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Message
Home building advice/questions
Posted on 11/17/17 at 3:42 pm
Posted on 11/17/17 at 3:42 pm
Current situation--
4600 square foot house in a fantastic suburb of Dallas.
Paid $99 a square foot for the house new in 2013
Today, it appraises for $598,000. The house will sell quickly in this market according to my realtor friend. We owe about $350,000 on it and have added a pool and nice outdoor living/kitchen.
This house has everything I could ever want BUT, there is a state highway in front of my property that is separated by a berm and my street.
In the next three years, that state highway is going from two lanes to possibly six, but for sure four. It will almost be in my front yard and it's already packed with 18 wheelers.
Wife wants to build on an acre and a half, probably similar square footage, one story instead of two. We have found a lot and would pay cash for lot and start building in February.
Would you sell now and do this if you were me before the highway expands?
What is the construction loan process if I own the lot outright?
We are very fortunate in careers and bring home around $44k a month. Our current total monthly budget is around $9,000 so we are investing like crazy in rentals, our business, and the stock market.
Would you sell asap and rent while building or wait until almost finished with construction to sell? I don't think two mortgages will interfere with getting approved. Thoughts?
Thanks in advance. I have major heartburn about selling and moving because of the great deal and equity we have in this place.
4600 square foot house in a fantastic suburb of Dallas.
Paid $99 a square foot for the house new in 2013
Today, it appraises for $598,000. The house will sell quickly in this market according to my realtor friend. We owe about $350,000 on it and have added a pool and nice outdoor living/kitchen.
This house has everything I could ever want BUT, there is a state highway in front of my property that is separated by a berm and my street.
In the next three years, that state highway is going from two lanes to possibly six, but for sure four. It will almost be in my front yard and it's already packed with 18 wheelers.
Wife wants to build on an acre and a half, probably similar square footage, one story instead of two. We have found a lot and would pay cash for lot and start building in February.
Would you sell now and do this if you were me before the highway expands?
What is the construction loan process if I own the lot outright?
We are very fortunate in careers and bring home around $44k a month. Our current total monthly budget is around $9,000 so we are investing like crazy in rentals, our business, and the stock market.
Would you sell asap and rent while building or wait until almost finished with construction to sell? I don't think two mortgages will interfere with getting approved. Thoughts?
Thanks in advance. I have major heartburn about selling and moving because of the great deal and equity we have in this place.
Posted on 11/17/17 at 3:46 pm to JoseVargasTX
I would sell now, because if you wait longer and the highway expands people might not be as interested in the house.
Posted on 11/17/17 at 3:48 pm to JoseVargasTX
quote:
$44k a month
damn!
Posted on 11/17/17 at 4:36 pm to JoseVargasTX
I’d sell now but you are making so much per month that it won’t make too much difference in the grand scheme of things.
Posted on 11/17/17 at 4:43 pm to JoseVargasTX
First, congrats on that 1 MM per year salary. Second. Hells yeah. If I had your cash flows, I would build every 5-10 years. You can make some good money building in the right areas.
Posted on 11/17/17 at 7:47 pm to JoseVargasTX
Honestly, with your income, you can literally do whatever the heck you want. If you can float 2 mortgages at the same time in the event your current house doesn't sell, then do whichever makes you happiest. We sold our home after the flood last year, and rented for a year while we built. I personally felt better not having 2 notes at the same time, but you are a legit OT baller.
Posted on 11/17/17 at 11:19 pm to JoseVargasTX
quote:
Would you sell now and do this if you were me before the highway expands?
Yes. I’d list I?t right away and sell I?t as soon as you get a good offer. The advantage is you’re in no rush and won’t have to concede much to sell.
quote:
What is the construction loan process if I own the lot outright?
Not much different. Property + Structure will be factored into the value, so owning the land allows you to have additional equity and lower your LTV. The construction loan just simply won’t pay/purchase the land.
Building is very stressful. Just prepare yourself for that. Moving twice is less fun, especially a 4K sqft house. Depending on where you’re living in between, this can also be stressful (if renting a smaller place, farther drive, living with relatives, etc.).
From a financial perspective, you’ll be fine. But you already knew this. If you love your house and don’t want to move, don’t rush I?t. You have a few years based on what you’ve said. However, while stressful, building allows you to design and build the exact house you want with all the amenities you want. Every compromise is a decision you make.
Posted on 11/18/17 at 5:57 am to JoseVargasTX
I would sell. With the income you bring plus the highway expansion, you will sell regardless, just get it out of the way.
You will be req’d to put down 20% to build. You don’t necessarily have to buy lot out right, but once you have plans and cost to build plus lot cost, you need 20% of that total down to get a construction loan. The value of land goes towards 20% should you own out right.
Most construction loans are 12 month, but if the scope of your project seems greater, there are options there as well. Once complete you will go from construction loan to a permanent loan. Some banks offer one time close, which can save on title fees, but devil is always in details and it can be cheaper to do two loans. Watch their fees.
The option to sell now rent vs one move is a “know thy self” question. I would personally stay put, especially with kids, but there is no right vs wrong answer.
Good Luck!
You will be req’d to put down 20% to build. You don’t necessarily have to buy lot out right, but once you have plans and cost to build plus lot cost, you need 20% of that total down to get a construction loan. The value of land goes towards 20% should you own out right.
Most construction loans are 12 month, but if the scope of your project seems greater, there are options there as well. Once complete you will go from construction loan to a permanent loan. Some banks offer one time close, which can save on title fees, but devil is always in details and it can be cheaper to do two loans. Watch their fees.
The option to sell now rent vs one move is a “know thy self” question. I would personally stay put, especially with kids, but there is no right vs wrong answer.
Good Luck!
This post was edited on 11/18/17 at 6:00 am
Posted on 11/18/17 at 6:35 am to JoseVargasTX
Do whatever makes you happy. My wife and I are in a similar place as you financially and almost every decision now is about what makes us happy. After almost 20 years of travelling and sacrificing we focus on happiness. Now don't get me wrong, we make good financial decisions and don't piss away our money but we no longer delay gratification.
Posted on 11/18/17 at 10:14 pm to JoseVargasTX
I’m in the DFW market as well, I would buy the land right now and sell your house in 6-7 months when the construction is done. I am about to close on my house in three weeks, so I’ve seen what the market is doing and prices are going nowhere but north for a while.
If you buy the land in the Winter while less people are looking and sell in the active Summer months, you will come out on top IF you can eat two loans at once for a couple months.
If you buy the land in the Winter while less people are looking and sell in the active Summer months, you will come out on top IF you can eat two loans at once for a couple months.
Posted on 11/19/17 at 7:11 am to AUCE05
sell now so the potential hwy expansion doesn’t run off buyers.
This post was edited on 11/19/17 at 7:13 am
Posted on 11/21/17 at 12:16 pm to JoseVargasTX
I live in the DFW area and I can tell you from experience, people dont like buying homes close to busy streets. Sell while you can. Tomorrow is promised to no one. Bird in the hand......
Posted on 11/21/17 at 1:48 pm to JoseVargasTX
quote:
bring home around $44k a month
Posted on 11/25/17 at 8:50 pm to AUCE05
Congrats on being bad at math. Not a mill.
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