Building pros vs cons

[Vishenka69]

Somebody talk me off the ledge. We met with a builder today and DH is in love, but the price tag and timeline aren't sitting as well with me. I was hoping for a completely undoable amount but this is not bad just slightly higher than my comfort zone.

It's daunting for our first house ever to be a custom build. We have no idea what we want and I was hoping to start with a smaller starter house to figure things out and then move on to bigger and better once I'm ready. Is it crazy to start this way instead?

My other concern is that everyone says to significantly pad the budget. I'm ok with the number they gave us but not if it doubles. What's a reasonable number to expect? 10% over, 20%?

I'm ready to just call the whole homeownership thing off and remain a die-hard renter for the rest of my life.

[DCJenn]

Re: Building pros vs cons

Go with 45% over and from here on out be at the building site every weekend and when you're not there go to open houses by new builders. Get to know what you DO like and what you both walk into a room and think, "eww, why'd they do that?"

J
PS- my ex and I bought a new townhouse in a DC suburb and they only reason we got the never ending drainage problems paid for is that we went ALL the time and had pictures documenting drainage problems from Day One.

[Vishenka69]

Re: Building pros vs cons

One of the reasons I'm even considering this is the company is a very small (as in 2 brothers and their dad) local one. They do only 2 houses at at time and also build green. On the down side, it takes almost a year for things to be done right the first time around. I was hoping for a more instant gratification. But this would be starting from absolute scratch with an architect (one of the brothers). I'm thinking of asking to talk to the people who's house they're currently finishing.

45% more will put the project over a mil and there's no way I'm signing up for that.

Re: Building pros vs cons

I'm not sure what to tell you, but we've looked into building at a couple different times and nixed it. (Of course, we were talking residency/moonlighting money at that point, not attending money.)

One of the reasons we decided not to do it is that people told us there were so many unexpected expenses on the back end, for finishing the house. Even with buying a finished "starter" house, there are unexpected expenses, but very minor compared with building. I suppose it would depend on the builder, though - more experienced ones may give you a closer estimate on finishing costs for homes they've built several times? :huh: I would definitely see if there's a way you can talk to other people who have had houses built by this team.

I guess I feel like our renting experience has given us a pretty good idea what we want in a house. (But we also owned a home during residency, and currently we're renting a large house for cheap - similar style to what we'd like eventually.) Still, our plan at this point is to buy a smaller house after fellowship and live in it for a couple years. That way we have time to find the perfect property and builder, and it will also give us time to feel more comfortable financially. The downside is that we may not be in our smaller home long enough to build any equity before selling it.

A while back I was trying to figure out how much of a home we could afford eventually. I think I came across the general rule of spending less than 30% of your monthly income on a home payment. But for those with larger incomes who can reasonably expect their incomes to increase, up to 40% might be acceptable. Of course this also depends on other existing debt.

[Flynn]

Re: Building pros vs cons

One of the reasons I'm even considering this is the company is a very small (as in 2 brothers and their dad) local one. They do only 2 houses at at time and also build green. On the down side, it takes almost a year for things to be done right the first time around. I was hoping for a more instant gratification. But this would be starting from absolute scratch with an architect (one of the brothers). I'm thinking of asking to talk to the people who's house they're currently finishing.

45% more will put the project over a mil and there's no way I'm signing up for that.

A few thoughts from someone who built a custom home in the last two years...

A year start to finish is NOTHING in the way of timeline. Also, budget four months over what they say. There can be unexpected things that come up the builders cannot control -- our appliances were almost 3 months overdue for example. You can't move in without HEAT and hot water. This was NOT the builder's fault, it was the appliance store's responsibility.

Is the driveway and landscaping included in the house price? If not, budget at least another 20,000 dollars into what you are already spending.

The lot -- check check and recheck how much city hook ups are, taxes, back taxes and interest. The buyer is usually responsible for ALL of these fees and they are THOUSANDS of dollars. If the builder already owns the lot, this may not apply to your specific situation.

I would talk to as many people as you can about their experience with these builders. Everything we read said talk to AT LEAST 5 people who they have built for in the last three years. Ask a ton of questions. Does the builder offer something to the owner if he goes over a month? Two months? Get something in writing for this. A friend of ours had a project that went 8 months over schedule so they had rent AND a mortgage for a short time. It sucked.

Building green -- what does that mean? Do you have state of the art stuff in your house that will be difficult to service AND expensive?

Having a set budget is tricky. Copper wiring pricing trippled from the time we set the budget to the time the wires were purchased. It had to do with what was happening with gas/petrol etc. The builder had NO control over this but it made our 7,000 budget for wiring go to 24,000 dollars and of course we had to pick up the cost.



Will you stay in this house forever? If not, whatever you do, don't build the most expensive house in the area (we didn't do this but we're close) . Think about selling the house in five years -- what would the average buyer want?

I know this is a personal question but what about kids? If you guys decide to have kids, you might want to build a totally different house than if you choose not to. Most people looking for a certain size house are people with children. They are looking for at least 4 bedrooms and 2.5 baths with a rec room or play room area. This might not be what you want now.

I have to run but this is just off the top of my head.....

Edited to add --

...also factor in what your house would be worth to assess property taxes. Where we live, the state GETS YOU on new construction. They send a person to decide what your house is worth. He comes over without an appointment and goes through every square inch. We had them come prior to our movie room and several office built ins being done and I think we saved a bit in taxes.



The bottom line for us is we love our house and we knew as a couple EXACTLY what we wanted. We had a few terse moments but they were short lived and we're very happy with the finished product. We know people who built a house and no lie, IT TESTED THEIR MARRIAGE (non-medical people).

I had been saving pictures of floor plans and different rooms for years and had them all on my computer. I basically said, "can you do this?" and "How much will it cost?" It seemed all very easy to me.

Our builders had iron clad reputations, were extremely above board and everything went as smoothly as possible with respect to building a custom home. It could have very easily been a nightmare of epic proportions had we gone with someone less than ethical -- or had something go wrong with our lot like too much water to build on or unstable conditions of some kind.

PM me if you have more questions.

[Vishenka69]

Re: Building pros vs cons

Flynn, thank you so much for your thoughts. DH spoke to some coworkers today that have build in this area and they're all talking him out of it. As much as I like the thought of custom building, I'm not sure it's a good idea to do it right now or that we should start with it. I don't think we'll get as good of a deal on a new build as we can on pre-existing in the current market.

Thanks for bringing me back down to earth. It's just so weird to suddenly have so many choices. These are all good problems to have but they're still problems.