Is It Cheaper To Build Or Buy?

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    It is time to start making plans for moving into the house of your dreams and getting all of your things organized. But tell me about the house of your dreams. Is it an already-existing home that's been renovated, or do you build it from the ground up? Does a newly built structure accommodate both your requirements and your financial constraints? Do you have any idea off the top of your head whether it is more cost effective to buy or build a house?

    It's not easy to find the ideal home for your family. There is a lengthy list of factors to take into account, including the cost, the style, the amount of space, the neighborhood, and the schools. It can be difficult to find an existing property that meets all of your requirements, which is one of the primary reasons why so many people choose to construct their own home instead. Nevertheless, comparing the costs of buying a house to those of building one can be a difficult task. The following are some things that should be kept in mind. At MJS Construction Group, we have a selection of the very best home builders, so that we can turn your house into the home of your dreams.

    The Costs Associated with Building Your Home

    When buying their first home, many people decide to take advantage of a fantastic idea that involves buying an existing home and modifying it so that it satisfies all of their requirements and preferences. Home improvements can increase a property's value and give the homeowner greater equity in the asset.

    You are provided the opportunity to either continue living there or sell it for a proawafit. There are a lot of young couples who live in the home they are fixing up and flipping in order to make money while they are making the renovations. It will be difficult for you to find a home for less than 150,000 dollars that does not require a significant amount of remodeling work. If you are the type of person who has no interest in fixer-uppers and wants to move into your ideal home that is ready to use from the very first day, then you should not consider purchasing a fixer-upper.

    The process of getting ready to build a house is significantly more involved. It is not as easy as selecting a location and referring to a picture in a publication. We have made the decision to provide you with all of the information necessary to construct a house. Examine the list to determine whether or not you have the resources necessary to build your own home rather than purchasing one that is already built.

    Buying Land

    Purchasing some land is necessary before beginning construction on your home. Depending on the specifics of the situation, this predicament can be viewed as a two-edged sword. In the event that you are looking to develop in the state of California, you will have a difficult time locating open lots in areas such as San Francisco. Even if you are successful in finding a sizable piece of land, you can bet your bottom dollar that it will set you back a sizeable sum of money.

    If you want to settle down in one of these highly populated areas, you might as well toss your hopes and expectations in the trash and begin looking for homes that have already been built and are on the market. Moving to states such as Maine, on the other hand, makes it possible to purchase land at an affordable price and to construct a home. A few acres of land in Maine can be purchased for as little as $20,000 in some cases.

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    Rural areas will almost always be more affordable than plots in the suburbs of bustling cities, but it is important to consider all of your requirements before making a purchase decision. Because of this, if you are employed in the technology industry in Silicon Valley, it is most likely a better idea to buy a home than to construct one for yourself.

    On the other hand, constructing your own house may provide better value for your money if you live in a region of the country that has a lower population density or if you work outside of a major city.

    Building Loans

    If you intend to purchase a home that already exists on the market, purchasing a home is as simple as submitting an application to the bank for a loan that has already been pre-approved, and then searching for a home that falls within your budgetary constraints. However, lenders do not issue mortgages on plots of open land.

    As a direct consequence of this, you will be required to submit an application for a construction loan to a financial institution or other lender. These facilities are more analogous to a credit line than they are to a mortgage in terms of their structure. You get the loan from the bank, and then you take money out of it based on how much money you need for your current building expenses, keeping the rest of the money in the account.

    You will only be required to pay interest on the amount of money that you actually spend, and the term of the loan will determine how much time you have to finish building. The majority of construction loans include a drawdown facility that lasts for a period of 12 months before the lender closes the account and begins charging you for the money that was used during the loan period.

    There are some companies that provide building loans that offer moratoriums on their loans. If you implement this strategy, you will be able to enjoy the benefit of making no payments to the lender during the term of the loan. After the allotted time has passed, the loan is repaid in the same manner as a mortgage, namely, by making regular payments toward the principal balance.

    You are free to put the money toward any expense connected to the construction of the building, such as the cost of laying the foundation, building the frame, or installing the roof. Before transferring funds into your bank account for the purpose of putting them to use in the building of your home, the majority of lenders require that you first present an invoice for the services of a supplier or contractor.

    The majority of the time, construction loans will cover the costs of building on land that already has utilities and sanitation infrastructure in place. You will, however, need to submit an application for a raw land loan if you plan to develop land that does not already have any services in place.

    Lenders consider these transactions to be high risk, so you should be prepared to make a down payment that is up to fifty percent of the value of the land. However, undeveloped land is available for a significantly lower price than developed property, and it is likely that you will be able to purchase it at a more reasonable price that will more than compensate for the larger initial deposit.

    Getting on the Grid

    When it comes to managing your utilities, purchasing either new or existing construction can save you both time and money. All that is required of you is to keep up with your regular payments, and the electricity will continue to flow throughout your home. On the other hand, if you're building on undeveloped land, the cost of the project could skyrocket at this point.

    Let's go over the necessities for the new development on your land, starting with the utilities that need to be installed.

    • Waste Management - Research conducted by Home Advisor indicates that the price range for installing a septic tank is anywhere from $2,738 to $8,186 on average.
    • If you live in an area of the country that experiences cold winters, such as Maine, then you will require heat for the months of December through March. Depending on the square footage of your home, the installation of an HVAC system for the entire house can set you back anywhere from a few thousand to fourteen thousand dollars.
    • Electrical Systems In order to set up the lights and electrical outlets in your home, you will need to hire licensed and trained electricians to do the work for you. This project could easily set you back a few thousand dollars; make sure you shop around to various contractors to get the best deal.
    • When they purchase their first home, many people are surprised to learn how much money landscaping can cost. It is highly likely that you will not be content with a simple patch of dirt for your garden; therefore, it is imperative that you work with a landscaper. Because the cost of plants and landscaping can quickly become exorbitant, you should make sure to obtain competitive quotes from a number of different contractors.

    Living Off the Grid

    With the current state of infrastructure in the United States, many new homeowners are making a move to take their home off the grid. What does this mean? Going off the grid means that you no longer rely on local services for your utilities.

    Some homeowners choose to do a partial off-grid installation. They may decide only to install renewable solar power in their home while leaving the municipal water supply connection.

    However, some people decide to drill wells for their water and use composting toilets for sanitation. This strategy takes them off the grid entirely.

    This strategy works for both new builds and existing structures. Here’s what you need to make your home an autonomous environment.

    • Installing solar panels in your home will result in the greatest increase in cost associated with switching to renewable sources of energy. The installation of high-quality solar panels throughout a house can run a homeowner anywhere from $6,000 to $14,000.
    • Batteries: You'll need a bank of five to ten deep-cycle batteries, each of which must have a capacity of one hundred milliampere-hours or more. One of these can cost as much as $200 by itself.
    • Inverter – an inverter with a capacity of 5 kva that is able to meet the demands of your home's electrical needs will cost you between $500 and $1,000.

    Hire a Contractor or Do It Yourself?

    If you choose to construct your own house, you need to ask yourself if you intend to handle all of the construction work by yourself. Or you are employing a third party to carry out the work on your behalf. Changing the flooring, refurbishing the HVAC system, and painting the walls are all examples of do-it-yourself projects that can be accomplished when it comes to improving an existing home.

    However, in order to construct a home from the ground up, one needs the expertise of engineers, architects, and electricians. If you do not possess all of these skills, you will be required to seek the assistance of a professional; however, the hourly rates charged by high-quality contractors are typically quite expensive. Are you interested in shared accommodations? Put an end to your search! You can put your trust in MJS Construction Group.

    Frequently Asked Questions

    Townhouses don't appreciate nearly as fast as traditional homes because they don't entail the same amount of land. While most townhouse-owners don't care about their minimal yards – or the complete lack of them – it means appreciation takes longer.

    Townhomes are typically not soundproof. The sharing of walls and sometimes an HVAC system means many familiar, daily-living sounds can be easily heard even when they're not happening in your home.

    As a condo or townhouse tenant, you may recognize the sound of neighbors' voices through the walls or their footsteps above. Sound is created when something vibrates, and it must travel through objects, liquids or air to reach your ear.

    Convenience. Many people find townhouses to be easier to own than single-family homes. Since there's no yard, there is practically zero outside maintenance required of the homeowner.

    Urban Townhomes are three storeys, with a foyer, family room and garage access on the main floor. The second floor features the living room, dining room, powder room and eat-in kitchen, as well as a balcony that spans the width of the home.

    Making the Right Decision

    Evaluate the Pros and Cons of a New Home

    Will you be okay with the distance from the city center, which is typical for newly built homes?

    Do you have the patience to wait twenty years for young trees to reach their full maturity, and are you willing to coax a new lawn into existence?

    Will the new subdivisions' tendency toward uniform design drive you completely insane?

    In most cases, newly constructed homes are constructed on top of one another. Does the proximity to you and the potential lack of privacy bother you?

    Evaluate the New Neighborhood

    Will you be okay with the distance from the city center, which is typical for newly built homes?

    Do you have the patience to wait twenty years for young trees to reach their full maturity, and are you willing to coax a new lawn into existence?

    Will the new subdivisions' tendency toward uniform design drive you completely insane?

    In most cases, newly constructed homes are constructed on top of one another. Does the proximity to you and the potential lack of privacy bother you?

    Be Agent-Savvy

    Keep in mind that the real estate agents working to sell new homes work for the builder, not for you, and that they do not represent your best interests. They are not concerned with assisting you in making the best choice for you and your family; rather, they are trying to meet a quota.

    The manner in which real estate agents handle new subdivisions is governed by the laws of many states. If you have a real estate agent, you should let him know right away that you want to look at new construction homes. If he does not accompany you on your first visit to any new subdivision, the builder's sales rep will receive the full commission if you end up purchasing a home in that neighborhood. He is required to do so.

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    Get the Skinny on Your Builder

    Check to see if there are any complaints lodged against the company that your builder works for at the Better Business Bureau.

    Inquire with your real estate agent concerning the builder's standing in the neighborhood.

    Pay a visit to some of the homes that your builder has previously built and inquire with the current owners about how well the quality of the craftsmanship has withstood the test of time, daily use, and the elements.

    Upgrade the Smart Way

    Upgrades are extremely profitable for builders because they only require a moderate investment in terms of both materials and labor. Due to the enormous markup, you should investigate each option you are thinking about to determine whether or not it would be more cost effective to bid it out after you have moved in.

    In order to turn a profit, builders, in general, have to sell their wares quickly. If you find yourself in a bind while haggling over price, try asking them to include the upgrades you want at a discounted price or for free. This is a way to get more value out of the deal that is agreeable to both parties.

    Don’t Skip the Inspection.

    Never make the mistake of assuming that just because a house is brand new that it is free from flaws of any kind. Make it a requirement that the final inspection be carried out by a qualified expert that you have contracted separately.

    If at all possible, have the house inspected during each phase of the building process, when it is easier to identify any potential problems. If the builder has a problem with this, you should take that as a warning sign.

    Be aware that the municipal inspections for code violations are not even close to being as thorough as the inspections performed by independent professionals.

    Protect Yourself with Warranties

    Every new home comes with an implied warranty from the builder, which states that the builder is responsible for repairing any major flaws in the structural integrity of the home.

    You need to make sure that the builder will cover any flaws in the craftsmanship with a warranty that extends for some period of time after you move in (like a year, for instance).

    This warranty really ought to be backed up by some kind of insurance.

    Make sure that any warranty you receive states clearly what is and is not covered, as well as any limitations that may apply to damages.

    Bring out your real estate attorney once more and have her look over the warranty to make sure that it is in compliance with the law. This will provide you with additional peace of mind, which is something that we highly recommend.

    Pros of Building a House

    Okay, now that we covered pricing, let’s look at the specific benefits of building a house:

    • Customization. If you build your own home from the ground up, you will have the opportunity to customize every aspect of it to reflect your personality, preferences, and way of life. This includes everything from the floor plan, cabinets, and flooring to the sinks, lighting, paint colors, and doorknobs. Even mass-produced homes built within subdivisions offer a degree of personalization in terms of the paint colors, flooring alternatives, and specific finishes that can be selected.
    • Low to no competition. Existing homes had been listed for sale for an average of 22 days in August of the year 2020. 4 Due to the rapidity with which homes are removed from the market, it can be difficult to find the ideal existing home at the most affordable price. However, if you already own the land on which you want to build your home, you won't have to worry about any other buyers.
    • Reduced need for upkeep. Because new homes are constructed in accordance with the most recent building codes and are outfitted with the most cutting-edge technology, you probably won't have to worry about major repairs or severe maintenance issues for the first few years of ownership. This means that there won't be any leaking roofs or malfunctioning HVAC systems. In addition, many companies that construct homes provide some sort of limited warranty in case something breaks.
    • Reduced expenditures on energy. Woot woot! New homes typically come equipped with the most cutting-edge energy-saving systems and materials, which almost always results in lower monthly energy costs.
    • Newness. As the first owner of the home, you have the unique opportunity to start from scratch and benefit from brand-new systems, finishes, and fixtures.

    Cons of Building a House

    We all know that one of the drawbacks of building a house is that it is more expensive, which isn't such a big deal if you are able to set aside enough money for it in your budget. To cover all of our bases, however, let's consider the following additional drawbacks to building a house: Check out our selection of dual occupancy builders to see if one of them is right for you.

    • More time spent waiting A new home construction project will take an average of seven months to complete, and that time frame does not include the time needed for planning and gaining approval. 5 Because of this, it is highly likely that you will be without a place to live between the time you sell your current residence and start construction on your new one. Because of this, you'll need to make sure you have enough money saved up to cover the cost of renting a place to live before you can move into your newly built house.
    • It will be more difficult to negotiate the price. The majority of purchasers go into a real estate transaction with the intention of cutting costs. When it comes to newly built houses, things work a little bit differently than they do in the market for previously owned homes. If your real estate agent does not bring a creative mind to the negotiation table, there is typically not much room for negotiation with a builder regarding closing costs or the purchase price of the property. Nevertheless, purchasing an already-built house is likely to give you a better return on your investment.
    • Noise and mud. If you build a house in an area where other new houses are also being constructed, you may find that your daily commute is disrupted by construction noise, increased traffic, and clumps of dirt. If your tolerance for the amount of noise and messiness is on the lower end, you might want to think twice about moving into this neighborhood until other homes are finished being built and things have a chance to settle down.
    • Stress. When you build a house, you will need to purchase land, choose a home design, select flooring, fixtures, cabinets, countertops, interior trim, exterior trim, and so on and so forth. These are just some of the many decisions you will have to make. You'll need to accomplish all of this while adhering to your financial plan. It takes a lot of time and effort to successfully manage all of the aspects that go into building a house. It is important that you do not underestimate the level of stamina that will be required of you in order to ensure that everything is completed in the correct manner.
    • Hidden costs. The dollar signs that you see on the sticker for various items, such as countertops, fixtures, and appliances, are just the tip of the price-berg. Upgrades can quickly drive up the price of your new home, and depending on the terms of your contract, those costs may or may not be rolled into that price. Take precautions by limiting your budget to purchases that can be paid for in cash. Also, make sure you don't overlook any post-move expenses, such as landscaping or blinds, as these will sneak up on you as well.

    Talking it over with an experienced real estate agent is the best way to decide whether you should buy an existing home or build a new one from the ground up. Your real estate agent is the best person to advise you on where to find the best deals in established neighborhoods as well as emerging communities. In addition, they will assist you in determining whether it is in your best interest to construct a new home from the ground up or to purchase an existing one.

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