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re: Buy or build right now?
Posted on 7/26/18 at 8:26 am to StringedInstruments
Posted on 7/26/18 at 8:26 am to StringedInstruments
quote:
We got scorched after buying in 2008
I'm afraid in our area thats what folks are going to be saying about buying in 2018. The prices where in our area are f*cking nuts. NUTS. If I was advising my brother, I'd honestly tell him to rent the cheapest house you can make due with for the next year or so as stuff starts to level off.
There are however some elements missing from making the forthcoming 'correction' much like the previous one 10 years ago. I think there are way, way less garbage mortgages with variable interest rates spiking that required little or no down payment (basically people that really couldn't afford to buy a house).
This next one could be a good ole' straightforward pricing correction due to simple stuff like supply and demand.
1
Posted on 7/26/18 at 10:30 am to poochie
Bump for my q:
quote]Also interest rates are up about 1% since this time last year. If you wait 6-8 months to build you could save 20% on the cost of the home you are planning on building.
How so? Please explain the mechanics of this. Not disagreeing, trying to make an informed decision.
quote]Also interest rates are up about 1% since this time last year. If you wait 6-8 months to build you could save 20% on the cost of the home you are planning on building.
How so? Please explain the mechanics of this. Not disagreeing, trying to make an informed decision.
Posted on 7/26/18 at 11:07 am to poochie
this is just my opinion. Once the housing market starts to level off you will see a drop in materials. The flood here and in Houston help raised the building material prices twice. Once the demand comes down so will the prices. I also will say this when your ready to build go for it. You seam like you have every thing ready to go.
Posted on 7/26/18 at 11:40 am to AUjim
I'm actively trying to purchase a few acres right now. Gonna take the rest of the year and work on it little by little to get a driveway, utilities, pond, house pad, etc... I likely wouldn't begin building until spring next year.
Posted on 7/26/18 at 2:14 pm to brian_wilson
quote:
Who the frick can afford $3400/month in rent?
keep in mind it's easier to pay $3400/mo rent than it is paying a $3400/mo mortgage (assuming just principal and interest).
If owning, there's property taxes, homeowners insurance, and a lot of other expenses that a renter isnt responsible for.
Posted on 7/26/18 at 2:16 pm to StringedInstruments
quote:
Well if you and your spouse made a combined $200k - which isn't really that high for two successful professionals in their 40s - $3400/month would be very doable.
Sure. If you make $200k, you can spend $700/ month on a car payment. This doesn't make it a good idea.
Posted on 7/26/18 at 2:59 pm to StringedInstruments
quote:
Do you feel the same about buying a house?
No, because to me renting is just throwing money away, and buying an existing home is the more financially reasonable route.
There's always a markup on new construction.
Posted on 7/26/18 at 4:07 pm to maneframe150
quote:Depends.
Buy or build right now?
Sounds like something you could find in an existing construction.
Re-sell will probably be more profitable if you find a deal and buy.
Sub'ing it out yourself will obviously impact the equation some, but unless you're in the industry with connections, could extend construction time and construction loan costs.
If there are unique aspects you're after though, smart home, home theater, energy efficiencies, specific kitchen items, etc. it can be worth it to build, enjoy your accoutrements, then give up a little profit on the flip side when you sell.
Posted on 7/26/18 at 4:17 pm to brian_wilson
quote:
Sure. If you make $200k, you can spend $700/ month on a car payment. This doesn't make it a good idea.
We are talking about houses. Not cars. I make a $3500 payment (includes taxes and insurance) on my house. It has gained almost 500k in equity in the past 2 years. It feels like a good idea.
May of 2020 is what Edsel Charles has predicted to be as the start of the market correction in real estate. He also predicted the last crash. This will be nothing like that per his prediction, and market will return to normal spring 2022.
Posted on 7/26/18 at 4:35 pm to ItNeverRains
quote:Wow! Congrats on that investment!
We are talking about houses. Not cars. I make a $3500 payment (includes taxes and insurance) on my house. It has gained almost 500k in equity in the past 2 years.
Great stuff.
Posted on 7/26/18 at 7:24 pm to StringedInstruments
quote:That's not a very smart move. That $3400 doesn't include insurances and property taxes that go into the escrow account. The $3400 becomes 4000-4200 pretty easily. People making combined 200k might clear 10,000-12000/month depending on variables like health insurance, 401k contributions, etc. You're better off getting a note including all ins and taxes at 2300 and investing the 1700 elsewhere.
Well if you and your spouse made a combined $200k - which isn't really that high for two successful professionals in their 40s - $3400/month would be very doable.
Posted on 7/26/18 at 8:26 pm to ItNeverRains
quote:
May of 2020 is what Edsel Charles has predicted to be as the start of the market correction in real estate.
I think it happens before then.
Posted on 7/26/18 at 9:47 pm to HailToTheChiz
Just let it happen after my house sells kthx
I'd prefer not to be stuck with 2 mortgages
I'd prefer not to be stuck with 2 mortgages
This post was edited on 7/26/18 at 9:48 pm
Posted on 7/26/18 at 11:01 pm to NC_Tigah
quote:
Sub'ing it out yourself will obviously impact the equation some, but unless you're in the industry with connections, could extend construction time and construction loan costs.
Came here to say this. This is never a good idea for anyone not in the industry or with close connection to it (I.e. your brother is a builder). You won’t get the best prices from subs and suppliers, and you certainly won’t be a priority for them when it comes to getting on site. They’ll take care of the builders who keep giving them work before you. So when that weather is getting shitty and there’s work that needs to be done ASAP, you are at the end of the line. Depending on where you are building, just getting permits and inspections might put you in over your head.
ETA: Self performing some of the work isnt always the way to go either. Sure it’ll save you a few bucks to wire your own home, all the way up until the inspector tells you that you have a bunch of code violations that you didn’t even know existed.
Paint and cleanup are about the only thing I’d tackle, and even paint won’t save you that much and will take you twice as long to do.
This post was edited on 7/26/18 at 11:05 pm
Posted on 7/27/18 at 6:27 am to Jake88
quote:
That $3400 doesn't include insurances and property taxes that go into the escrow account.
Yes it does. A mortgage payment typically includes insurance and taxes that go into an escrow account, and that's what the $3400/month was responding to: someone discussing a mortgage payment.
quote:
People making combined 200k might clear 10,000-12000/month depending on variables like health insurance, 401k contributions, etc. You're better off getting a note including all ins and taxes at 2300 and investing the 1700 elsewhere.
Sure people are better off going for a smaller note. Why $2300? Why not $1200? Or $900?
Using Smart Asset's paycheck calculator and assuming their employers offer health insurance coverage, I'd estimate they'd be pulling in around $11k after taxes and insurance in the state of Alabama. But let's go with $10k.
With a $4000 total mortgage like you said, they'd have $6000 leftover. That is plenty to live off of especially after their mortgage and 401k payments.
This post was edited on 7/27/18 at 6:29 am
Posted on 7/27/18 at 6:57 am to braindeadboxer
quote:
Came here to say this. This is never a good idea for anyone not in the industry or with close connection to it (I.e. your brother is a builder). You won’t get the best prices from subs and suppliers, and you certainly won’t be a priority for them when it comes to getting on site. They’ll take care of the builders who keep giving them work before you. So when that weather is getting shitty and there’s work that needs to be done ASAP, you are at the end of the line. Depending on where you are building, just getting permits and inspections might put you in over your head. ETA: Self performing some of the work isnt always the way to go either. Sure it’ll save you a few bucks to wire your own home, all the way up until the inspector tells you that you have a bunch of code violations that you didn’t even know existed. Paint and cleanup are about the only thing I’d tackle, and even paint won’t save you that much and will take you twice as long to do.
I won't say never, but generally its not ideal, especially in hot markets where quality subs are tough to lock down. You will consistently be the short straw.
In the ideal scenario, once you are through rough in inspections (plumbing, electrical, hvac) and framed in, the project becomes much easier to manage IMO and could be contracted by the average person. But I'd bet most builders probably wouldn't be interested in this, and certainly not want to warranty anything done prior.
Posted on 7/27/18 at 9:42 am to stout
quote:
I'd honestly wait a bit. A lot of signs are starting to point to a nationwide slow down.
Agree.
Just a gut call as I don't have your level of expertise in the market, but I see lots staying on the market longer, interest rates rising, and a lot of demand has been satisfied. Not a crash or anything, but a definite cooling of the market.
To the OP, I wouldn't build in a sellers' market; too many jackleg subs b/c of demand and I definitely would not self-contract.
Posted on 7/27/18 at 9:47 am to StringedInstruments
All of this talk of high rent and mortgages makes me embarrassed to say what my condo here in SoCal cost but at some point you're paying for quality of life and living on the beach is pretty cool too I guess.
Posted on 7/27/18 at 12:56 pm to stout
quote:Yep. Very cool indeed. My avatars and sigs usually come from one of the porches of our beach home.
living on the beach is pretty cool too I guess.
Posted on 7/29/18 at 11:56 am to braindeadboxer
Are there any builders you'd recommend?
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