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Buying a new house vs. pre-owned
Hello,
I've never posted to this forum before so Hi! My husband and I got married in July and are wanting to buy a house and move back to our hometown sometime between April and June (our lease ends mid-June). We were in our hometown scouting out price ranges and neighborhoods. He has been bugging me for months to put a down payment now and just rent it out until we want to move in June. This option stresses me out because what if we don't find renters, or what if our renters don't pay, or what if our renters move out, or worse, what if our renters trash the house.
While looking this weekend we came across a new development. The baseline package was about $9,000 under our budget, so we have about that much wiggle room for options and upgrades. The development is in the best school district in town (for our future babies) and our side of the street is the last to be built on so it's not like we will be staring at empty lots for months. I'd love some advice/experiences on buying new vs. pre-owned. My husband is freaking out about buying new, while I love the idea of being able to make it my own and move into a new neighborhood with younger people like ourselves. We have a $1000 refundable lot retainer down, but we have to decide by Sunday, or we don't get that back.
Re: Buying a new house vs. pre-owned
Would you be happy with the base package only? Have you looked into the references of the construction company? Also, make sure to take any HOA fees into account in your budget.
While, granted, I don't have much experience in this arena. From what I've heard about new construction in a housing community with "base model" vs. "builder upgrades", it reminds me a lot of buying a new car with "base model" vs. "upgrades/packages". It's like you add a few things and suddenly the price is substantially more...and you can often add those items "after market" for cheaper.
I do own rental property and I wouldn't recommend buying a house so early that you need to rent it out for a 6-7 months. Quite frankly, you would have a hard time finding tenants. While you'll occasionally find an exception, most people don't want to move somewhere they will have to move back out of just a few months later.
Plus, if you don't live in the area, you would need to either hire a property management (PM) firm/real estate agent (REA) for friends/family to conduct showings for you. PMs often charge the first month's rent. REAs often charge that also, but I've also seen them charge just a few hundred bucks.
However you all go, good luck with your home search!
The most important tip I can give someone building using a home building company is to check what any upgrade would cost you to do after you move in. This includes extras like lighting, kitchen sinks and such. Even changing the flooring can be less expensive to change after move in at times. Anything, that you feel you can do yourselves like that is often less expensive to do after you move in. Even when you have to hire someone to do the work because any "upgrade" dhanges you make to their basic home (other than choosing from their set choices) you are not only paying for the original, but for the upgrade too. And on top of that, if it's something they contract out, you're paying them for the trouble of having to hire someone else to do the job.
Case in point. The builder we used for our second home put a porcelain sink in the kitchen. I had one in a rental when we first married and it was horrible looking because of chips and scratches so we asked for a change to stainless. We paid $250.00 for a sink we later saw at a home improvement store for $19.99. Granted, you're not going to find a twenty dollar sink anymore, but the idea that we paid 12 and a half times for a new sink, that was actually less expensive than the one that would have been installed, we also paid for in the porcelain sink in the basic cost of the house plan we chose, .
New construction homes are cheaply made. Any generic home with an average builder is not made with the best materials. The only way you get good stuff is to go custom. We built new in 2008. It was put up in 3 months. New construction homes go up in a few months using cheap materials and cheap labor - labor to just get the job done, not skilled workers who give a crud about what they are doing.
Even if you do build new you still need an inspection done. Our inspector found the roof missing flashing the drainage problems in the back yard.
I would never build new again. I look at all the new homes popping up around us - all shiny and quickly made (ones that are $300k +++) and would take an older home ANY DAY.
My parents built new in 1983. It was, at that time, a run of the mill new build. But, it has been a great, sturdy, well-constructed home with wonderful materials built by people who cared. That's just not the case anymore.
What ever you end up doing, do NOT build on a lot down hill from other lots still under construction, it's how you end up with major water flow problems.
This is true. When we built our home they wanted and extra $5k (a deck was an upgrade option) to build a 12'x12' deck. If you know anything about decks, you know that 12' x 12' isn't very big at all - certainly not large enough for a grill and a table with 6 chairs.
Anyway, we passed on that option and a year later DH built our own 16' x 20' deck for under $2k.
When you're selecting options, do upgrades on the items you KNOW you cannot do on your own, ones that cannot be added easily at a later time, and ones you know you will USE. Another example was our master bath soaking tub. For that configuration we spent an extra $2,500. We used the tub maybe 5 times in 3 years before we moved. It was not worth it. If I had to do it again I would have opted for a standard shower/tub combo and do a double vanity with two sinks.
Other words of advice:
1. Plan and pay attention to the direction in which your doors swing open. They take off most of the doors in model homes. We didn't realize this and ended up with two doors in our laundry room banging into one another. Had we known this, would could have opted for one of the doors to be a pocket door and the problem wouldn't have existed.
2. Upgrade your carpet and pad. Back to my PP, materials they use can be cheap. Therefore, you need to plan that carpet even one step up from the builder's base is probably going to look flat and bad in a few years especially in high traffic areas.
3. Get a utility tub in your laundry room if that doesn't come included.
4. Figure out where they are going to put things like light switches and thermostats. Sometimes you can find these things in weird places in the middle of walls. It's weird looking and also makes it tough to hang wall décor/art.
5. Plan for adequate lighting. In our new build we added 7 recessed lights around the home to provide more light. It was awesome. For example, rather than one hall light upstairs, we did a recessed at the top of the stairs, at the linen closet and at the opposite end of the hallway. We did this on the main level in front of the hall closet and along and main foyer area too.
6. Don't pay to upgrade your landscaping. It's a rip off. They typically plant things that are too close to the house and things that are not meant to be in the main front area of a home after a few years because they grow too large and block windows, etc..
7. Plan for extra wall outlets (if not included already) at the mantle (if you have one) and one kitchen islands.
Thank you for all your awesome advice. We went to the design center yesterday to select all our upgrades and options. Besides the bay window we added, we have a week to make any changes, take any options off, or add anything.
I'm taking your advice and going to be spending some time at Lowes this weekend looking at how much all this stuff will cost on my own. We are super happy with the stuff we pick and still stayed $6,000 under our budget after selecting all our options. We are in the middle of a drought in California right now so all they can put in is bark and a few "drought tolerant plants." So, that's kind of a con since our front yard will suck and our backyard will be kind of non-existent, but it'll only be about $100 to roll out grass in a couple years when the water situation gets better (and it'll save us money in the meantime!
My experience yesterday was great because DH and I were able to focus on the stuff that was important to us and upgrade it.
We just Skyped this evening with out daughter in Northern Cali. She said they had two days with a little rain and were so happy for it. Not anything to amount to much, but encouraging. I hope you get more soon. The water situation is terrible out there.
My problem with these new developments is that they throw them up everywhere and the homes aren't special in anyway. They often build the same floor plan multiple times. That just isn't what we wanted. In the filing we live in, they were only building the same floor plan 3 times, but now in the newer filings they are building it multiple times. There is one that has 27 of the same house in the same filing. I think that is just crazy....
But that's us. We wanted something with a large yard and more character. You can't get that in our are in these new subdivisions. It's all about what you want.
Good luck with your decision!