Build or Buy Your New Home?
Finally, you’ve saved enough to get a mortgage and with a steady income, you’re ready to start have it start working for you in a property investment. The bank probably already has a pre-approved home loan budget for you and it’s time to start shopping around for your dream house in a nice neighborhood. Goodness you, there are a few variables to consider. However, the toughest decision would be whether to build or buy your new house.
If you already own a property or if this is your first time to own one, then you’ll concur with me that purchasing a real estate property can be stressful. Not to mention now you throw in the decision between buying the home or building. Most people dream of someday building a home that suits their specifications. It is however very crucial to consider carefully the timing of this kind of decision, as well as a number of other factors.
Here are a few things to consider before choosing to buy or build a new home. Take time and see the best option to get you your dream home.
Consider the timing:
Timing is everything. I personally know that building a home will take time. Many builders will promise you that your house will be complete and move in ready in 6 months. With very few exceptions, that will not be the case. They will promise this to get your business, but unless you are building a smaller 1,500 sq ft home, then don’t bank on it.
If you are building a standard size, 2,500 square foot home, then you can expect your construction project to take between 7-9 months including the purchase of the property, approval of loans, and construction including inspections.
So, if you plan to move in less time, then I would highly recommend you looking into existing real estate to make your purchase.
Have you looked at what is available now?:
Many times people jump right into trying to build a home and skip over the existing real estate market assuming that there are no houses currently standing that might fit their needs. Unless you are looking for a particular location, or need acreage, I recommend you take a look. Sometimes you may be surprised at what you find, and the price you may find it for.
There will always be great gems on the market that might very well into your budget. Additionally, you may be able to pick up a property, and if it is not perfect, you could always buy it correctly and with some earned equity in the purchase, fund an upgrade project to make your house exactly what you want it to be. And in this case you don’t have to wait 9 months to make it happen.
Some other things to think about before you commit to one or the other is utilities. Before you purchase a piece of property and think about building on it; make sure that your utilities are all cleared. If you are purchasing in a subdivision where all of the engineering has been completed, then definitely not an issue But if you are thinking about something a little more remote, be sure to have these looked at by experts and understand exactly what you are getting into.
Another topic to ensure you cover is while building a home, you still have to pay for your current residence. So you have to pay for your rental amount plus the loan to fund the construction. Now, many banks do offer something called a “bridge loan”, which I highly recommend you consider. That allows your contractor to pull out only the funds he needs as he is building, and you only make payments on the amount he pulls out. So you are not required to start making payments on the full construction loan amount. This makes it much more plausible for people to build.
About the Author
Patrick Rogers operates Asurent Property Management located in Ashland, Oregon. To find out more about Asurent’s services, you can learn more by visiting here: Asurent Property Management