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Do It Yourself Construction in Baja California Sur, Mexico
Do-It-Yourself and Build a House
Unfinished Construction
What it takes to build a house with your own hands. It can be done. You, in effect, are acting as your own building contractor as well as supplying all the manual labor. But, be aware that there is a big, big difference between do it yourself construction in Baja wherein you do the actual manual labor with your own hands or "having it built" by hiring a Mexican contractor to build the home for you.
In the first instance wherein you do the labor yourself, you will have to pay for your living expenses including ground transportation in addition to your construction costs. Expect to spend many months in Baja if you build your house with your own hands. If you are not experienced in construction, it will take you twice as long to finish the project. Be prepared to spend an inordinate amount of construction time on the project, more than you can anticipate. You will need to be fluent in Spanish. Some, and I mean only a very few of the vendors that you will need to buy materials and services from speak English. The vast majority of vendors speak no English. You will have to get permits and special visas in order to get the construction permits. That means that you will need to understand their fast speaking and technical jargon. They don't have time to make sure you understand them, and they don't care if you don't understand them. It is very much like dealing with the DMV in California.
For do-it-yourself construction in Baja, while not impossible, you must be an experienced builder. No novices here. You will need to do a detailed construction plan including a cashflow estimate and timeline for purchasing materials and getting them delivered to your site. You will have to arrange for security of the building materials on the site to safeguard them from theft. That can mean pitching a tent or living on site in an RV and doing your own watchman services. Also, requires putting up a temporary chain link fence and gate around the property and the building materials. Be prepared for a lot of challenges and cost overruns if you are not an experienced builder. To be legal, you will need a special work permit and visa. The Mexican government frowns on foreigners doing work in the Baja and not hiring Mexicans to do the actual labor.
The real savings in building your own home with your own hands is in saving money on the contractor's fee. His fee is approximately 50% of the total cost paid to the contractor. If you DIY with your own hands, your direct labor cost savings will be equivalent to about 25% of the cost of paying a contractor to build it for you. You are only saving yourself about $9 US an hour if you do all the labor with your own hands the DIY way. The overall savings is 75% if you do your own contracting and all the manual labor. See the last few sentences fo the paragraph below entitled " Be your own construction contractor and hire local labor".
Cost analysis estimate. If you buy a relatively new listed house from a local real estate agency, two bedrooms, 1,000 sq. ft. house on a 4,000 sq. ft. lot about 1 mile from the Loreto marina, 3/4 of a mile from downtown Loreto, that would cost you about $300,000 US. If you buy the lot and have a contractor build the house, that would cost you about $180,000 US. If you buy the lot and build the house with your own hands, that would cost you about $105,000 US plus the expense of your room and board, travel, and lost earnings if any. See the section below on "Do I Need a a Mexican Contractor to Build a House?"
Be your own construction contractor and hire local labor
Do It Yourself Construction in Baja. Sounds great, and is a great way to go, if you can do it. This is the best option in my opinion, so long as you are experienced and knowledgeable enough in construction and you are fluent in Spanish. You will need to do your own planning and purchasing, protect your materials, and be prepared to spend six months to one year in the Baja. Hiring local labor is a good way to go. But, there are adminstrative duties that can be tedious and a little costly. First of all the payroll tax expense is around 42% of gross wages. Workers there get paid weekly, so there is an accounting issue that needs to be dealt with constantly. The local accountants know that you will need their help and their services are not cheap. By doing your own contracting, you will be saving alot of money. Paying the local labor at the local labor rates is very cost effective. I recommend it. Their daily rates for skilled construction labor is about $30 US to $65 plus 42% payroll tax expense. I recommend this approach. Think about it. If you do your own labor, you are paying your self the equivalent of $9 an hour because that is all it costs per hour to pay someone else to do the work...hundreds of hours of work, mostly in the hot sun!
Even if you created a Mexican corporation, you are required to maintain a certain percentage of your employees as Mexican residents to do the labor as official employees of the corporation. Having a Mexican corporation isn't much of an advantage for labor costs and can be an administrative nightmare. In a future article in this website, I will describe all the details of having a Mexican corporation for doing real estate development. Not advisable for a single residential house.
Do I Need a Mexican Contractor to build a house ?
Advantages of hiring a Mexican contractor ? Do it yourself construction in Baja may not be the best option for you, especially if you are not skilled in construction or fluent in Spanish. Hiring a qualified, licensed, bi-lingual contractor to build a house for you is the easiest and preferred method compared to building the house yourself with your own hands. You won't have to know the Spanish language. If you are not fluent in Spanish, this is a critical advantage. Actually, if you intended to build a house with your own hands, it would be impossible to do it without knowing the Spanish language. You couldn't get permits, you would omit crucial filings, you would lose wasteful sums of money due to lack of communication errors, and the time would be just about doubled to do anything if you could do it at all.
Contractor Built Vs Do it Yourself Construction in Baja
Save 30% - 50% off the PURCHASE OF A LISTED HOME. The cost of having your house built by a contractor is usually 30% to 50% lower than the cost of buying a listed house from a local real estate agency. Shorter construction time. A decent contractor should complete a 1,000 sq. ft. home in less than six months. Without the experience or the right contacts, it can take an inordinate amount of time to get construction and building done in Mexico. Often times it will lead to failure or wasted construction cost dollars. Do it yourself construction in Baja requires a constant presence in the city of choice.
You won't need special work permits or visas.
Save travel cost and time. Since the contractor will do most everyting regarding the construction, you won't have to spend much time in Mexico. Several visits at most. You should go to the Baja to visit the construction site from time to time to take care of administrative tasks that will require your physical presence. Also, it is just plain prudent to do a physical inspection yourself even if you know nothing about construction. At least you can verify that work is being done, that the construction is in line with the design, and make your own estimate of the quantity of progress that should be done. Top
Disadvantages of hiring a Mexican contractor ? The most significant disadvantage is cost. As I mentioned before, the total cost that you would pay to a Mexican contractor would cover the materials and the labor and his contracting fee. They won't tell you, but, their contracting fee is roughly 50% of the total cost they are charging you. So, if the contractor charges you $100,000 US to build you a house, he is getting $50,000 straight into his pocket. Only about 25% is the total cost is for materials and another 25% is the actual cost of manual labor that the contractor will pay on your house construction project. Also, the contractor doesn't do any actual physical labor. He just oversees things and has a working supervisor direct the work crew. The contractor spends about 4 to 8 hours a week overseeing things, that's it. Do the math, he's making as much as my California attorney per hour. Top