KB, Anderson, Centex... oh my! :) Who did you choose & why? (Raleigh: new house, neighborhood)
Raleigh, Durham, Chapel Hill, CaryThe Triangle Area
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As a former electric company IT worker, I must just be prejudiced for heat pumps. Have never felt that the output of our heat ducts was less than satisfactory, and am always pleasantly surprised when the bill arrives from Progress Energy.
Since we don't have the budget required to obtain a quality custom home, Vicki is correct in that we currently intend to remain renters. That way, when the particular piece of poorly built junk we occupy deteriorates too badly, we just find a newer piece of junk to be our next home. The place we rent now is pretty well built but is starting to suffer from the effects on the foundation of soil subsidence.
The building we rented from in NYC is over 60 years old and still totally sound from stem to stern. Fireproof throughout thanks to good building codes. The steel closet doors with solid brass hardware are stronger than the front doors on the homes we've seen recently.
I inherited $300K and thought it might be a good time to buy instead of rent. The low quality materials and workmanship convinced me to put the inheritance in a 5% CD at the State Employees Credit Union, with the monthly interest more than enough to pay rent, utilities, and Time-Warner.
I guess I'm just an old fart from times where even inexpensive homes were built to last. My Mom's old place on Long Island was put up just after WWII to sell for the VA mortgage max of $9,999. It's still standing, and the original roof lasted over 30 years. Don't think the mid-priced stuff built today will have such a lifespan.
Hi saturnfan, thanks for not thinking I was picking on you! The problem with your idea of WAITING to buy the "perfectly built" home is that in the past 17 years, you've been paying someone else's mortgage, not getting your tax deduction AND just losing money.
I have a client who buys and sells every 2-3 years. EVERY TIME he sells, he makes money. For instance...he bought a house for $354,000 and we just sold it for $394,000. You do the math. Even if you deduct his closing costs paid to get into the house and his fees involved with selling the house, he still makes a nice profit for only 2 years. Typically he buys a house less than 5 years old so he has virtually no expenses with maintenance.
Now thats typical...about 6% per year in certain areas...like North Raleigh, Cary, Wake Forest.
A non typical example is the house I recently sold in The Park at West Lake. They made over $90,000 in 2 years! And I'm actually NOT exagerating and I'm not trying to make myself look good but I am giving these as examples of what you can do.
For the 17 years that you've been renting, you've made this kind of money...where?
Now you've inherited this money. Where else can you put this to make this type of profit? Money markets are paying between 3% to 4.5% but housing in this area is making between 6% to 8% per year.
I'm really NOT picking on you but I want you to consider what I'm saying. And I know you are going to say that because I'm a RE Agent, I have an ulterior motive when in reality, I just think you are not seeing the whole picture and this is my way of helping!
Ok...I'm prepared...I'm sitting down...disagree but BE NICE.
I'm always nice, Vicki. Used to be in corporate customer relations at Exxon-Mobil HQ.
The only time we ever bought was in the late 80's in New Orleans. Economy tanked, house dropped 50% in 2 years, and I got laid off when the utility company almost went belly up with nuclear power investments that went sour after Three Mile Island. Moved here at 30% less salary and had to file Chapter 7. When my ship comes in, I'll be at RDU waiting for it.
Forbes just did an own-vs-rent analysis which I gave to Katie, our manager, as a possible nice addition to renewal packets. It tells the pluses and minuses of both sides pretty fairly.
While some folks have done well in home appreciation in the past bull market, this trend may or may not continue. In some areas, yes, in others, a definite no.
Tax treatment has changed with a marital standard deduction of about $10K. Unless you can replace all of this with high state tax, property tax, and charitable deductions, you may not really get all of your mortgage interest deduction since there will be an offset - the $10K vs what you can use to replace it. You no longer may deduct consumer interest except mortgages and other home loans.
Now, the rest depends on your individual skill set. If you can do most repairs and improvements yourself, ownership will be a much better deal than if you have to contract out almost all tasks at the home. Myself and my wife were not blessed with any aptitude for home repair, and even simple painting is way beyond us. We both have an intense fear of heights and poor eyesight. My brother in law, on the other hand, has bought several distress properties, improved them, and made money when he decided to sell.
One other thing. A couple of years ago, I called my manager at another complex and told her how happy I was to be a renter that particular day. She asked why that day. I responded that the heat pump just died and it would be her pleasure to put in a new one.
After reading here that the upgrade for a tiled kitchen floor in one subdivision was $8K, I felt happy because $8K would pay a year's rent.
See, Vicki, I may differ with you at times but we can still be friends.
Thanks saturnfan! My intention is never to be mean but just to help folks and sometimes thats missed in my typing. And I do appreciate your comments but I can't agree with them all!!! Someone on here told me that I was opinionated. I'd be the first to agree with her!
Under certain circumstance rent sometimes is better than owning. To be making money in housing, the differences between the cost to borrowing (APR) and the market appreciation must be at least 1.5 points.
Most people who calculate the profit by buying and selling, are not factoring out the cost of barrowing, the extra cost of utilities and upkeep, and the potential interest rate they are going to receive by investing the extra money.
Here in Raleigh, the rent is cheap. I am paying $760 for 1100 sqf. apt. To buy a house in the same location, I need at least 400K, after 20% down the mortgage and taxes would be around $2800. That is $2000 more than what it costs to rent. Add to that the extra cost of utilities, yard maintenance, and other home services. Investing this money every month, should out pace the current real estate appreciation in Raleigh.
The current interest rate on mortgage is about 6.625% of conforming and 7% for Jumbo with good credit. For a house to be good investment, the property must increase at least 8% a year, and first and second year appreciation will cover closing only. So, one will start making money only in the third year.
In NY the rent is too high. An apartment in Long Island or Queens will run will over $1600, in this case renting is waste of money.
In Columbia SC, housing is so cheap. A good home can be had for well under 200K. Rent costs the same as Raleigh, so it makes sense to buy.
I have a client who buys and sells every 2-3 years. EVERY TIME he sells, he makes money. For instance...he bought a house for $354,000 and we just sold it for $394,000. You do the math. Even if you deduct his closing costs paid to get into the house and his fees involved with selling the house, he still makes a nice profit for only 2 years. Typically he buys a house less than 5 years old so he has virtually no expenses with maintenance.
I don't know if you're saying that buying and selling homes is a good way to make money, or if you're just saying that buying a home is a good investment. But if it's the former, then I don't know if I agree.
Sure, he makes money every time he sells, but he pays closing costs, etc.., every time he sells too. Wouldn't he be better off financially if he simply bought a house and held onto it? That is unless he's gotten good at buying-low-selling-high...
Well, we're now seeing both sides and it's nice to have a balanced presentation to evaluate one's personal situation.
As we've seen, there's no "one size fits all" here. Do the numbers, factor in all costs, and then add your preferences to the equation.
At least here, you can rent reasonably. In NY, that's no longer the case. The 2BR in Stuyvesant Town (Manhattan) we left in 1985 (rent $550) is now about $3,500 if the tenant is market rate, not protected by rent stabilization.
Hey Petunia16,
i LOVE your spreadsheet. I went through a similar exercise when we moved down here - what an overwhelming process. I just wanted to share a few things that helped us. Our realtor was really helpful in guiding us with the builders. She told us what to look out for with some. like KB won't give you much of an idea of upgrade prices before you sign. Which for some could really drive up the cost. But yet, she mentioned that KB is a decent builder. But she seemed to rate Centex higher than KB (from her experiences with her clients).
We ended up going with Centex. I started a post though, that speaks to some of our doubt once we signed. It's hard to feel 100% confident that we've made the right decision, but after countless hours of going over and over it with friends, family and our realtor, and reminding ourselves how disappointed we felt with every house we looked at (we looked at about 30houses) and how elated we felt when we finally saw a model of the home we ended up buying, I feel like we're doing pretty well - getting a nice home in a nice development for what we're spending, and are anxiously awaiting our inspection to see where things sit and how Centex will address issues that we bring up. The thread is Experience with Centex Homes.
When we visited the Centex community where we ended up buying, the sales rep sat with us and modeled a detailed scenario of upgrades. So we walked out before we put a deposit down, having a rough idea what the upgrades would do to the base price. Granted we didn't see all of the upgrade options so we weren't 100% sure what we were getting, but we could at least get a sense for the types of upgrades, etc.
To this day, I still hear a lot of good things about Centex. And if you check out the thread, you'll get a mix...you'll see posts from folks that have had less than optimal experiences.
As a note, I have heard good things about k hovnanian (sp??).
I don't think any builder is going to be without issues. Granted, some are going to be better than others - and there are pros/cons when you compare big builders like Centex, KB, etc. with a local custom builder. Your price point and identifying items you're not willing to compromise on will also help narrow some of your builder choices. If we were in a different spot, we would have bought a parcel of land and hired a local custom builder. That's just not our price point right now.
With any company or entity you deal with, there are going to be communication breakdowns. Continue to arm yourself with knowledge, be curious, ask a lot of questions. It's sad, but you really do have to keep people honest.
you should also try to learn as much as you can about the community/area where you're looking, no matter who the builder is. Some developments are going to be tougher to figure out than others depending on the state of the construction (early phases vs. later phases).
hope that helps. please feel free to ping me if you want to chat about my experiences.
Yeah, a friend of mine bought a Centex home and they said EXACTLY the same things you did! We almost bought a house through them. I liked almost everything about it except the lot was sooooooo small. It was almost like living in apartment building with that small bit of land outside.
That was my exact impression of the Grandale subdivision in Durham. The floorplans were awesome, but the houses were so close together it gave me the creeps. For 400k up, some elbow room would be nice.
Also, as someone else mentioned...the lack of green options was bothersome.
The neighborhood wasn't particularly 'fit' either. There were sidewalks, but no walking trails.
The houses in MeadowMont are close together, but the space planning is MUCH better (the houses are pricey, too.)
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