Author Topic: Possible to build your own home cheaper then buying fixer upper?  (Read 2924 times)

Kaplin261

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http://www.mrmoneymustache.com/2013/09/04/how-and-how-not-to-buy-a-house/
So using MMM's advice on taking your time to buy a home and researching the market, I could probably score a home a that is %20 below market value. I am very handy and could do the repairs and remodels myself. So when I sell the home in 13 years it should be a profitable situation.

But here is the thing, I live in Richmond VA. Most of the homes here are Ranch homes or colonial. Boring, basic housing with no architectural detail. You can find neet homes in the city but the school system is horrible there and would require tuition fees at a private school for our son.

Another problem we have ran across is homes under 2000 sqft just dont have the neighbors we are looking for. If it were just me and my wife it wouldn't be a problem. We currently live in one of these neighborhoods and most of the children here are always getting into trouble. Home prices range from $165K-$235K and this about the norm for homes under 2000 sqft in my  area.

So it looks like to get the kinda neighborhood we want with a small home like we want building is a viable option. We want a small 2 bedroom 1300 sqft home that we can sell in 13 years and not take a loss on our investment. Is this possible? We would build something that looks like a eichler home.

We have considered moving out of Richmond but with the LCOL and my wife's $100k job, staying put just seems like the best option to hit early retirement.

muckety_muck

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Re: Possible to build your own home cheaper then buying fixer upper?
« Reply #1 on: October 03, 2015, 05:47:40 AM »
If you are looking strictly for resale value, I strongly caution AGAINST a home w/ only 2 bedrooms. Many families have boy/girl kids and want them to have separate bedrooms, if nothing else - for the teen years because there can be some AWKwARD times ahead. Some people want an extra hobby room or a guestroom strictly dedicated for guests. You would seriously limit your pool of available buyers by selecting a 2 bedroom home to build.

We've never built our own home, but have had a few fixer-uppers. There are ways to customize and make them "yours." If there's an extra bedroom you don't need, shut the door and don't use it. Plus, you can live in a fixer-upper while you're fixing it... you can't live in new construction until it has been inspected as a final product. Money saved by buying the fixer-upper.


La Bibliotecaria Feroz

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Re: Possible to build your own home cheaper then buying fixer upper?
« Reply #2 on: October 03, 2015, 10:06:32 AM »
I don't think that owning the tiniest, cheapest house in a good neighborhood is necessarily going to be a good investment!

Keeping in mind that I have no idea what I'm talking about, could it be an option to fix up a larger home so that part of it is an apartment you could rent out and then, when you want to sell, reintegrate into the rest of the house?

smalllife

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Re: Possible to build your own home cheaper then buying fixer upper?
« Reply #3 on: October 03, 2015, 01:16:50 PM »
PM me if you're interested, but we've got several neighborhoods on our radar that are what you describe and I did the fixer upper thing in one of them.  A little too revealing for a public post since housing and neighborhoods and all that ...

Gerard

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Re: Possible to build your own home cheaper then buying fixer upper?
« Reply #4 on: October 03, 2015, 01:40:12 PM »
I don't think that owning the tiniest, cheapest house in a good neighborhood is necessarily going to be a good investment!

Doesn't conventional real estate investment wisdom say that you should do exactly this?

Emg03063

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Re: Possible to build your own home cheaper then buying fixer upper?
« Reply #5 on: October 04, 2015, 05:15:44 AM »
While it's certainly possible to build a house for less than a bad deal on a fixer upper, and possibly for less than a routine deal in a fixer upper, you should definitely be able to buy a fixer upper for less than the cost of building, unless Richmond has undergone some sort of above national average real estate price growth in the last decade I'm unaware of.  Assuming by "build" you mean "pay to have built", and are not looking for the construction to be your employment or to build after working a day job and on weekends, I would put together a building budget for what you are proposing, and then look for an existing house in that price range, even though it may be bigger than what you need.  Don't forget you have to carry the construction cost while you're building a house you're not living in, in addition to the cost of your current residence, which is a hassle, and makes delays expensive.  When buying a livable fixer upper, that doesn't apply.  Whether or not you would take a loss on the build depends on the future of house prices, which is unpredictable, but the relevant question is which route is going to give you more total lifetime happiness over the ownership period (value of the quality of life you enjoy while owning + the money you have left over after sale).  Buying a 2000 sf house that conforms to the neighborhood at 20% off is probably safer financially, but by all means, run the numbers.  Please post your analysis.  I'm interested to see what you come up with.