Author Topic: Is building a house mustachian?  (Read 1667 times)

Case

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Is building a house mustachian?
« on: May 28, 2018, 02:58:27 PM »
Weíre moving to a new city in 6 months, and starting to look for a house.  The city is Wilmington DE, so COL is medium, market doesnít experience a ton of growth but there is a large market.

Anyways, the ideal house for us is not very big, but smartly designed as most here would probably want.  <2000 sqft, 2-3 bedrooms, 2 bath.  Preference for open concept, no vestigial rooms like dining rooms, better to have multipurpose rooms.  Its hard to find that combination of stuff.  Most of teh market is either lower end stuff that would require too much work and wouldnt be worth investing in, or very expensive and waaay too big for us.

Therefore, i wonder about building in order to get what i want, but donít know whether this is just a foolish endeavor financially speaking.  If this were our final house, then sure, Iíd build, but this is likely to be a 5-10 year house for us.  Part of me thinks that there are other people like me out there that have the same tastes as me, and will be desparate for the style of house Iíd built.  If this were true, then perhaps i can sell the house at a premium later down the line.  But, I have no idea if building from scratch tends to result in the homeowner putting in extra money wihch they never recapture. 

I want add that while Iíll DIY to some extent, building inthis topic refers to paying contractors to build for me.  I can do a little DIY, and so I might leave an unfinished basement for me to work in gradually, but it would notbethe major thrust of the housr building by any means.

Any general feedback?  Is homebuilding only really worth it when you want the house a certain way, but that usually costs you a premium that you never recapture?  Better to stick with Ďusedí houses then new, from a mustachian perspective?

tralfamadorian

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Re: Is building a house mustachian?
« Reply #1 on: May 28, 2018, 03:26:58 PM »
I think the economies of purchasing a new home will depend on location. How much would a new home cost per square foot (including land) in Wilmington? And how does that compare to purchasing a home already built (including costs to renovate it to your liking)? If $new/sqft < $built/sqft, you're done. If $new > $built, is the extra cost of new worth the intangible value (the mustachian happiness factor) of not dealing with renovating an older home and the satisfaction of having just what you want?

Slow2FIRE

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Re: Is building a house mustachian?
« Reply #2 on: May 28, 2018, 03:30:13 PM »
Mustachian in so far as building a highly energy efficient home using low impact materials.  I could see that, over just trying to update an existing home to be lower impact (but brand new construction does have a high environmental cost for housing over existing housing).

Mustachian in so far as low cost -> heck no!  Custom houses are typically more expensive than existing homes and I always hear (good ol' hearsay) expect your final costs to have been about 10-20% higher than the initial estimates...

So my general feedback is try renting for a year or two while you have a chance to really understand the neighborhoods and local housing market while looking for that house that REALLY checks most of the boxes for you (I say most, because you'll wait forever or build custom to get *ALL* the boxes checked).

Case

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Re: Is building a house mustachian?
« Reply #3 on: May 28, 2018, 04:50:50 PM »
I think the economies of purchasing a new home will depend on location. How much would a new home cost per square foot (including land) in Wilmington? And how does that compare to purchasing a home already built (including costs to renovate it to your liking)? If $new/sqft < $built/sqft, you're done. If $new > $built, is the extra cost of new worth the intangible value (the mustachian happiness factor) of not dealing with renovating an older home and the satisfaction of having just what you want?

Thanks, that provides a good basic framework of how to start comparing the too.


Case

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Re: Is building a house mustachian?
« Reply #4 on: May 28, 2018, 06:20:17 PM »
Mustachian in so far as building a highly energy efficient home using low impact materials.  I could see that, over just trying to update an existing home to be lower impact (but brand new construction does have a high environmental cost for housing over existing housing).

Mustachian in so far as low cost -> heck no!  Custom houses are typically more expensive than existing homes and I always hear (good ol' hearsay) expect your final costs to have been about 10-20% higher than the initial estimates...

So my general feedback is try renting for a year or two while you have a chance to really understand the neighborhoods and local housing market while looking for that house that REALLY checks most of the boxes for you (I say most, because you'll wait forever or build custom to get *ALL* the boxes checked).

Thanks for the info.

This is not so much to find the perfect house, but rather a more modern house with efficient design.  I dont mean energy efficiency, but efficiency of use.  The houses of old are basically clown houses, wildly inefficient uses of spaces.  The concepts are not too complicated, but surprisingly hard to come by.

Landlady

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Re: Is building a house mustachian?
« Reply #5 on: May 29, 2018, 12:39:09 PM »
We built a house for similar reasons. Where I live the houses are clunky cabins with big beams, poor insulation and cobbled together floorplans. So we hired an architect to design a house for us. There were two ways we made our decision feel mustachian. 1. We did everything after drywall ourselves which saved us more than $100,000. 2. We had our architect design our house to incorporate a guest suite which we could airbnb out. Now that our house is finished the 350 sqft portion designed for airbnb almost pays our entire mortgage each month.
As far as efficiencies in a new house goes - I think that's a wash since LED light bulbs and modern insulation will only pay you so much.

waltworks

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Re: Is building a house mustachian?
« Reply #6 on: May 29, 2018, 01:38:38 PM »
New construction is always going to cost way, way more than buying something that already exists, and at least somewhat more than buying an existing structure and modifying it (sounds like you'd throw a few long beams in and remove most of the interior walls?)

So no, it's not mustachian. I would not even consider it if you plan to move in 5-10 years. On that timeframe, you could end up only living in the house for 3 years, since it's quite easy to have a ground-up project take 2 years to complete.

-W

robartsd

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Re: Is building a house mustachian?
« Reply #7 on: May 29, 2018, 02:53:50 PM »
Probably the most cost effective way to get what you want is to find a floor plan you can work with (mostly just replacing some walls with beams) that is already priced low because it needs major renovation. I wouldn't expect a ground up house to sell for more than other homes of similar size and finish materials would when you're ready to move on in spite of any efficiencies you design in.

texxan1

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Re: Is building a house mustachian?
« Reply #8 on: May 30, 2018, 03:27:28 AM »
in my mustachian mind, it can be done extremely cost effective and efficiently.

I did my house myself, from designing it on a better homes and gardens program, to finding the engineering firm, finding the sub contractors , and doing a small amount DIY.. (pulling electric wires, plumbing Pex lines etc).   

Before I started the actual construction, I used spray marker and mapped it out on a lot down the street to see how it all fit together.. Even the extent of spraypainting couches and tables etc... IT worked great for us\

I maximized efficiency of the plans, with no waste, minimal penetrations in the roof, spray foam walls etc etc.... Once I started getting bids, I even let some of the local builders give me price for what they could do it for.. In the end, even with upgrades, but shopping around for wood from lumber companies, buying some things ourselves etc... We built it for under $100sf and beat the builders quotes by over 100k.... BIG DIFFERENCE

The best thing we did, was to hire a so called build mananger, we paid him 5k to help us manage the subs, help us find the subs and coordinate timing.

I did however show up every morning at 7am, and every evening at 6pm to make sure there were no mistakes and to keep the guys on there toes..

It went great but it was stressful at times... it seems like it takes FOREVER to build


two years later, I decided to build a small fish camp, which ended up doing the same way and actually became just a small house in the end... Never even used it, as it cost so little to build that I had people begging me to buy it from me for top money..> SOLD it


elliha

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Re: Is building a house mustachian?
« Reply #9 on: May 30, 2018, 03:44:45 AM »
Where I live many people have been able to build a house for much cheaper than buying an existing one in the same or similar neighborhood so it depends on where you live. If you do some work yourself this is especially true. Those I know who made a profit built standard houses and not designer architect houses though.

Acastus

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Re: Is building a house mustachian?
« Reply #10 on: May 30, 2018, 11:00:03 AM »
Most of the time, a new house simply costs 15% more than used, minimum, so a new house is as Mustachian as a new car, aka NOT. You need to add landscaping, and there are no mature trees. 2 exceptions I can think of:
1. The perfect house plan is *THE* thing that makes life worth living. This is where you splurge after being frugal in the rest of the budget.
2. A new house is the most efficient way to build a low operating expense house - solar panels, low voltage wiring, geothermal heat pump for heat and A/C, passive solar layout, metal or slate roof. Retrofits can work, but maybe not as well. This probably needs to be a forever home. I doubt you will get paid back for these eccentric cost savers in the housing market.

Fishindude

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Re: Is building a house mustachian?
« Reply #11 on: May 30, 2018, 12:28:38 PM »
After remodeling several old houses pay as you go, over a decade or two, I often think we may have been better off to bite the bullet and built a new one that would have needed very little work for 10-20 years.  Problem was, I couldn't afford to build new back then.

Car Jack

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Re: Is building a house mustachian?
« Reply #12 on: May 31, 2018, 07:50:20 AM »
I think you need to do some legwork as the cost to build vs existing has all kinds of variables.  Two examples:

Friends of ours bought a house in a new development in Arizona.  About 3 years later, they decided to move and put the house up for sale.  The economy had turned down but the builders kept putting up houses, driving down the prices as the new houses were now competing with other new houses.  New houses there were significantly cheaper than the one our friends bought just 3 years before.  They took a bath on the sale as they had to come down to meet the market.

We were in the market for a house some time ago and found similar things to what you are finding.  We could get a McMansion or a 50's ranch with hardly anything in between.  We looked in to new construction as there were several new developments going on in the town.  This made it easy to compare costs as each development had a model home and would hand us a price list.  The key thing we learned.....the price of the house was really an incomplete price.  Want a lawn instead of a bunch of dirt and piles of rocks?  Extra.  Gutters?  Extra.  A paved driveway?  Extra.  Carpet that was not garbage?  Extra.  Lighting and outlets beyond what barely met code?  Extra.  With these houses, we found that the extras added up to at least 25% on top of the base house price.  In my area, building a new McMansion was a full 50% more than a 5 year old, existing McMansion of similar size and with similar finished features.  Lucky for us, we decided to keep what we had.  As it turned out, the timing was perfect because had we bought, it was the peak and now, 15 years later, the prices are just reaching what they were back in the early 2000's.

patchyfacialhair

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Re: Is building a house mustachian?
« Reply #13 on: May 31, 2018, 09:20:26 AM »
I wouldn't custom build a smaller home unless it was a final, truly "forever", retirement home. It simply costs too much.

OP regarding your comment about others being "desperate" for something smaller and newer like what you'd build...honestly if the demand was there, builders would build smaller homes. But they don't, because a majority of buyers don't downsize or buy something small anymore. I'd worry that you'd struggle to recoup your build costs when it came time to sell as most people are buying bigger homes.

Case

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Re: Is building a house mustachian?
« Reply #14 on: May 31, 2018, 11:54:30 AM »
I wouldn't custom build a smaller home unless it was a final, truly "forever", retirement home. It simply costs too much.

OP regarding your comment about others being "desperate" for something smaller and newer like what you'd build...honestly if the demand was there, builders would build smaller homes. But they don't, because a majority of buyers don't downsize or buy something small anymore. I'd worry that you'd struggle to recoup your build costs when it came time to sell as most people are buying bigger homes.

What I mean here is, there is a small fraction of the population the very much wants this category of housing.  It's not mainstream, but it is there.  We had a similar experience in my previous home, which was similar to how I have described here.  It sold immediately.  My small conversative midwestern town had a small contingency of people that want those types of houses very much.

So I disagree.  I think the demand is there, and it's not as simple as you're making it out to be.

But anyways, as most of said, despite this building a house is inherently more expensive and it probably makes more sense to just keep our eyes on the market for a gem (which we'll probably have to get into a bidding war for, because other people like us will be on the look out for this type of house too).

Slow2FIRE

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Re: Is building a house mustachian?
« Reply #15 on: May 31, 2018, 04:45:09 PM »
I wouldn't custom build a smaller home unless it was a final, truly "forever", retirement home. It simply costs too much.

OP regarding your comment about others being "desperate" for something smaller and newer like what you'd build...honestly if the demand was there, builders would build smaller homes. But they don't, because a majority of buyers don't downsize or buy something small anymore. I'd worry that you'd struggle to recoup your build costs when it came time to sell as most people are buying bigger homes.

Might be one of those location dependent things...

Open floor plan homes under 1800sq ft and less than $300,000 were receiving 5+ bids and selling for over asking within 2-5 days of listing in the Raleigh-Durham area the past 2-3 months. 

Villanelle

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Re: Is building a house mustachian?
« Reply #16 on: May 31, 2018, 07:58:19 PM »
I wouldn't custom build a smaller home unless it was a final, truly "forever", retirement home. It simply costs too much.

OP regarding your comment about others being "desperate" for something smaller and newer like what you'd build...honestly if the demand was there, builders would build smaller homes. But they don't, because a majority of buyers don't downsize or buy something small anymore. I'd worry that you'd struggle to recoup your build costs when it came time to sell as most people are buying bigger homes.

Might be one of those location dependent things...

Open floor plan homes under 1800sq ft and less than $300,000 were receiving 5+ bids and selling for over asking within 2-5 days of listing in the Raleigh-Durham area the past 2-3 months.

Were those people planning to live in them more or less as-is, or people planning to do major renovations and additions, but wanting to buy something they could afford immediately and on which they could put their own stamp?

MrUpwardlyMobile

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Re: Is building a house mustachian?
« Reply #17 on: May 31, 2018, 08:05:27 PM »
Weíre moving to a new city in 6 months, and starting to look for a house.  The city is Wilmington DE, so COL is medium, market doesnít experience a ton of growth but there is a large market.

Cost of living in Wilmington is really more low-medium for the region.  Hockessin would be pricier in many regards and thatís still not a real medium.

robartsd

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Re: Is building a house mustachian?
« Reply #18 on: June 01, 2018, 09:09:46 AM »
Might be one of those location dependent things...

Open floor plan homes under 1800sq ft and less than $300,000 were receiving 5+ bids and selling for over asking within 2-5 days of listing in the Raleigh-Durham area the past 2-3 months.

Were those people planning to live in them more or less as-is, or people planning to do major renovations and additions, but wanting to buy something they could afford immediately and on which they could put their own stamp?
Does the answer to that question matter to the seller?

Villanelle

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Re: Is building a house mustachian?
« Reply #19 on: June 02, 2018, 07:59:50 PM »
Might be one of those location dependent things...

Open floor plan homes under 1800sq ft and less than $300,000 were receiving 5+ bids and selling for over asking within 2-5 days of listing in the Raleigh-Durham area the past 2-3 months.

Were those people planning to live in them more or less as-is, or people planning to do major renovations and additions, but wanting to buy something they could afford immediately and on which they could put their own stamp?
Does the answer to that question matter to the seller?

It matters because the question at hand is whether the house the OP is thinking of building--smaller than average, and with not a lot of bedrooms, will be easy to sell.  Throwing out that other small houses have sold with bidding wars doesn't really matter if those are old houses bought for the purposes or remodeling, and priced lower because of their age and undesirable floor plan.  The OP's house will be shiny and [fairly] new, and thus he would need top dollar in order not to take a complete bath on it.  That means that selling to people who want to get in cheap and make additions and/or flip aren't going to be interested.

So multiple offers on cheap small houses doesn't really help the OP because his is going to be an expensive small house.  And that's potentially a very different pool of buyers (flippers and home addition-ers vice someone who wants to live in a lovely small home that is already nice and well done).

MayDay

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Re: Is building a house mustachian?
« Reply #20 on: June 03, 2018, 06:02:54 AM »
Around here, the type of house you are describing would sell fast because it would be cheap (on the regular market). But I doubt it would be cheap to build from scratch unless asa few PP's mentioned, you do lot yourself.

We found that 50's and 60's ranches meet that criteria. But the downside is our original 1952 shower is leaking into the basement so we may be about to rip it out :(

Old houses suck sometimes. There is part of me that wants to do a custom new build like you are talking, with a IL/AirBnB suite, etc. But in reality by the time we can afford that I think we'll be old enough that we'll buy an old folks condo instead.

Acastus

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Re: Is building a house mustachian?
« Reply #21 on: June 04, 2018, 07:58:17 AM »
If you do a lot of the carpentry yourself, it will be about as Mustachian as it gets. Or at least Pete-opian. He loves that stuff.

robartsd

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Re: Is building a house mustachian?
« Reply #22 on: June 04, 2018, 08:27:04 AM »
Might be one of those location dependent things...

Open floor plan homes under 1800sq ft and less than $300,000 were receiving 5+ bids and selling for over asking within 2-5 days of listing in the Raleigh-Durham area the past 2-3 months.

Were those people planning to live in them more or less as-is, or people planning to do major renovations and additions, but wanting to buy something they could afford immediately and on which they could put their own stamp?
Does the answer to that question matter to the seller?

It matters because the question at hand is whether the house the OP is thinking of building--smaller than average, and with not a lot of bedrooms, will be easy to sell.  Throwing out that other small houses have sold with bidding wars doesn't really matter if those are old houses bought for the purposes or remodeling, and priced lower because of their age and undesirable floor plan.  The OP's house will be shiny and [fairly] new, and thus he would need top dollar in order not to take a complete bath on it.  That means that selling to people who want to get in cheap and make additions and/or flip aren't going to be interested.

So multiple offers on cheap small houses doesn't really help the OP because his is going to be an expensive small house.  And that's potentially a very different pool of buyers (flippers and home addition-ers vice someone who wants to live in a lovely small home that is already nice and well done).
It would be easy to sell the house at about the same price as other houses about the same size. You're right that it would be much harder to sell at a premium because it is newer.

There is part of me that wants to do a custom new build like you are talking, with a IL/AirBnB suite, etc. But in reality by the time we can afford that I think we'll be old enough that we'll buy an old folks condo instead.
I think I feel the same way. Of course if your child wanted to move into the main house at the time you were ready to downsize, you might move into the IL suite.

soccerluvof4

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Re: Is building a house mustachian?
« Reply #23 on: June 07, 2018, 03:23:38 AM »
Think it really depends on where you live. In our area and most I have looked it seems you used to build and have instant equity and now you have just debt. Paying up for homes that are cheaply built as well. We think of this often as it would be nice being fired but the 70's ranch we bought 3 years ago when we downsized if you built today would cost a fortune because its built so well. I'd be more willing to go as far as to say i'd pay a bit more for something built well then build the shit there building today. Just recently saw the burn rate on house s today for escape is 3-4 minutes as it was closer to like 20-30 minutes.