better windows. Our clients aren’t always focused so much on the savings. For them, the idea is I’m gonna get better stuff.
What are some other common motivations?
If savings is the number one reason people choose to do this, control is a very close second. You know what your budget is when you walk in the door, and if you decide to spend $29,000 on kitchen cabinets, that’s on you. You completely controlled that.
What does your service cost, and how does that compare to a traditional general contractor’s fees?
Our fee is driven by the square footage of the house, but it is always going to be very close to 5 percent of construction costs, which include everything it takes to bring a project to completion, with the exception of land and banking. It’s a fee that you know up front and that doesn’t change during the course of the project. In comparison, in Denver, you would likely pay a general contractor 18 to 22 percent of construction costs.
If someone decides this is too much for them—either initially or after beginning the process—how can you help?
We’ll always offer full, turnkey general contracting services to anyone who walks in our door. We can do it the traditional way or the owner–builder way, and we help the client understand the benefits of both. That said, we haven’t had anybody start down the owner–builder path and halfway down, choose to go the other way. In 17 years and 300-plus projects, I think that’s pretty good.