Author Topic: Buy or build?  (Read 3054 times)

mandies

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Buy or build?
« on: March 12, 2014, 07:32:48 AM »
One of our plans for FI is, in about five years, to move into a home we own outright that is smaller than our current home, in a lower property tax area, and more efficient.

Our goals are to have a home that is:
- small, about 1100 sq feet
- on at least a .25 acre or more lot
- be extremely efficient for heating/cooling/ongoing maintenance (brick siding, metal roof, etc.)

Here's our question: are we better off buying an existing home and fixing it up to build in efficiencies like geothermal heating, solar panels, etc. or buying land and building a home? We live in an area where there is a fair bit of land available fairly cheap. We were wondering if trying to keep costs down during the building process, like using cinderblocks, installing a metal roof, installing drywall and flooring (using possibly recycled materials) ourselves, if it would be cheaper in the long run. We'd probably still need to hire to have a lot done, because neither of us are construction experts. However, we will have two boys that could help quite a bit with digging, painting, nailing, etc.

For those that have more knowledge than we do about home-building, which is generally more affordable in the long run? Are there costs associated with building a new home that are not easily made up in the value of the home? What's our best bet to make our dollar go the furthest?


Rural

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Re: Buy or build?
« Reply #1 on: March 12, 2014, 07:51:16 AM »
It is possible to build for much less than you can buy for; we did it. However, it's not simple. How much time do you have? If you both work full-time and don't have anyone else willing to volunteer labor, I'm not sure it's possible. It's a tremendous, tremendous job and it will take much longer than you think it will.

We built ours with both of us teaching, so we had summers off and spring breaks to work. Also, my father had retired, and he spent many months working alone during the day until my husband got home from school to help. He generally stayed here four days a week and went to his home for long "weekends" (usually during the week so that my husband and he could do heavy work together on Saturday and Sunday). We didn't have weekends or any other breaks during the year and a half of building. The exception was when the weather was too bad to do anything (think active thunderstorm) and as we made more progress and got the place dried in, there were no exceptions.

My father built the house I grew up in while he was working full-time. But, he worked nights, 12 hour shifts, and on his "weekends" he left work at dawn, went to the build site, worked all day without sleep, then worked the next several days while he camped at the build site, then went back to work for the night shift without sleep or with just a few hours' sleep. I was a small child, and my mother and I saw him only during his work weeks, when he came home to the house we were renting to sleep during the day.

I don't mean to be nearly as discouraging as I'm afraid this sounds. It is an incredible accomplishment, and it feels worth doing during the sacrifice and afterward. There's no way I'll ever be sorry, and 40 years later not only is my father not sorry about his place, but he's not sorry about ours or the one that he and my brother built for my brother's family a decade ago. But it's not possible to overestimate the amount of work. You need to factor that in as you're making a decision.  Also, you have to be absolutely sure you want to stay forever. You will not be willing to move out of a house you built with your own hands.

For us, it's meant an incredible jumpstart toward financial independence, and it almost certainly made the difference between financial independence and not having enough for my parents, but it's a lot harder to accomplish than simply saving and investing money.

soccerluvof4

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Re: Buy or build?
« Reply #2 on: March 12, 2014, 08:36:50 AM »
It is possible to build for much less than you can buy for; we did it. However, it's not simple. How much time do you have? If you both work full-time and don't have anyone else willing to volunteer labor, I'm not sure it's possible. It's a tremendous, tremendous job and it will take much longer than you think it will.

We built ours with both of us teaching, so we had summers off and spring breaks to work. Also, my father had retired, and he spent many months working alone during the day until my husband got home from school to help. He generally stayed here four days a week and went to his home for long "weekends" (usually during the week so that my husband and he could do heavy work together on Saturday and Sunday). We didn't have weekends or any other breaks during the year and a half of building. The exception was when the weather was too bad to do anything (think active thunderstorm) and as we made more progress and got the place dried in, there were no exceptions.

My father built the house I grew up in while he was working full-time. But, he worked nights, 12 hour shifts, and on his "weekends" he left work at dawn, went to the build site, worked all day without sleep, then worked the next several days while he camped at the build site, then went back to work for the night shift without sleep or with just a few hours' sleep. I was a small child, and my mother and I saw him only during his work weeks, when he came home to the house we were renting to sleep during the day.

I don't mean to be nearly as discouraging as I'm afraid this sounds. It is an incredible accomplishment, and it feels worth doing during the sacrifice and afterward. There's no way I'll ever be sorry, and 40 years later not only is my father not sorry about his place, but he's not sorry about ours or the one that he and my brother built for my brother's family a decade ago. But it's not possible to overestimate the amount of work. You need to factor that in as you're making a decision.  Also, you have to be absolutely sure you want to stay forever. You will not be willing to move out of a house you built with your own hands.

For us, it's meant an incredible jumpstart toward financial independence, and it almost certainly made the difference between financial independence and not having enough for my parents, but it's a lot harder to accomplish than simply saving and investing money.


I think Rural summed it all up pretty well.  I built several of our houses but to keep upgrading. Build , live in it two years and Build another. The big thing is since I was self employed I could do this because the time invested in doing enough of it yourself is a ton. My only suggestion would be to really figure out exactly what you want to build and price it out with a builder and then back out things you feel you want to do.  For the most part there are builders that will work with people that want to do this and or through the research you will probably learn about if your comfortable taking on the whole project yourself or not.

mandies

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Re: Buy or build?
« Reply #3 on: March 12, 2014, 10:32:38 AM »
Wow -- your replies are both very insightful, especially about the length of time and monumental effort.

My husband is a SAHD with two boys, and in five years, they would still be too young to do too much heavy lifting. I work at home, but I can see with a project like that it would be tempting to ditch on "real" work to work on the house. And we probably wouldn't want to stay in the house forever -- if our sons get married and have grandkids, we'll be FI so we'll want to move nearby to visit regularly.

So I'm guessing if builders and contractors did most of the work, the price goes up quite a bit, correct? Especially compared to trying to get a great deal an existing home through foreclosure, auction or short sale?


Milspecstache

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Re: Buy or build?
« Reply #4 on: March 12, 2014, 05:57:32 PM »
I have built my own home and it is a lot of work...  however, your smallish home seems much easier to build.  If you can go the General Contractor route you will find many savings.  Of course, banks today don't like owner-builder GC types which may force you to go the route we went which is finance the land and cash-flow the rest so you avoid the bank-inspections.

Brick is also very expensive.  Much cheaper to find an existing brick house and remodel it.

Remodeling a very old home is a lot of work in that many walls won't be square and you will spend money correcting 'quick-sand' type problems that will appear and grow more expensive with time.  In a new home you can predict much of the expense ahead of time and mitigate by doing more yourself.

Either way, if you remodel or build, you will teach your two young boys a lot of life-skills which will greatly help them in the future!

Rural

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Re: Buy or build?
« Reply #5 on: March 12, 2014, 08:38:19 PM »
I have built my own home and it is a lot of work...  however, your smallish home seems much easier to build.  If you can go the General Contractor route you will find many savings.  Of course, banks today don't like owner-builder GC types which may force you to go the route we went which is finance the land and cash-flow the rest so you avoid the bank-inspections.

Good point this; it's what we had to do as well. Also, land loans are generally a higher interest rate (ours was 7.5% with very good credit). We mitigated that problem by paying it off in under four years. :-)

kc2006

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Re: Buy or build?
« Reply #6 on: March 17, 2014, 08:56:43 PM »
I'm looking to build my own home, or at least take on most of the building.  We're looking to build in a more rural area and have a local farm credit bureau that has low interest rates for land, the goal is to purchase the land with a loan, pay cash for the beginning phase of building, and then pay as I go while I finish it.   The only thing I'm looking to have done for us is the foundation and the framing because I have a connection for the framing to be done cheap which will speed up the process greatly.  I'm self employed and plan to be "out of the field" and just managing the company by next year, this will give me all the free time I need to work on the house.  My time line is to get the home weathered-in in within a 6 month span (next may-oct) and then spend another year finishing it.

Here's a website I found that lays a lot of info out and explains how he did it and saved a lot of money.  He wasn't too set on finances but still made it happen. www.make-my-own-house.com