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I've looked and looked at houses and can't find anything I like in a good neighborhood in my price range. I've found vacant lots with city water and sewer in good locations for about $4500. Is it possible to build a house for a decent price nowadays? I'm single and don't need a big house at all but I am attentive to details so it can't be completely unimaginative. My biggest desires is it has to have an extra hobby room and office and really want a small garage. Also want vaulted ceilings in main areas, or nine foot throughout, not eight foot everywhere. And I do not want flat formica cabinets and flat lauan doors. Everything else I can give or take, any ideas? Also really want a front or back porch.
I don't want just a box shaped house but I hear corners add to cost...
I thought maybe if I shopped around for good deals on doors, vanities, fixtures etc it could be done cheaper. I knew someone that built a house and they bought cabinets and toilets, etc at scratch and dent type places and got nice stuff.
Find the house that meets MOST of your criteria. Think of it as a short-term relationship; if you can't improve it to your satisfaction dissolve the relationship in 5-7yrs. In that amount of time you will have a better understanding of home ownership, home maintenance, and what you REALLY NEED, versus what you REALLY WANT.
You may even find out things about yourself you didn't know before.
The biggest downside to making "new construction" your first / starter home is that it really severely limits your potential to use a "property ladder" strategy of moving up compared to the much wiser strategy of looking for the "worst house in the best neighborhood" as a starter.
Even if you are lucky and get a house in an area where there is substantial demand and some price appreciation with new construction (which is pretty rare) the odds of there being buyers eager to buy your now "used" house in area where they may still be vacant lots / new homes available from the builder REALLY limits the upside for you to "move up".
In contrast if you focus on homes in really nice areas that need a little fixing up (you might be surprised just how cheaply you can replace flat laminate cabinets and luan interior doors...) AND you put in the needed updates you are in a much better position to sell your starter house at a profit in a reasonable window (5-7 years). Similarly if you choose to put in things that are better than "builder grade" in an established area you have FAR BETTER likelihood of NOT over-improving for the area as you would risk when going with often over priced "upgrade packages" that builders try to foist upon new buyers...
Frankly I would be very worried about any place where new buildable lots are selling for just $4,500 -- that seems so inexpensive as to be a concern that the very low price will attract under-capitalized buyers with very very modest budgets. Assuming standard pricing models, with land costs about 1/3 of the costs of the construction these are home that might have selling prices more modest that what average new cars sell for and the potential for folks that have no business being home owners getting in way way over their heads would be a serious concern.
Can you even Get a construction loan? When I looked into it 2 years ago here in GA there were Zero banks/credit unions willing to extend a reasonable construction loan. I'm saying this as someone with 800+ credit and we had about 60% of the total loan amount in cash savings while already owning the land (gift from my wife's parents). Unless we funded it ourselves, zero loan, it wasn't going to happen. At that time there were just too many properties on the banks records, that they wanted to remove, to get any sort of reasonable loan. Might be a little different today, but I doubt it.
I had an architect draw up plans for me while I was struggling to find a loan, with a very modern design/layout and a budget goal of $100k. I'll never know if he did it or not as we probably won't build to those plans now. In the mean time we bought a home for half of what we were going to spend on building (just a starter home, needed a cosmetic gut job) and have sense bought Another home (1930's full brick Tudor revival) for a little more than the Other half of what were going to spend on building and have a rental property paying both mortgages.
I'm guessing that you're looking for a "forever" home and being WAY too picky. Don't. The average person moves every 6 years, chances are Very good that any home you buy today won't be a home you own in a couple decades. Ignore cosmetics, Completely. Focus on finding a structurally sound building in a location that will have a lot of draw (walking distance to good schools, a park, library, grocery, etc...) to the standard family. Buy the house and either work on it yourself or hire a contractor to fix the cosmetic issues to your liking.
A house is just a box where you keep your stuff when you shake out the non-functional aspects. Anything else, you can change, but make sure that box is the best box you can afford (talking from a structural/systems standpoint).
By the way, you're making me very glad that when I bought my first home, it had to be done quickly and with a grand total of 6 properties within my price range. Only 2 were real options. I went from signing the agent contract to house contract in 3 days and moved in a month later. I made a lot of mistakes with that house, but it's now 4 properties and 10 years ago.
My biggest desires is it has to have an extra hobby room and office and really want a small garage.
Also want vaulted ceilings in main areas, or nine foot throughout, not eight foot everywhere.
These are NOT characteristics of a "starter home".
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Is building a house financially reasonable as a starter home?
I've looked and looked at houses and can't find anything I like in a good neighborhood in my price range.
Too expensive? If so, then you want more house than you can afford.
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I've found vacant lots with city water and sewer in good locations for about $4500. Is it possible to build a house for a decent price nowadays?
Vague. Building has a lot of challenges and budget is just one of them.
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I'm single and don't need a big house at all but I am attentive to details so it can't be completely unimaginative. My biggest desires is it has to have an extra hobby room and office and really want a small garage. Also want vaulted ceilings in main areas, or nine foot throughout, not eight foot everywhere. And I do not want flat formica cabinets and flat lauan doors. Everything else I can give or take, any ideas? Also really want a front or back porch.
You spoke of lots - does this type of house you want conform to the neighborhoods the lot are in? Meaning - are you thinking of building a 1 story, 1200 sf home with 1 garage in an area with lots of 2 story, 2000 sf 2 car garage homes?
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I don't want just a box shaped house but I hear corners add to cost...
More roof lines make the house more expensive. Odd shaped houses are an expense. Again, consider how the other houses look in the area you were thinking of building. You don't want to be the odd ball home surrounded by ranch or colonial style homes.
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I thought maybe if I shopped around for good deals on doors, vanities, fixtures etc it could be done cheaper. I knew someone that built a house and they bought cabinets and toilets, etc at scratch and dent type places and got nice stuff.
Any ideas or experiences.
Sure - you can find ways to cut corners but you have to beware of making the home look piecemeal. Find a cheap toilet? great, except you need 3 of them for your 2.5 bath home or have different looking toilets in each room. Same with flooring, cabinets, doors... You can make a new home look like a really bad remodel that way.
Don't forget to consider your time in your cost calculations. How many places will you have to visit, over and over, to find all the pieces you need at discount prices? What will you do if you don't find things that you need?
i built my house 1100 sq ft myself for $49,000. its very basic, no fancy, stock general over the shelf plans. it will never sell for over 100k. Now remember the $49k is materials only. I did all the labor. To get it build would of been another 50k
but by doing it myself i was able to pay out of pocket for material and no mortgage, so if you have it built it would add another 50k and then if you got a moorage it would add about another 100k over the life of the loan.
so even if you have no experience , if you stay with a basic envelope , its very do able and you can save a lot of money. I recommend everybody build their own house.
I built mine because i couldn't find anything i like, i wanted a two bedroom with big rooms instead of the common three bedroom with very small rooms.
The biggest downside to making "new construction" your first / starter home is that it really severely limits your potential to use a "property ladder" strategy of moving up compared to the much wiser strategy of looking for the "worst house in the best neighborhood" as a starter.
Even if you are lucky and get a house in an area where there is substantial demand and some price appreciation with new construction (which is pretty rare) the odds of there being buyers eager to buy your now "used" house in area where they may still be vacant lots / new homes available from the builder REALLY limits the upside for you to "move up".
In contrast if you focus on homes in really nice areas that need a little fixing up (you might be surprised just how cheaply you can replace flat laminate cabinets and luan interior doors...) AND you put in the needed updates you are in a much better position to sell your starter house at a profit in a reasonable window (5-7 years). Similarly if you choose to put in things that are better than "builder grade" in an established area you have FAR BETTER likelihood of NOT over-improving for the area as you would risk when going with often over priced "upgrade packages" that builders try to foist upon new buyers...
Frankly I would be very worried about any place where new buildable lots are selling for just $4,500 -- that seems so inexpensive as to be a concern that the very low price will attract under-capitalized buyers with very very modest budgets. Assuming standard pricing models, with land costs about 1/3 of the costs of the construction these are home that might have selling prices more modest that what average new cars sell for and the potential for folks that have no business being home owners getting in way way over their heads would be a serious concern.
The problem with a "property ladder" is that it encourages people to take on lots of unnecessary debt, instead of settling with what fits their needs and stopping.
The "big elephant in the room" is NOT resale value, but the opportunity cost of the time you spend building the house. This cost may range from zero (if the time would otherwise be spent sleeping in with a hangover) to very large (if you otherwise would take on a high-paying second job or overtime).
Last edited by ncole1; 01-01-2015 at 10:05 AM..
Reason: fixed typo
While it is possible that some folks do "take on unnecessary" debt when buying ANY home there is NOTHING inherent in the strategy of finding a home in need of updating and then selling this at an appreciated value down that road that what be incompatible with "settling on what fits their needs and stopping"...
I further do not agree that there is anything special about the opportunity cost of the time associated with building a home -- if you find a willing builder they may very well have homes that built speculatively or for a deal that feel through. Depending on the circumstances it is entirely possible that the builder may even "toss in" upgrades such the OP wants AND do this in time frame that is no more lengthy than the period one would shop for an existing home.
More importantly I would heed the advice of Brian_M -- falsely assuming that your "first home is your forever home" is perhaps the worst mistake that most buyers can make. This indeed does lead to paying for fancy upgrades that quickly become dated, rooms that might make sense for a single or childless couple that do serve longer term needs, locations that might work at one stage of one's life but really are not good choices as ones priorities shift, and a whole host of people that foolishly lock themselves into homes that do not maximize either the financial upside nor their ultimate housing utility.
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