Let’s talk about buying your dream home and making your real estate investing dreams come true!
When most people think about investing in real estate, they think about getting as good a deal as possible.
They tend to think less about what they want specifically, and how they can make the most out of their money.
In today’s incredibly hot real estate market, there is one thing that you should absolutely consider.
Real estate investing and owning your dream home don’t always have to be about scouring the housing market and looking at hundreds of different homes until you find the one that’s as close to what you were wanting as possible.
In fact, in today’s market where there are far more people buying than there are selling, it might not be possible for you to get your dream house in the area you like.
For people who find themselves in those situations, they should consider building instead of buying.
Now there are many pros and cons on both sides, but building your dream home from scratch can often be an attractive and affordable option for you to get your dream home while making an excellent investment.
Price is obviously one of the main things to start considering.
The first question people usually ask when comparing buying or building a home is what the price differences are.
In general, in high-demand areas the price of building a home from scratch on top of the price of land will be more expensive than building a pre-existing home on land that is already included.
However, realistically high-demand areas are also currently low on inventory (due to the high demand).
So, it’s very possible you wouldn’t be able to buy a pre-existing home anyway and may need to seriously consider building your home to make it possible.
Building a custom home costs around $150/ square foot, so for a 2,000 sq. ft. house, the price would be approximately $300,000.
The National Association of Homebuyers (NAHB) reports that the average cost for a buildable lot of land is $85,139, including the costs associated with financing the lot.
Depending on the area and what inventory is available will help you decide if those costs are comparable with anything you’d be able to find otherwise.
If you decide that you’d prefer to have your custom home built in order to truly achieve your dream home, there are a number of benefits that you will receive both as an owner and investor.
One of the most obvious benefits is, of course, total control and the ability to have your dream home built according to your exact specifications and desires.
Instead of searching for a home that checks as many boxes as possible, you can have a home built that checks every single box you’ve ever imagined (within reason).
You don’t have to compromise the way you would with a pre-owned home—from the floors, to the finishes, to the appliances, to the layout and flow from room-to-room, everything is yours to decide.
Another massive benefit to you as both an owner and investor is that new construction has a totally clean slate.
You don’t have to worry about any hidden damage, termites, any problems with the foundation, etc.
You’re starting from scratch, and as such, everything is perfect and brand new.
That means whoever will be living in the house, be it you as the owner, or a potential buyer, there will be many worry-free years before anyone has to even consider replacing or repairing anything.
Particularly with all of our new smart technologies, outfitting a home with the latest means you’ll save heaps of money on your utility bill, when compared to how other, much older systems function.
That’s attractive to you as a homeowner, as well as an investor, since future potential buyers will have far less to worry about, and will be attracted to newer construction.
Now that you know some of the costs you can expect if you want to build your custom home from scratch, hopefully that’ll now be a consideration for you as an investor.
Especially in a real estate market like this, where demand is much higher than inventory, more and more investors will start considering building new construction.
To really understand that crisis of inventory, consider these figures: while 41% of renters plan to buy a house in the next year, only 11% of homeowners are even considering selling in the same time frame.
In a tight market like that, it can be incredibly profitable and beneficial to you as an investor to consider building over buying.
Look out for the next Real Estate Riches article, where we’ll dig deeper into the building versus buying debate!