My nephew and his wife contacted me recently to ask my opinion on whether or not it was better to purchase an existing house or build.
It was a great question and got me thinking about the best way to answer it.
I asked them whether they had ever looked at houses, and if so, which one was more appealing to make an offer. They had seen a lot of houses, but none seemed to be in their price range. Although they liked one house they saw, they realized it had an 11-year-old roof and would require a new roof soon.
They wanted to know how much a new roof would cost. I didn’t know the exact size, pitch, or other details so I made a guess at $12,000 to $15,000 depending upon a few things that I would need to know. They hit the nail on its head with this question.
The roof is just one of many elements that make up a house. Existing houses may need more than a roof…
What are the condition of the furnace and central heating? It is possible to have problems with the windows, flooring, and plumbing fixtures.
WHAT SHOULD BE REPLACED, WHEN, AND AT WHAT PRICE?
Let’s assume that the roof of this house needs to be replaced within three years. A roof replacement will require them to raise $12,000 to $15,000 in three years. They should have thought about how they would raise the money in three years.
I asked them when the furnace was built. They stated that everything in the house looked original from when it was built eleven years ago.
They thought that the heating and air conditioning were 11 years old.
“Didn’t you consider replacing the furnace or central air? I asked them.
They said, “It is important to know.” I don’t want them to find strange smells or carpet stains after they move in. The question is again, how much do you need to replace it?
Let’s just say that it would cost around $10,000 to replace the carpet.
I mentioned that most people building new homes today want ceramic tile and hardwood floors throughout their home. If they do choose to get carpet, it is usually for bedrooms or formal living rooms.
Today, people are moving away from carpet. Carpets hold so much dirt and dust. They also have nasty stains and smells, which can be a problem for everyone who lives on them. One of the greatest benefits of new flooring is that it has never been used by anyone else.
LOOK AT ALL MAJOR ELEMENTS IN A EXISTING HOME IF YOU ARE COMPARING NEW VS EXISTING.
When comparing an existing house with building a new one, take a look at all of the main elements.
Which condition are they in? Next, add up the cost of replacing all these items. Then ask yourself:
“In the next few years, when I need to replace these items, will it be possible to come up with tens of millions of dollars?”
What happens if the furnace fails and the roof leaks? What are the different loans you will need to maintain a used house?
This is without mentioning the inconvenience of living in the house while the repairs are being made. It’s not usually a matter of a few days, but it can take weeks to complete the repairs.
As far as I’m concerned, it is impossible to compare the cost of owning an existing home with one that you have just built. According to me, “The older the home, the larger the money pit will end in being.”
You can enjoy 15 years of worry-free living in a new home.
