I recently received a question from one of my viewers named Dan. Dan and his wife bought a home in 2013, but now they want to live on a more private piece of property that will age with them.
Since it’s difficult for them to find a home that meets all of their must-haves and is located on private property in their area, he’s wondering if they should buy land themselves and build a new construction home or wait for the right home to come onto the market. If he did buy land and build, how would the financing work?
For Dan and anyone else facing this situation, the answer comes down to whether you want the perfect home or the ideal value.
Whenever I ask homebuyers whether they want to look for the deal or pay retail, they usually want to purchase the home that is the deal. However, some people prefer homes that are cheap and they can fix up. They’re also willing to compromise on things like privacy, layout, square footage, and other things of that nature.
To know what’s best for you, we have to examine this from a couple different angles.
If this next house is something you want to age with you and you never want to buy another house, then building is the best choice. That way, you can lay it out however you want with the exact square footage you prefer and features you desire.
There are a couple of limitations with this option, though. One of which is there is only so much land out there to buy. Most of the land in this area is going to be more rural, so you should be able to find some lots that are slightly larger and can satisfy your need for more privacy.
You also have to obtain a construction loan, and they can be a little bit of a nightmare. There are very specific types of loans where they do draws so the builder can afford to put up certain sections. They then pay against that draw and eventually convert it into a singular mortgage. There are fewer options for that kind of loan out there right now, but it still can be done.
On the other side, is it a better dollar value to buy a property that already exists? From a dollar-to-dollar value, resale is definitely a better choice. However, you have to sacrifice certain things when buying a resale property. This is because if you didn’t design it, it will be less likely to feature all of your must-haves.
At the end of the day, you simply must ask yourself if this next house will be the one you grow old in. If so, look for some land that meets all of your must-haves as far as scenery and location. After that, we can recommend some builders who can get you the custom home that fits your needs.
If you have any other questions, please don’t hesitate to reach out to us. We would be happy to help you!