To build or not to build...

[eytonxav]

Our first home was an older pre-existing home that essentially became a custom rebuilt home. Sometimes there is a lot to be said about getting it exactly the way you want from the get go. While I would probably enjoy the process of doing a custom build, I doubt the timeframe, cost and construction headaches would make this something I would want to entertain at this point in my life.

 

[someguy]

Thanks to everyone for the thoughts and advice. It's very helpful.

If I had instead posted that the DW loves cars and would like a brand-new, custom-ordered [insert BMW/Jag/Mercedes/Porsche], I imagine the majority (or even every) reply would have been "don't do it--waste of money". To those who said "do it" to the custom house but would say "don't" to the car...what's different? It would be a lot more feasible to sell the fancy car (taking a hit for both new car depreciation and for the expensive custom order) if priorities or finances changed.

 

[REWahoo]

To those who said "do it" to the custom house but would say "don't" to the car...what's different?

Houses usually appreciate, new cars usually don't.

Oh, and you can't live in your car until you sell...at least not comfortably.

 

[Bestwifeever]

Once we get fully into retirement mode (kind of taking a test sabbatical for now from project work) we plan on moving to a final location and building a final home. ...

We are hoping/planning on 8-10 years until retirement. As far as how long we'll stay, it's hard to say. DW also periodically (although not as frequently) talks about moving to CA, or HI, or southern Spain, or LAM. She tends to get tired of something and want a change -- sometimes any change....

Okay, given these comments, I vote against building. You expect to relocate in retirement in 8 to 10 year, so subtracting at least a year for the building as you're still figuring this out, you'll be building and then selling a new house that would appeal to limited buyers (vs the homes more in keeping with your neighborhood) so possibly you would lose money on it--and then you would build again at your retirement locale? I think I'd just try to wait this out.

And your spouse "tends to get tired of something and wants a change -- sometimes any change." Which maybe is what this new house would be, just satisfying her need for a change. Can you just distract her with repainting and new bathroom vanities, or new landscaping with a fountain, or something until she gets over this idea?

Good luck--if you build, I'm sure it will be awesome, but I'm voting no just based on your own comments.

 

[RunningBum]

To those who said "do it" to the custom house but would say "don't" to the car...what's different?

That's a good question. Part of my answer is that I view a car as a way to get from one place to another, so beyond reliability, a certain level of comfort, and the capacity to carry the people and cargo I transport, it doesn't matter that much. If someone is really into the driving experience, I wouldn't criticize what they choose. Too often a car is a status symbol, and that's where I think it becomes a waste.

Another big reason for me is the ability to tailor a house for particular needs. If I want a room for trains, a pool table, a grand piano, or an indoor lap pool, for example, I can splurge on that. If I don't want to pay for formal rooms or a home theater (not standard, but sometimes comes these days with houses that have other extras(), I can omit those. I can design it in mind for the type of entertaining I do (large crowds, smaller parties, or little at all) and get the right number of bedrooms based on family needs. My property has a great view, and I was able to maximize it with my plan.

In short, you can build a house with a few luxuries you want without paying for luxuries you don't. Or at a different level, you can build an economy house but with a few extra comforts or needs that are important to you.

The appreciation aspect is debatable. It's true that houses appreciate, but a specialized house may not appreciate as much, or may be tougher to sell, because you have to find a buyer who appreciates the extras you did add without missing the ones you skipped. To protect against this you may still want to keep smaller formal areas, and even if it's just the two of you and a rare overnight guest you should have more than 2 bedrooms unless its a small cottage or cabin.

 

[someguy]

car and house

Houses usually appreciate, new cars usually don't.

I think you may be applying traditional wisdom to a non-traditional situation. At least in this part of the country, 99 times out of 100, a "typical" (cookie cutter in planned community) brand-new house will see an immediate depreciation hit, much like a new car. Except in this case, the depreciation hits as soon as the house is mostly completed, not when someone first buys it. I don't know this, but I suspect the two main reasons for this depreciation are 1) the advantage of getting exactly what you want is lost and 2) the new home builder pads the build-to-order price to cover contingencies. Any way, a cookie-cutter house that a local volume builder here will build you today for $250K would immediately resell for perhaps $225-$235K.

This depreciation is further an issue when you get into full custom builds in less cookie-cutter/planned communities. The builder probably loses any economies of scale, and they can't reuse plans like a copy machine. And, buyers' expectations to get exactly what THEY want goes up.

As a more specific example, one area we're looking at is mostly built out, but has one lot that someone bought to build on later, but ended up not being able to. The average resell price in the area (lot + house) is approximately $150/square foot. I estimate our cost just to build the house will be around that mark. So out of the gate, we're down anywhere from $60-$120K (i.e. cost of lot). There may be a modest premium to be gained by having a newer roof/HVAC/etc than all the surrounding homes, but there is also the somewhat deviant style and significantly smaller size cutting the other way.

As far as appreciation goes, RunningBum has hit the nail on the head. As we all know, history is no predicter of the future, but cookie-cutter homes built in our neck of the woods 10-15 years ago are selling for about what the original buyer paid to have them built. And they typically are going to have had money put into them in the meantime -- new kitchens, finished basement, landscaping, etc. Higher-end semi-custom and full custom are selling below what was originally paid.

PErsonally, I don't consider a primary residence as an investment. So I think my car-house analogy holds water. Most of us need a house and most of us need a car. In my hypo, we are considering spending more than necessary to move from a need to a want. Purchasers of both items pay a premium for brand-new in the form of an immediate depreciation hit. Purchasers also take a hit for going more custom, too. Depreciation is pretty much guaranteed for the car and has been the case for houses here, too. Admittedly, during other periods, modest (e.g., 3% annual) appreciation of houses is possible.

 

[Midpack]

We are hoping/planning on 8-10 years until retirement. As far as how long we'll stay, it's hard to say. DW also periodically (although not as frequently) talks about moving to CA, or HI, or southern Spain, or LAM. She tends to get tired of something and want a change -- sometimes any change.

Yeah, that changes my earlier reply...best of luck.

 

[travelover]

Sounds like your wife wants it, so you don't have a choice. I've never had a house built, but my observation of those that did convinced me that I never want to. YMMV

 

[REWahoo]

I think you may be applying traditional wisdom to a non-traditional situation.

She tends to get tired of something and want a change -- sometimes any change.

You're wasting your time asking for our advice - you're doomed.

 

[jclarksnakes]

From a purely financial standpoint the expensive luxury car and the custom built home are both poor choices. But there is more to life than money. If you have the money spend it on whatever it is that makes you, and perhaps more importantly your wife happy. In your case I do think the relatively short length of time you will be in the house makes it a poor choice.

 

[UserRequested]

If you got the money and will take great pleasure in living in a house that you designed and built, then go for it.

 

[daylatedollarshort]

Personally, I would not have a house built again, but my husband agrees with that so for us it is an easy decision. We'd rather live light, small and be free to travel. Having a house built is really time consuming.

But since this is something important to your wife and you do not seem all that opposed and can afford it, going ahead with the house might make her happy enough that you should consider going along with it.

 

[Dave_S]

I recently did a major rennovation and addition to make our house our dream home and i can tell you that if you can find a nice home in inventory somewhere you'll get a much better deal than building one. Existing homes are all pretty much "on sale" everywhere, but builders and contractors want top dollar for their services these days. You can find a much better value in a pre-owned home.

 

[Amethyst]

I wouldn't build a house unless both parties very much want to.

Would all the "DW always win" and "if the wife wants it, you must get it to have peace" answers change if the male spouse was the one who wants to build?

Amethyst

 

[Badger]

I went through the same thing a few years ago. I was already in the house when we married and my wife didn't feel it was really "ours". She also tends to like change frequently and although it doesn't always work out well she has a good attitude and rolls with it. On the other hand I research and plan more to avoid "buyers remorse".

I researched places all over the country where we might want to retire to when the time came as well as we visited numerous homes being built in developments with lots of amenities.

The bottom line was it would be very expensive for us to build due to HOA, tax increases, etc. We also couldn't find a better location than where we are at the beach, a few blocks from fire and police dept., 2 miles from a military base, 20 minute drive to a large college and a large University, and in what has become a very nice neighborhood in a small town near a large city. Our house is now about 1700 sqft. All the other houses on our street have been torn down and replaced with McMansions (no tax increase for us but property value has gone up tremendously).

Our solution has been to do some remodeling and landscaping during the past 10 years that include total kitchen remodel, total bathroom remodel, 20'x10' sunroom addition with tile floor, new driveway that curves around to the back yard, landscaped backyard with 24'x32' patio, 3 tiered pergola and hot tub, citrus, fig trees, and blueberry bushes, and an organic raised bed garden. Plans are being made for a large paved walkway and front patio as we complete landscaping of the front yard. Some changes I did myself and others were hired out. Total cost will have been about 60k. She had total say in what and how it was to be done. So now, in addition to having the title changed into both our names, she feels better about the house being ours.

Now we will spend our retirement money on playing, travel, entertainment, and good food.

Cheers!

 

[someguy]

Very good point, Amethyst. I realize every couple has a dynamic that works for them, but I think DW and I are pretty far from traditional American gender roles.

Would all the "DW always win" and "if the wife wants it, you must get it to have peace" answers change if the male spouse was the one who wants to build?

Amethyst

 

[Amethyst]

I was struck by the number of respondents whose comments implied that wives are childish, pettish creatures, who will make a husband's life miserable unless they get what they want - like marriage jokes from Grandpa's day and age. In fact I started wondering if everyone was joking and I just wasn't getting it (not uncommon).

A.

Very good point, Amethyst. I realize every couple has a dynamic that works for them, but I think DW and I are pretty far from traditional American gender roles.

 

[Katsmeow]

We planned to build and even bought land and worked for months on a design with a builder. At the end, we decided it didn't economically make sense. Basically building and getting exactly what we wanted was going to cost substantially more than buying an equivalent already built house that was a few years old, even after we did some remodeling of the existing house we ended up buying (and the remodeling was discretionary).

You pay a lot for the privilege of building. One thing that was clear when we were working on the design was that even if you build you never get exactly what you want in all respects. There are always constraints. Some are financial (most people have a budget) while others might be based upon lot size and layout or legal limitations (zoning, HOA, for example) or physical requirements of the site.

I also have seen a lot of home construction and I've seen way too many situations of bad construction where things go wrong. I didn't want to be in that situation. I was just very reluctant for that reason. I eventually got to where I was going to build anyway, but the reason we ultimately didn't was the financial one. I just didn't want to spend all that extra money to build my own house.

 

[travelover]

I was struck by the number of respondents whose comments implied that wives are childish, pettish creatures, who will make a husband's life miserable unless they get what they want ............
A.

I suspect that they were joking, but like any joke there has to be a grain of truth to make it funny. Not that I've ever seen it.

 

[Brat]

My husband is an architect, I have survived two personal custom homes. If you intend to stay in your community only 8-10 years don't do it. The project, from the time you have a contract on a vacant lot, design a house, build a house will easily take a year. Add to that you 'thinking about it' and lot search time... two years.

Save that $ for your retirement home.. encourage her to spend her energy researching that, figuring out what she would want and what your needs will be.

If you do go the custom house route pm me for practical advice.

 

[bld999]

My husband is an architect, I have survived two personal custom homes. If you intend to stay in your community only 8-10 years don't do it. The project, from the time you have a contract on a vacant lot, design a house, build a house will easily take a year. Add to that you 'thinking about it' and lot search time... two years.

Save that $ for your retirement home.. encourage her to spend her energy researching that, figuring out what she would want and what your needs will be.

If you do go the custom house route pm me for practical advice.

Wow, that's got to be record territory, I bet he went thru a few rolls of flimsey on those...

The permit and plan review time in cities is often 4-6 months, esp. after the crash when municipal layoffs hit. Then the builders revved up and the staff for plan review is short, as the design and building orgs are in many cases hiring the same people as the building departments, but earlier.

OP, I looked at your profile to see if you had the benefit of living rural, which often makes the permit stuff easier. Couldn't tell, but I like your "state" anyway. Thinking of putting "rest" as my state.

 

[kaudrey]

My parents built a custom home when they retired. My dad was an electrical engineer, and did most of the architectural drawings himself. He also "helped" the contractor with the electrical work and other things (he likes to build stuff). They came in on budget but several months late. They downsized, and then realized a few years later that they downsized a little too much, as they didn't have a room big enough to host their bridge parties - they ended up building a den onto the house.

It was definitely stressful for them. I remember talking to my mother one day and she was about to go crazy looking at faucets and cabinet door handles. So many little decisions! But, they've been in it for over 15 years now, and they still love it. I will say that they did some smart planning ahead - they built the master bedroom on the ground floor, which is coming in really handy now that my mother is having hip problems and is not extremely mobile...

 

[rodi]

I wouldn't do it. But then again, our last building project got us very familiar with the California Contractors State Licensing board, the aribitration process, the state attorney general's office, learned what an administrative court is, how to collect on a bond, what a mechanics lien is, etc.

Lets just say we're a lot poorer than we would have been, and the original GC is no longer licensed.

(Some of our loss was in legal fees, cost of hiring a new contractor mid-project, etc.)

If you do go forward some advice:
- Consider being owner-builder... In other words - hire the subs yourself, that way you have more quality control over the contract with them and know they are paid. (avoiding mechanics liens from subs since you have direct contracts with them.)
- Do NOT have arbitration clauses in your contract(s). We found out the hard way that if the other party doesn't pay their half of the arbitration fees (fees are pricey if it's more than $50k in damages) then YOU have to drop it or pay their side to move forward. We lost a good chunk pursuing arbitration that never happened because the contractor didn't pay his share of the fees. (Lost it in lawyer fees and sunk arbitration fees.)
- Pay attention on the job site. Daily. Supervise. Supervise some more. Be nice to the subs... they're the ones doing most of the work and will take more care if they like you.
- Any issues with your contractor - put it in writing. If you talk to them verbally, follow up with an email capturing that discussion (like minutes). Email works fine if you retain the emails. Our emails discussing work progress, payments, demands for payments, etc formed a SOLID case. Our lawyer and the state AG prosecutor were impressed.

We ended up with exactly what we wanted (a handicap accessible casita for my in-laws to live in.) But it cost us $200k more than planned (original budget was $250k... so yeah... that hurts). It cost us a lot of stress. And the legal issues consumed us for several years.

So I'd advise against custom building. But I'm coming from this jaded perspective. This hurt my nest egg a lot.

If you do move forward - I agree 100% with the no-granite thing. We redid our kitchen with stainless steel counters and I LOVE the ease of use and the look. It's not as modern as you'd think - we were inspired by a kitchen tour at Hearst Castle... if it worked in the 20's... why not now.

 

[Brat]

Home owner's planning for the 'perfect house' takes time. As an earlier poster mentioned not thinking about space for bridge parties, think about room at the dining table for a feast dinner, how and where you enjoy watching TV. The size of the master bed and bath rooms. Guest rooms.. how many, and how many you need for resale value (an extra bedroom can be used as a den by retirees). Remember you are starting from scratch, think about what you have now that works well because you will want that incorporated in the new house. Building that list of needs and wants can take months.

Finding a good lot, preparing plans, getting permits (plan checkers are frustrated architects, they need to find SOMETHING), negotiating with builders, constructing the house... and then there is landscaping!

If you don't intend to live in that house for 20 years don't do it.

Regarding the be your own general contractor.. the problem that will occur is that you don't know who the good sub-contractors are in your community. For example, you will need an excavation contractor, a foundation contractor, plumbing contractor, framing contractor.. the list goes on. Then there is the coordination of the sub contractors, the waste lines need to be laid before the foundation contractor gets well along.. and you need to be able to confirm that the grade of the sewer line is correct. My husband was the plumber for our first house, we had a general contractor on the second and caught the plumbing sub ignoring the drawings because he 'knew better'. If we hadn't caught that the slope of the line to the sewer wouldn't have worked.

Another sub known to take short cuts is the siding contractor. The siding contractor on the house next door to us installed lap siding face in because he thought it looked better! It dripped in, not out, as a result. On another of DH's projects the siding contractor slipped the underlayment along as he worked, there was no underlayment.

Anyone who acts as their own general contractor really needs to know construction IMHO.

 

[tulak]

We added on to our house years ago. Too young and inexperienced, but luckily, everything turned out ok.

In retrospect, we should have paid for an independent private inspector. Someone that could make sure the contractor/subs weren't taking short cuts in areas where we have no expertise, which at the time was pretty much everything.

Our build quality turned out ok, but I think it would have been much better if we went that route.