Building my first house and am already planning on moving out…

[ErinH]

So, to keep the story short, here’s a simple breakdown:

• Wife and I both have steady income (healthcare, engineer)
• Father-in-law is a contractor, and we’ll be doing work ourselves, saving us tens of thousands.
• Decided to build home on land we like
• Loan to equity ratio is 68% and have the difference b/t our loan and appraised value is in the plus's.
• Monthly payment is a bit high and I’m not so sure I want that payment, though we can afford it if we really strap down (ie: no ‘toy’ money)

We went to my father in laws house last night to discuss some of the cost breakdown. We were good until we realized we hadn’t factored in a fence and heating/cooling units, which comes to about $15-20k more. After that I was seriously bummed, as I realized we’re going to have to pull from our savings… something I was trying to avoid at all costs. While talking this over with the FIL, he asked about us selling the house. He’s suggesting that we build the house, plan to live in it for a year or two, but putting a sign out in the front yard… he said we might even get an offer while it’s being built. And, he would know… he just built a house across the street from our lot which appraised for quite a bit and the couple who is building it was made 2 offers on it before it was even completed. Another house 2 lots down was bought 3 weeks ago for near their asking price. We could take the money made and put it as a down payment on another home, build it ourselves to save money and effectively cut our mortgage payments in half.

Now, while this sounds great I am being realistic about the market. Thus, we’ll likely plan on living there and just sticking a sign out in the yard while we’re there. We’d be in no rush to sale so it’s not imperative we take anything less than what we want.

Another issue with me is that I don’t want my F-I-L to feel like we’re just using him to gain money. I told him this last night and he said he’d always planned on doing this a couple times for my wife anyway, so she could get to the point where she’d be able to buy a house outright. I guess if he’s okay with it, I am.

Lastly, I’m a bit bummed about this because of the lot we’ve picked. I love this lot. I hate to see it go. I also really like the layout of the house. I'm already emotionally attached, lol. But, if saying goodbye to a nice plot of land so that I can actually enjoy life, then so be it.


I guess the really big plus is that if this all works out the way we’re thinking, I’ll actually be able to afford gear to put in my HT room this time. Because right now, I’m not going to be able to fund jack for this room and I’m still running all the wires for 7.1, front projector, and a few lan cables.


I dunno… I just wanted to share my thoughts out loud and maybe get some input. This is our first home and I’m honestly a bit scared. I don’t like the idea of not having more than 15% of our monthly income as disposable… I guess I’m just used to having a lot of extra money at the end of the month. We’ve been saving it, and now that we’re building we’re nearly going to wipe out our savings with only about $10k left. That makes me pretty dang scared.

 

[ParadigmDawg]

I would just make more money and keep the house.

 

[ErinH]

I would just make more money and keep the house.

I'll ask my supervisor for a $30k raise right quick...

 

[ParadigmDawg]

I'm no engineer supervisor but I think that will work.

 

[ErinH]

I'm no engineer supervisor but I think that will work.

lol.

hey, I didn't say who did what in my OP. How do you know I'm not a nurse (insert funny Ben Stiller joke here)

 

[ParadigmDawg]

We have talked about it before plus if you were a nurse or a RT you wouldn't have time to play on the computer.

I have rethought my plan for you. Your wife will work 3 extra 12's/week during respiratory season to fund your HT. That will net you~49k to finish the project. She is young and although this will suck, she can do it. Just tell her the Dawg laid out the plan so she must do it.

 

[ErinH]

Your memory > mine

I already told her that she has to work 200 hour weeks. I told her not to worry about time; Doc Brown has that under control. Just as long as her future self doesn’t see her current self, all is well in space time continuum.

 

[Mort Corey]

JMO, but only having a 15% cushion (or less...spit happens) and draining ready cash to $10K would scare the beegeebers outa me at this time. It doesn't appear that any job is safe and a three to six month cash cushion would seem prudent. Since you're already into the project I assume there's no turning back at this point but perhaps some items could wait a while.

Mort

 

[ErinH]

JMO, but only having a 15% cushion (or less...spit happens) and draining ready cash to $10K would scare the beegeebers outa me at this time. It doesn't appear that any job is safe and a three to six month cash cushion would seem prudent. Since you're already into the project I assume there's no turning back at this point but perhaps some items could wait a while.

Mort

That's what I'm saying. We could mortgage the extra $15-20k for the fence and units, and keep that money in our savings. Would bump our mortgage up about an extra $100/month. We'd need to decide if that's worth it to use right now. It just might be.

 

[Cpt.America]

Or you could just SKIP the fence, and build a fire . Vuala, I just saved you 20k. Send me a check for 10, and well call it even.

 

[ErinH]

lol. Sure thing.


The fence is for my dogs. If it weren't for them there would be no fence.

 

[Cpt.America]

Maybe you could do a smaller, cheaper, crappier, chainlink fence temporarily? Then later when cash is better... rip it out and put up a nice wood fence (I assume that is what you had budgeted). Chainlink is ugly... but could be a decent compromise in the interim.

 

[ErinH]

Going a step further, if we go ahead and put up a ‘for sale’ sign during construction, maybe the homeowner can take care of the fence themselves? *wishful thinking*


Honestly, I think we’re just going to build this place the way we want. We can afford it, but we’re just going to be strapped as far as excess spending on toys, food, etc. We do a good job now, but we’ll have to make sure to stay that way. Then if things turn around and we decide to stay we can; but if we decide to sale we won’t have anything devaluing the home. I know we can cut corners here and there, but in the end I'm not sure it would literally be 'worth' it.

Luckily we already have all the furniture we need except for the bonus room. I probably won’t even bother with that.

 

[highfigh]

How is it possible to forget about the HVAC? I can see forgetting about the fence but the HVAC? A contractor forgot? Huh?

If you already negotiated the loan, see about getting a lower interest rate. Or, do more of the work, yourself.

 

[ErinH]

Not the entire HVAC. Just the units themselves.
We’ve gone over the pricing a few times and last night when we went over it for a third revision he had forgot to throw those in there because he hadn’t gotten a hold of the guy he buys them from. Simple mistake.

We’re already doing a lot of work ourselves: tile, hardwood floors, carpet, painting garage & bonus room, insulation, electrical, sprinkler, and concrete … just off the top. We’ve been buying floor model appliances and using friend’s discounts to purchase other things. So far we’ve saved over $7k in appliances and granite, and have yet to buy a refrigerator & microwave. Lowe’s will negotiate nearly as low as you want to get stuff out of inventory.

 

[ivseenbetter]

Lowe's negotiates!??

 

[ErinH]

Lowe's negotiates!??

YES!

On floor models, at least. When you go into the store they usually have one area with ‘demo’ models or old stock they’re trying to get rid of.

Our own savings:

Samsung Washer/Dryer
Original Price: $1800/pr
We paid: 1450/pr

GE Stove
OP: $848
We Paid: $450

Whirlpool Dishwasher
OP: $498
We Paid: $250

 

[itschris]

I'd say that any proposition that entails selling a home in the next 1-3 years is risky. Can you scale back the house and add on later?

 

[ErinH]

Well, again, it’s not that we can’t afford to live there. It’s just that we stand a very good chance of being able to sale this house quickly based on our loan vs. appraised value.

I guess to put it shortly: if someone offers us what we want, we’ll take it without a doubt. If not, we’ll stay there.



We’re pretty much locked in. We can cut down on things, but then we also run the risk of having to pay for it later. For example, for me to complete the bonus room upstairs it would cost about $1k in materials (drywall, carpet, paint, lighting). That unfinished space would cost us nearly $20k in equity (says the appraiser).

I think it’s just that it’s such a scary thing anyway. I have a feeling even if I made double what I make now I’d still be uneasy about this as it’s my first home and it’s my first REAL commitment to something. Cars, credit cards don’t really count in the grand scheme of things.

 

[highfigh]

Not the entire HVAC. Just the units themselves.
We’ve gone over the pricing a few times and last night when we went over it for a third revision he had forgot to throw those in there because he hadn’t gotten a hold of the guy he buys them from. Simple mistake.

We’re already doing a lot of work ourselves: tile, hardwood floors, carpet, painting garage & bonus room, insulation, electrical, sprinkler, and concrete … just off the top. We’ve been buying floor model appliances and using friend’s discounts to purchase other things. So far we’ve saved over $7k in appliances and granite, and have yet to buy a refrigerator & microwave. Lowe’s will negotiate nearly as low as you want to get stuff out of inventory.

What kind of units does he normally get? If they're Goodman, you can get great prices online. I bought two furnaces from www.alpinehomeair.com and had a local guy install one of them. I did the other one before I found out that city hall requires a contractor to do it, permits, BS, etc. They have really good customer service and help lines, double the normal warranty and while I have read comments in builder's forums saying that the sheet metal was thin/inferior and they have problems, they use the same control boards as just about everyone else and I can say without a doubt that the sheet metal was heavier than what it replaced. Both have operated perfectly and are very quiet.