Home builders / Construction guys
- Thread starter Uncle Ruckus
- Start date
This is a really interesting analysis. I’ve never thought of it that way, but it makes sense. However, you’ve also got to factor in that you need to live somewhere. So there’s going to be basic costs associated with that, through either mortgage and repairs, or rent. At least with the mortgage and repair costs you own the asset.
Houses can most definitely be good investments, and you can make a lot of money buying and selling them. But, like most things, you make the money during the buying process. I sold a house last year that I had owned for 9 years. I sold it for 107% more than I paid for it. The land value had not increased much at all, maybe 20%? But, I stole the house when I bought it. So, I’m not sure how much it was appreciation of the asset, and how much was dumb luck and good timing.
But, to your broader point, owning a house can also be a money pit. The new house I bought after selling that house was a significant upgrade in terms of land value, size and quality of the house itself, etc. And I was there less than two weeks before I had to significant work done on one of the central units. I also had to replace pool liner and pool pump within first 6 months. That’s money I’ll never get back in the sell.
PVC. Crap! Only "construction" I'm looking at short term is a new sprinkler system. I guess I'll wait.
Not sure about residential but commercial materials are escalating.... steel, lumber, and gypsum. We have seen price threats many times in the past that didn't stick but this time it's real ... I know that residential construction drives a lot of the material cost for commercial construction so I would assume these price increases probably will be here to stay for a while ... I saw an overnight increase in lumber prices after the hurricane but these prices tend to trend downward after a portion of immediate demand has been satisfied .... Despite the virus, construction around Atlanta and the local Southeast is still strong, so as a professional estimator I'm factoring material escalation into every bid ... Like someone said earlier, it probably makes better sense to take advantage of the current low interest rates and go ahead and pull the trigger.
Yeah. I'm long winded, but ultimately the "house" itself is like a car. You have to have one and you might as well pay for what makes you happy. But also like a car it's falling apart every day, albeit a lot slower.
The land is what appreciates. Location, location, location right?
Good point in the buying. I have argued for years it's better to buy a new truck than used. The 15% hit you take when you drive off the lot is from MSRP. If you buy it for 20% less than MSRP (which is common on mid to high end full size trucks) you are going to be way ahead in the equity on the truck for a while.
The land is what appreciates. Location, location, location right?
Good point in the buying. I have argued for years it's better to buy a new truck than used. The 15% hit you take when you drive off the lot is from MSRP. If you buy it for 20% less than MSRP (which is common on mid to high end full size trucks) you are going to be way ahead in the equity on the truck for a while.
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That's what we most likely will end up doing. Single story home, 1900 living, 3500 total (big carport, front porch, back deck), so it's not loads of lumber that would be in a 2-story 3k square foot home. It's our first and only home build. God-willing, we will be here for the rest of our lives. With that being the case, we should save more money on a low-as-**** interest rate than higher building materials. And on top of that, I will be the contractor and doing a lot of the work myself.
Pro Tip.
When you are looking for subs on different parts of the project, go to the supplier and ask who they would recommend. The brickyard knows the best masons. The lumber dealer (not Lowe's or HD) knows the best framers etc. I have found tons of great subs this way.
When you are looking for subs on different parts of the project, go to the supplier and ask who they would recommend. The brickyard knows the best masons. The lumber dealer (not Lowe's or HD) knows the best framers etc. I have found tons of great subs this way.
That also makes a lot of sense. It’s definitely an interesting conversation. If you are somewhat diligent, you can find deals in almost anything (homes, cars, tractors, golf carts, whatever). You can typically tell when a seller is getting desperate or anxious. A lot of people would be shocked at what offers will actually buy some things. Granted, you’ve got to have either the cash or equity/credit to do it. But, I’ve bought a couple houses listed at $90-110K for low 50’s. Pay a contractor $5-10K to remodel the kitchen and spruce up the master bathroom (if you can DIY and have the time, then even better!) and then rent it or just re-list it. You can typically sell it QUICKLY for $90-95K (due to new kitchen and bath) and if you’re patient and timing is right you can get $100-110K. I know that’s deviating some from original topic, but I’m just saying you make money in the buying process. If you overpay for a depreciable asset, then you’re going to be waiting on someone to overpay for it when you sell it. That’s not an ideal situation.
I wanted to go back to our land and refurbish my grandparents' house...
however, the county (in Mississippi) is going the wrong way. The illicit drug market is growing. Some local leaders are really trying to cleanup the county ("actual trash" everywhere, driving the gangs out, making owners to apply codes to their homes, etc.) ... but, then there are some local leaders that don't know how to lead.
however, the county (in Mississippi) is going the wrong way. The illicit drug market is growing. Some local leaders are really trying to cleanup the county ("actual trash" everywhere, driving the gangs out, making owners to apply codes to their homes, etc.) ... but, then there are some local leaders that don't know how to lead.
Whatever you do
In the year you jump off, start keeping every sales receipt. Most people never deduct their sales taxes because of the high threshold to meet. You will meet it with the sales taxes on home materials, so you can add in all the other sales taxes you pay that tax year. Just got to keep the receipts. They add up.
In the year you jump off, start keeping every sales receipt. Most people never deduct their sales taxes because of the high threshold to meet. You will meet it with the sales taxes on home materials, so you can add in all the other sales taxes you pay that tax year. Just got to keep the receipts. They add up.