Posting #6 Why Should I Build New Versus Buying Used?
Posting #6 I Love the House…if it only had ______________(you fill in the blank) = Even More Cash Our of Pocket
On top of differed maintenance discussed in part #3 and deferred decorating discussed in part #5, you have the issue of “I just don’t like it the way it is” problem. I think it is fair to say that it is virtually impossible to find exactly what you want when buying a used home.
The kitchen might not actually need updating per sea, but you just “hate it” for whatever reason. I meet clients all the time who “hate” certain parts of their existing home they live in (that seems perfectly fine to me), but haven’t changed it for whatever the reason. Living with something you hate is an alternative to not changing it, but is the type of solution that eventually will lead to moving. Good for our business…but not necessarily the best financial decision.
Houses that have “potential” is really a house that is going to cost you a bunch in the end to realize that “potential”. Opening up rooms, adding additions, finishing basements, major remodeling is very expensive. For example, if you buy a house for $150.00 per square foot and then remodel rooms for $200.00 per square foot, you now have invested $350.00 per square foot invested in certain parts of your house. We all know a kitchen can easily cost $25,000 to remodel. I have seen people spend a 100,000.00 too! I admit the $100,000 kitchen remodel will not automatically come with a new home when thinking about the cost differential but the initial cost per square foot you paid for that square footage becomes duplicated and is wasted money. If you remodel a 10’ x 15’ kitchen and paid $100.00 per square foot for your house (minus the land), you are duplicating $15,000.00 in cost. The more rooms you do this to, the more it will cost you. Not too smart is it?
Conversely, a new home can be exactly the way you want it and will always be cheaper. It will have the space where you want it.
Note: This blog is part of a multiple part series on the justification of building new versus buying used. If you haven’t read the prior postings, it is important to do so to understand the entire rational below.
Description Used New
Mortgage $ 250,000.00 $250,000.00
Utilities Savings Added $ 0.00 $ 28,000.00 (Posting #2)
Deferred Main Added $ 0.00 $ 46,500.00 (Posting #3)
Go Forward Main Added $ 0.00 $ 9,250.00 (Posting #4)
Total $ 250,000.00 $ 333,750.00
Description Used New
Payment @ 5% interest $ 1,342.05 $ 1,791.64
Utilities $ 291.67 $ 141.67 (Posting #2)
Deferred Maintenance $ 250.00 $ 0.00 (Posting #3)
Go Forward Maintenance $ 50.00 $ 0.00 (Posting #4)
Total $ 1,933.72 Mo $ 1,933.31 Mo
Deferred Decorating $ 10,000.00 Once $ 0.00 (Posting #5)
Make It The Way I Want $ 15,000.00 Once $ 0.00 (Posting #6)