Building VS Buying

[Howard]

I have been looking at townhomes all over the city and find that I really like the industrial, contemporary, ultra modern look. My concern is with townhouses everyone tends to be unsure of the appreciation because of all of the building going on. I am not at all fond of association fees with some places. My budget is $200,000 to $250,000. I am starting to think why not build? I have NO experience on the subject of building. Can anyone give me advice as well as recomend some builders? Looking for a 1500 to 2000 sqft. 3/2/2 home. Aziza has some interesting homes.

[The New Juniper]

Couple of thoughts:

First, your concerns over appreciation are probably well founded. However, i do not believe it is any more of a risk than buying a single family home in a new neighborhood. In other words, if you buy in a good neighborhood, buy a quality house, and do not overpay, you should be fine.

It is when buyers get caught up in the euphoria of a new product (like the ubiquitous townhome construction) and decide to settle for inferior product and pay at or just below going rate to get in that they run into trouble.

Look for the established builder. End of the day, quality construction is going to last and wear well. Conversely, shoddy construction will look shoddy in a short amount of time leaving you with maintenance issues and upkeep costs that will bring the cost fo the house effectively up to par with the nicer homes.

My advice, pay the extra nickel and buy a well constructed home. It will appreciate much more than the alternative.

Now, having said that, building will cost you about $100 psf. Can be done cheaper (and many do), but i believe it can be done correctly with quality at $100 psf. Caution: Hire a builder. doing this on your own with no experience in the industry is a disaster. You could probably save $15 psf by doing so, but is $30K worth it???

[musicman]

if you're only looking for 2000 sq ft. i'll bet you could build it for 110-120k. The price of the property will be your big variable. where are you looking to build?

[TheNiche]

if you're only looking for 2000 sq ft. i'll bet you could build it for 110-120k. The price of the property will be your big variable. where are you looking to build?

At 120k, a 2,000sf home would cost $60psf to build. I think that's a little low...more on par with the per square foot cost of low-income apartment housing.

Seriously, expect to pay about $100psf to a contractor right off the bat for a finished single-family or detatched townhome product. That value can always go higher depending on the quality of buildout, but that much is entirely up to you. And if you don't know what you're doing, it probably is best to hire a good contractor...especially if you can create more value at a more typical job.

[musicman]

At 120k, a 2,000sf home would cost $60psf to build. I think that's a little low...more on par with the per square foot cost of low-income apartment housing.

if you do you the contracting, that is within a doable budget. of course this doesn't include any perks that you decide are important. Remember i'm NOT including land.

Edited September 22, 2006 by musicman

[TheNiche]

if you do you the contracting, that is within a doable budget. of course this doesn't include any perks that you decide are important. Remember i'm NOT including land.

It might be doable assuming that very few mistakes are made and that the process goes very smoothly...but the end result would not be built to compete quality-wise in the marketplace. We're talking about no-frills.

Remember, good contractors are able to keep some of their costs down through good project management and economies of scale. Howard probably won't be working with economies of scale, so that's one strike against him that he can't really help.

[musicman]

It might be doable assuming that very few mistakes are made and that the process goes very smoothly...but the end result would not be built to compete quality-wise in the marketplace. We're talking about no-frills.

Remember, good contractors are able to keep some of their costs down through good project management and economies of scale. Howard probably won't be working with economies of scale, so that's one strike against him that he can't really help.

agree. a good friend of mine did this in his retirement years and really built some quality homes i.e. homes that you'd NEVER see a builder build. no particle board, no flex duct, etc. I was always amazed at his skills particularly when designing a home to where lumber cuts are minimized. he was an inspector prior to retirement.