Advantages & disadvantages of building a home

[StanleyVegas]

Unless you luck into a lot that previously had a house on it, cheap land will most likely be undeveloped. Power, water, and sewer/septic would need to be taken into consideration.

[pvoyd]

I doubt you can save by custom-building vs. buying from a builder - unless you are experienced in building code, can do a lot of work yourself, and have time and ability to salvage some building materials and fixtures.

Kira Obolensky's "Good House Cheap House" coffee table book has some interesting ideas on smaller dwellings and reusing materials, but my conclusion was you had to know the right people, know what you are doing, and have a lot of time.

[BillWallace]

If you ask a builder to do the home you won't save money. There are 3 primary ways to save on building a new home -

1) Do some or much of the work yourself. To get a $300k house for $200k this would have to be the case. You'd actually need to do the majority of the work to save that much as the land and materials will cost a bunch and you are just saving on the labor portion.

2) Be your own general contractor. You mentioned "hiring a builder" but that's the same as the normal cost of building. To save 5-15% on the overall cost you can become your own general contractor where you would be responsible for hiring and managing all the the subcontractors needed to complete a house. So you'd hire your own architect and get your own permits. Then you'd find companies for foundation, framing, plumbing, electric, HVAC, sheetrock, finishing, flooring, painting .... That way, you cut out the middle man. It takes a lot of time and the process of building a house takes much longer since you don't have the normal coordination between subcontractors that an established builder would have.

3) Cut way back on what your expectations are. Simple answer is you can build a home for $200k with a normal builder. But you can't build a $300k home for $200k. Now it may be possible to find a close to $300k home that needs lots of work that you can by cheap and work on. That's getting harder lately as there are fewer foreclosures out there.

The simplest way to address your housing needs is to find a move in ready home in the price range you can afford in the location you desire. This probably means reducing your expectations on size or features but gets you what you can really afford in a location that fits your needs.

[TedH71]

I looked into Craigslist to see the general price of homes.....still very reasonable. I even entered what I thought was optimal numbers ...max number was $250k with 3 bedrooms and at least, 2 bathrooms. I saw many good houses with acreage! You won't get that in the Kansas area! Or even Texas...(Austin area especially) I don't see what's wrong with buying used. In many cases, the original issues have been fixed if they had issues in the first place plus lots of those houses are large. Do your research. Are you looking for a specific type of house with your specific type of criteria? What are they?

[Pretzelogik]

Originally Posted by svaitla

If I buy land and ask a builder to construct a house for me, what are the difficulties need to face?
Is it a complex process? Will that be cheaper? Please advice.

The reason I am asking this is most of the new single homes are above $300K. My budget is only 200K.
Most of the new homes are located around 25 miles to 30 miles distance, which I don't prefer to travel every day two times. I live in edina. My office is in eden prairie.

A new option worth considering. Do a google search for "folding homes".

[Apple Tree]

For $200k, you would have a very, very, very bare bones home. If you want any level of trim, something nicer than the most basic home depot fixtures, etc., I actually think you would be better off buying a fixer-upper and then working on it. If you want a square house with clearance windows and no landscaping, I'm sure you could find someone to build you a very basic house.

Don't want to sound snobby, but most existing homes you see out there would cost at least 15% more to try to replicate new.

The other thing you would face is if you hire a guy and put the screws on him to do your house on the cheap, you will be his lowest priority. If he is not making a fair wage off of you, you are going to be his backup plan and he will focus most days on the projects that will pay the bills.

[TedH71]

Again, look at Craigslist. I saw tons of houses in good shape between $200k-$250k. The thing is you may have to drive 15-30 mins away from St. Paul in order to have those houses. A lot of those houses had acreage. I would pick acreage anyway because you can have room to add on to the house.

[WoodburyWoody]

Originally Posted by TedH71

I looked into Craigslist to see the general price of homes.....still very reasonable. I even entered what I thought was optimal numbers ...max number was $250k with 3 bedrooms and at least, 2 bathrooms. I saw many good houses with acreage! You won't get that in the Kansas area! Or even Texas...(Austin area especially) I don't see what's wrong with buying used. In many cases, the original issues have been fixed if they had issues in the first place plus lots of those houses are large. Do your research. Are you looking for a specific type of house with your specific type of criteria? What are they?

Having both built and bought an existing house, I would be very hard pressed to build again. With an existing home - and a good, trusted inspector - you know what you are getting.

With a new build, even the "reputable" national builders who offer 1-year whole home, 2-year electrical and 10-year foundation (as required by MN law) warranties, actually getting them to honor their obligations is another story.

And if you do build, still get a good, trusted inspector of your choosing to sign off before you take possession (and write that into the contract). Seriously, the industry is not what it once was.

[kbaker41]

Originally Posted by WoodburyWoody

Having both built and bought an existing house, I would be very hard pressed to build again. With an existing home - and a good, trusted inspector - you know what you are getting.

With a new build, even the "reputable" national builders who offer 1-year whole home, 2-year electrical and 10-year foundation (as required by MN law) warranties, actually getting them to honor their obligations is another story.

And if you do build, still get a good, trusted inspector of your choosing to sign off before you take possession (and write that into the contract). Seriously, the industry is not what it once was.

I'll second this, even though my wife and I didn't end up going with a new build. We sure lost a good 3 months though of searching due to the lies of the builder we were looking at and their agent. For your budget, definitely go with an existing home, as these builders won't give you the time of day. We were looking at a $275k budget in Farmington for about $1400 square feet of house with another 1000 unfinished basement. We ended finding a home built in 2004 for $257k that is almost 3,000 sf and it has been amazing for the year we've been in it so far and a lot cheaper than it would have probably been had we gone new.