PDA

View Full Version : House Buying Advice



Agent51
10-20-2006, 01:57 PM
OK. so I have recently decided I am interested in buying my own house. It seems like an odd thing to do at this point in my life, as I'm only 22 (23 in January) and I'm a bachelor, but I have the financial means to do so, and I'm tired of renting. My logic on this is that O'ahu is where I want to raise my family, and even though I am far from being ready for a family, I would like to aquire a place now that I can start settling into and making my own for when that day eventually comes. I have a bunch of questions that I'm hoping any of you guys that own houses could help me on.

First off I guess I need to ask what the best route to go is. Would it be better to buy a nice house, buy a "fixer-upper", or just build a house altogether? Again, my finances aren't really a problem, so this is more of a logistical question. In terms of building a house, yeah, I don't have an endless money supply to just BUILD a house right now, lol, but this project isn't exactly going to happen tomorrow, or even anytime soon (I'm thinking at LEAST a year away before I am seriously ready to commit to either buying or starting the buidling), so I have quite awhile to gather all of the info and knowledge I need and make the decision. I've been reading a bunch about it online, and I've been talking with family back home and with my boss here, so I figured I'd bring it up to my FinHeaven friends too.

So anyway, given the fact that O'ahu is DEFINATELY the place I want to live the rest of my life, and start and raise a family, would building a house be a better choice than purchasing one? I am one of those people that likes to have "creative control" over everything in the sense that I have certain ideas in my head of what I want things to be like and look like, so obviously building a house would help out in that sense, because I could have exactly what I want. But at the same time, I could find something similar to what I want and purchase it and then renovate it to what I want also, so which, in your opinion, would be the better choice?

I'm personally leaning toward building it, just because, as I already said, I like things to be a certain way and have a certain idea of what I would want my dream house to be, and this way I could build exactly what I want instead of trying to fit what I want into a space that is already there and might not accomodate the things I want. However, I get conflicting information. My family insists that I should BUY a house first and see what being a homeowner is all about before I just go and BUILD a house, but my boss tells me that, if I am serious about this being where I want to raise a family, building is the better option because I have full creative control. He says is I wasn't sure about staying on O'ahu and there was a possibility that one day in the futre I would move away then building wouldn't be worth the time and effort, but since I DO want to stay here then building is worth it.

Can anyone else give me some insight on this, and also maybe describe some of the problems (if any) you encountered when purchasing/building your house? Is it harder given that I am a first-timer? Any feedback would be greatly appreciated.

Timmy54
10-20-2006, 02:00 PM
check with different mortgage companies, some have very different rates.

find a realtor you like and trust to give you the scoop.

buying a great house or one that needs some fixing goes with your personality. I bought a home brand new and still changed a bunch of stuff. If that is you, you might not mind the fixer up.

If you can buy, do buy. Realestate is only going to go up. Historically it is one of the best investments. I know in Hawaii it can be expensive but in 5 years you will have some money in your house and it will be worth more (should be)

NJFINSFAN1
10-20-2006, 02:11 PM
Okay, I'll go point by point, and I'm a Realtor in a well to do area.

1. If you don't have endless funds, don't build! There are so many hidden prices in building your own home. If you can find a nice home in a nice area, that does not need work, but is on the smaller side, but with room to expand, jump on it! If you have a place to stay while you do a fixer upper and have patients and can do some on your own, that's not a bad choice either.

NJFINSFAN1
10-20-2006, 02:16 PM
If you decide to build, you really need to do your homework on the builder and have everything and I mean everything spelled out in the contract. Talk to people who have used him and find out what they liked and did not like. Most builders always find a way to add on fees. Also they very rarely get done on time.

If you buy a smaller home in a area that you like, and can expand, you really can't go wrong, it will coast you less, and Real Estate is never going to lose money over the long run, especially in Hawaii. And with knowing that, you can always like your family says, learn what being a homeowner is, and a few years down the line sell it for a profit and build your own home.

Just my thoughts. I'll send you my bill!:wink:

nolefin
10-20-2006, 02:30 PM
i just bought a house and i will tell you this, buy a newer home and make sure its complete and what you want no exeptions, and one other thing make sure you know what kind of neighbors you have, the wrong ones can make your life hell! good luck and get a home inspection even if the house is newer.

Timmy54
10-20-2006, 02:40 PM
oh that is a great point, get to know the neighbors before you move. You might find some people who you dont want next door.

NJFINSFAN1
10-20-2006, 02:44 PM
oh that is a great point, get to know the neighbors before you move. You might find some people who you dont want next door.

I always tell my customers before they buy the house to drive by in the Am, afternoon and at night to see if its busy, see if there are kids etc...

Amars
10-20-2006, 02:57 PM
Before you go see a realtor go get financing. Either from your bank that you bank with or a trusted loan broker. Then work with a realtor. I dont know how things are in Hawaii but price wise I dont think its the right time to buy. The market in a correction phaze and if you hold out a year you might save yourself some $$$. BTW how much is a house is in Oahu? If its $500,000 or above get ready for at least $3000+/mo payment if you dont have a big down payment. And thats not including taxes or insurance.

Agent51
10-20-2006, 02:58 PM
i just bought a house and i will tell you this, buy a newer home and make sure its complete and what you want no exeptions, and one other thing make sure you know what kind of neighbors you have, the wrong ones can make your life hell! good luck and get a home inspection even if the house is newer.

This is one of the reasons I am considering building. I want my house to be on (or in VERY close proximety to) the beach and up on the north shore of the island, not down by the busy, touristy part of the island (like the Honolulu/Waikiki) area. The reason I am considering building is because the houses that fit that criteria that are for sale are a STUNNING amount of money (like $5 million + for beachfront properties) whereas there is tons of LAND for sale (in better locations than the multi-million dollar homes mind you) and it's pretty cheap (in comparison). My rational would be I could buy the land in the near future and begin to design my dream home as more money keeps coming in over the next year or two and then get to building my own island paradise. I have 3 very close family friends back in Rhode Island that are contractors/own a construction business, plus one very close family friend that is an electrician, and all are willing to do the construction part for me for MUCH cheaper than hiring full-priced labor, so the price/work quality/getting screwed over thing isn't really an issue (unless the plumber I hire screws up, lol). I'm in no rush to actually have a house done and built, and I have the patients (and I'm a bit of a perfectionist) to wait until everything is perfectly set and planned out to begin work on the house. That's why I'm starting this planning idea now, so by the time I AM ready for it to get into motion, all of the planning and logistics are done and it's just a matter of the actual labor.

I also don't mind fixing up a place, I like projects and tasks like that, but at the same time, my rational again is, why buy a place and fix it up when I could just build exactly what I want from the begining?

I definately appreciate everyone's feedback and advice so far. This is obviously a pretty big decision and life step, so the more advice/information I can get the better.

Amars
10-20-2006, 03:04 PM
To build its going to cost you at least $125-110/sq ft. and that a hook up. My father in law (he's a contractor) just built a addition to his own house and with him doing the work that how much it cost. Wood is so expensive right now. So for a house that 1500 - 2000 sq ft its probably going to cost you from 165k - 250k. Then you have to buy all the stuff for inside your house like cabinets, floors, etc and that gets pricey. At least 50k. So its pretty expensive building a property and also buying the land on top of that.

NJFINSFAN1
10-20-2006, 03:36 PM
To build its going to cost you at least $125-110/sq ft. and that a hook up. My father in law (he's a contractor) just built a addition to his own house and with him doing the work that how much it cost. Wood is so expensive right now. So for a house that 1500 - 2000 sq ft its probably going to cost you from 165k - 250k. Then you have to buy all the stuff for inside your house like cabinets, floors, etc and that gets pricey. At least 50k. So its pretty expensive building a property and also buying the land on top of that.

It will be more in Hawaii!

Amars
10-20-2006, 03:54 PM
Wood has to be more expensive in Hawaii unfortunately. Im not saying building your house is a pipedream but stuff like that happens in steps. I recommend you buy a condo on the beach. Build some equity then buy a home. Build some equity in that then you can buy land and build a house. You'll probably be in your upper 30 or 40's but that the best way to do it IMO. If that truely your goal then while your property is building equity you save money to reach that goal

Prophet
10-20-2006, 04:11 PM
Build. You answered your own question.

ch19079
10-20-2006, 04:15 PM
Most states/countys have an on-line GIS system.

it will give you a ton of info about the specific plot you are looking at, as well as the surrounding area.

which school district the plot is in, where the water supply is comming from, distance to near by chemical plants that may accidentally catch fire at 10pm and force an evacuation of the area....:tantrum: ... those are all good things to know before investing in something as big as a home.

rafael
10-20-2006, 04:25 PM
I think you should build. The primary reason is that it's what you want (based on your posts) so you're unlikely to be satisfied with anything else. Second, you're likely to garner the greatest financial gain. I'm a lender (unfortunately, not in Hawaii), but I see the huge profits that people who build get. We do construction loans where the loan amount is based on the completed value, not cost. So you can walk in to +30% equity from the get go. That means your initial loan has a low loan to value (LTV) before you put any money down which should tranlate to a better rate. Even if you walk into a great deal on an existing house your LTV for the first year is based on your purchase price.

Buddwalk
10-20-2006, 04:39 PM
honestly newer houses construction wise...suck, there not made to last 50+ years

Amars
10-20-2006, 05:24 PM
I think you should build. The primary reason is that it's what you want (based on your posts) so you're unlikely to be satisfied with anything else. Second, you're likely to garner the greatest financial gain. I'm a lender (unfortunately, not in Hawaii), but I see the huge profits that people who build get. We do construction loans where the loan amount is based on the completed value, not cost. So you can walk in to +30% equity from the get go. That means your initial loan has a low loan to value (LTV) before you put any money down which should tranlate to a better rate. Even if you walk into a great deal on an existing house your LTV for the first year is based on your purchase price.


So since you finance on completed value not cost do you have put anything out your own pocket or does your company finance the entire construction?

Because if that the case this is the way to go. Finance company pay entirely for construction. When construction finishes you refinance to roll the land loan and construction loan together. Plus you get a good loan because its like putting down $150k for home instead 100% financing. Of course buying the land will have to be done first which can be pretty pricey for beach front.

DolfanDaveInATX
10-20-2006, 05:33 PM
See what is available in your area on the foreclosure/tax auction market. There has been a rise in foreclosure activity in recent months and it is about to skyrocket. Millions of recent home purchasers have bought more house than they can realistically afford thanks to exotic mortgages such as adjustable-rate, interest-only, and 50-year options. You may be able to wind up with a really nice house for a sizable discount off its market value.

And when you do finance, go with a fixed-rate mortgage of no more than 30 years. The fixed rates are around 6% -- which is historically low -- so it's best to lock it in for as long as you can.

Agent51
10-20-2006, 05:41 PM
Wow, very informative/helpful resonses from everyone. Here's a new question though. Say I did go the condo route in the near future and fixed it up really nice (what's that called, "Flipping"?) and sold it for a profit later to build a house, should I still buy the PROPERTY now (not like today, lol, but in the near future)? Like the land I have been looking into. I have been researching and it appears that the cost of land keeps going up (it's probably especially worse here because there is only so much of it), so would it be smart, assuming I went the condo route, to still invest in the land now, while it's lower, instead of waiting a few years down the line when I'm ready to sell the condo and build the house?

The condo route might be something I'd be interested in at this point in time because I have always thought buying property and rennovating it to sell for a profit would be such a fun hobby. I know it probably isn't as easy as it sounds, but like I said before, I love building stuff and "hands-on" projects like that, so it could be not only fun but a good entry-level introduction to property ownership instead of jumping right into the "big leagues" so to speak by building a huge beachfront house, lol.

DeathStar
10-20-2006, 05:57 PM
Most states/countys have an on-line GIS system.

it will give you a ton of info about the specific plot you are looking at, as well as the surrounding area.

which school district the plot is in, where the water supply is comming from, distance to near by chemical plants that may accidentally catch fire at 10pm and force an evacuation of the area....:tantrum: ... those are all good things to know before investing in something as big as a home.

:lol:

rafael
10-21-2006, 09:21 PM
So since you finance on completed value not cost do you have put anything out your own pocket or does your company finance the entire construction?

Because if that the case this is the way to go. Finance company pay entirely for construction. When construction finishes you refinance to roll the land loan and construction loan together. Plus you get a good loan because its like putting down $150k for home instead 100% financing. Of course buying the land will have to be done first which can be pretty pricey for beach front.

Exactly, the interest only payments during the construction phase are built into the loan, nothing comes out of your pocket. BTW my company brokers these loans so this is nothing exclusive to us.

rafael
10-21-2006, 09:36 PM
Wow, very informative/helpful resonses from everyone. Here's a new question though. Say I did go the condo route in the near future and fixed it up really nice (what's that called, "Flipping"?) and sold it for a profit later to build a house, should I still buy the PROPERTY now (not like today, lol, but in the near future)? Like the land I have been looking into. I have been researching and it appears that the cost of land keeps going up (it's probably especially worse here because there is only so much of it), so would it be smart, assuming I went the condo route, to still invest in the land now, while it's lower, instead of waiting a few years down the line when I'm ready to sell the condo and build the house?

The condo route might be something I'd be interested in at this point in time because I have always thought buying property and rennovating it to sell for a profit would be such a fun hobby. I know it probably isn't as easy as it sounds, but like I said before, I love building stuff and "hands-on" projects like that, so it could be not only fun but a good entry-level introduction to property ownership instead of jumping right into the "big leagues" so to speak by building a huge beachfront house, lol.

My advice is buy the land when the opportunity arises. As long as you don't end up in a sitch where you have to sell (financial troubles) then you're unlikely to ever lose.

NJFINSFAN1
10-21-2006, 10:23 PM
Wow, very informative/helpful resonses from everyone. Here's a new question though. Say I did go the condo route in the near future and fixed it up really nice (what's that called, "Flipping"?) and sold it for a profit later to build a house, should I still buy the PROPERTY now (not like today, lol, but in the near future)? Like the land I have been looking into. I have been researching and it appears that the cost of land keeps going up (it's probably especially worse here because there is only so much of it), so would it be smart, assuming I went the condo route, to still invest in the land now, while it's lower, instead of waiting a few years down the line when I'm ready to sell the condo and build the house?

The condo route might be something I'd be interested in at this point in time because I have always thought buying property and rennovating it to sell for a profit would be such a fun hobby. I know it probably isn't as easy as it sounds, but like I said before, I love building stuff and "hands-on" projects like that, so it could be not only fun but a good entry-level introduction to property ownership instead of jumping right into the "big leagues" so to speak by building a huge beachfront house, lol.

If you can find the right land, yes.

But also realize whats happening here now (It may not be happening by you, but consider it).

If you find a small house on a large piece of property, you can always knock it down and build, and depending on the codes in your area do very well.

In my town, you get away with murder if you leave the foundation and one wall up when knocking down. But you can add to that one wall. So your 1000SQFT old crappy house can become a 4000SQFT new house.

If you don't understand what I'm saying I will break it down for you, but it depends on the building codes in your area.

rafael
10-23-2006, 01:38 PM
http://www.usatoday.com/money/economy/housing/2006-10-22-young-flipper-usat_x.htm

I thought this was appropriate. Hope it helps.

Roman529
10-23-2006, 03:47 PM
Wow, not too many 22 year olds can afford to buy a house in Hawaii?? What do you do for a living? Is your income pretty steady or does it fluctuate? I have bought three different condos and rented two out.....I know flipping can work, but in many places, like California, real estate prices have peaked or bottomed out and you may not be able to flip it for a profit, unless you intend to hold on to it a for awhile. Good luck though...I loved my three years living in Oahu.

Agent51
10-24-2006, 08:54 AM
Wow, not too many 22 year olds can afford to buy a house in Hawaii?? What do you do for a living? Is your income pretty steady or does it fluctuate? I have bought three different condos and rented two out.....I know flipping can work, but in many places, like California, real estate prices have peaked or bottomed out and you may not be able to flip it for a profit, unless you intend to hold on to it a for awhile. Good luck though...I loved my three years living in Oahu.

I am the bar manager at Hawai'i's most popular nightclub, so I get a great salary on top of making REALLY good money in tips on the nights I am bartending (fridays and saturdays) and not just supervising, plus I am a sponsored surfer, so I get checks from a few different sponsors plus I get paid extra for doing photo/video shoots and if I do contests (which I don't get much time to do anymore :()