Buy used vs. Build new
Real estate is a rare investment where in almost all cases, over an extended period of time, you can expect the value of your property to increase. There are of course exceptions to the norm (industry fueled areas where resources have been depleted, natural disasters, etc…) but generally an investment in a home will increase over the long term. Thus, the decision between buying a used home vs. building a new home is often a tough decision to make, because unlike a used car, you are not getting a discount because the home is older.
Keep in mind that everybodys situation is unique to themselves, so something seen as a positive for some might be seen as a negative by others. Here is a quick list of factors that may or may not make one seem more appealling to you than the other….
BUILDING A NEW HOME
Maintenance: has that new home smell 😉 There is alot of comfort knowing that when you move into a new home there will be very little maintenance or large expenditures on repairs.
Cost: You are usually getting a lot more house for less money
Location: Unless you are spending big money on tear down lots in the center of the city, new homes are generally located on the outskirts of the city
Resale: If you are looking to sell in the near future – the other houses in the development are very similar so there is not much to seperate one from the other. This can be good or bad.
Equity: Unless you plan on finishing a basement or building a suite, other than time there are not many ways to help your property appreciate – therefore your investment is based solely on the trends of the market.
Initial move in period: Could be lots of mud, machinery, and noise as other houses in the community are being built. There could also be settling issues that arise over the first few years.
New Home Warranty – alot of builders provide a new home warranty which protects the home for the first few days
Possession day: Could be delayed because of finishing delays
Bonus: you know that no one has ever lived in this house before and it is all yours!
BUYING A USED HOME:
Maintenance: obviously depends on the age of the home, but you can expect a lot more work and upkeep. There could be some large expenditures in your new future (ie. shingles, furnace,etc..)
Cost: Surprisingly quite often the cost of an older home is the same or more than that of a new build.
Location: One of the reasons the costs are higher is usually because the location is better and the neighborhoods are more established.
Resale: There is a lot more variety in houses in the established neighborhoods. It makes it harder to predict the value of your home, but also provides a lot more variety for the buyer.
Equity: If you are willing to put in some sweat, buying an unrenovated home is a great way to build equity and make a home that suits your needs and tastes.
Initial move in period: Still susceptible to the nuiances of the community, however often they are more predictable and less extensive.
New Home Warranty – other than Real Property Reports that carry level some of protection, buyer beware! If the furnace breaks the day after possession its on your dime.
Possession day: Could still be delayed by financing issues or residents moving out, but much less common. You can expect to do alot more cleaning on move in day as its always a guess as to how clean the previous owners have left it.
Bonus: There is a lot more variety in location and style of houses if you are willing to look in different areas and time periods.
These are some of the major factors when considering whether to buy old or build new. As always, we are just brushing the surface, so if you have any more questions dont hesistate to give me a call!
