buy and build or just buy land and wait ?

[lonedog]

I am 3 years into retirement completely out of debt with $900,000 portfolio and $40,000 per year in pensions and social security. I am thinking about selling my house and building another one that will be more user friendly as my wife and I age. I will need to put $80,000 with the proceeds from my house sale to build what I want. My question is this: Given that the real estate market is cooling off, should I just buy the land and wait a while before building or should I go ahead and build now? There is no pressing need to build at the moment.

[REWahoo]

If you think the slowdown in your area will make the folks in the building trade more agressive and willing to sharpen their pencils when they bid, it might not be a bad idea to wait. You will also probably have better luck in getting the work done within a reasonable time schedule if they aren't backed up with other jobs.

The slowdown could soften some building material cost as well.

DISCLOSURE: We bought land and planned to wait until just prior to retiring to build. Got new house fever and went ahead with it, six years before I became voulntarily unemployed.

Buying the land and building the house is a 2 to 3 year project.

Don't sweat the small stuff.

[cute fuzzy bunny]

I'd buy the land and wait.

If the housing market in your area cools off, you'll be able to swing a better deal on the building work.

If the housing market warms back up, in a couple of years your house could be worth a good bit more.

Worked out great for the guy across the street from us in the cul de sac. Bought 30 acres about 5 miles away about 6 years ago when you could fish around in your pocket for enough to buy an acre and his house here was worth about $150k. He's just about done building now (project started about 7 months ago), his house is up for sale for $430k and he'll get a buyer in a week or two at that price, and half of his stuff is already packed in boxes and in a huge trailer out in front of his house (his business owns it).

He sells the house, rents back for a month or so, finishes the new place, finishes packing, pays off the construction loan, pockets about $150k.

Given that the real estate market is cooling off

I don't think that's a given. It has cooled off, and most people think it will continue to cool off, but past performance blah blah blah.

[tryan]

Buying the land and building the house is a 2 to 3 year project.

This is true ... we're in our 3rd year of the process (building water front). Builder would not sign a performance clause in the contract since he's "turning work away". Needless to say he's roughly 6 months behind schedule with no end in sight.

I'ld wait for the builders to get hungry.

[lonedog]

The more I think about it, I think I will do nothing, keep the money in the bank and enjoy life. I will need get a more retirement friendly house at some point but who knows how long that will be. I might not live that long then my wife can take the insurance money and do whatever she wants.

[thefed]

Originally Posted by tryan

This is true ... we're in our 3rd year of the process (building water front). Builder would not sign a performance clause in the contract since he's "turning work away". Needless to say he's roughly 6 months behind schedule with no end in sight.

I'ld wait for the builders to get hungry.

does a performance clause relate to the timeframe in which they finish...or what? I've not heard of that




jason

[FlogBlogger]

Originally Posted by lonedog

I will need get a more retirement friendly house at some point but who knows how long that will be.

Right. So buy, build and enjoy...don't wait. Life's short, when you can afford it!

FlogBlog

[tryan]

does a performance clause relate to the timeframe in which they finish

Yup ... what I've done in the past is ask the builder WHEN he can deliver the specified product. Then I pay a BONUS (5-10%) if he hits the date. BUT a penalty is assessed for each day he's late ($500-1000/day).

A hungry builder will never pass this up.

[Nords]

Originally Posted by tryan

Yup ... what I've done in the past is ask the builder WHEN he can deliver the specified product.* Then I pay a BONUS (5-10%) if he hits the date.* BUT a penalty is assessed for each day he's late ($500-1000/day).*

A hungry builder will never pass this up.

So, the faster he goes, the more money he makes?

Speaking from the perspective of two decades in submarines built by the lowest bidder under similar contractual obligations, where's the incentive to maintain quality/safety?

[cute fuzzy bunny]

I saw a house built under one of those contracts. The foundation failed in one corner where the builder had run out of either sand or cement and didnt have time to wait for another delivery. In several areas the siding nailing missed the studs by 3", top to bottom. Almost nothing was level or plumb.

Ick.