Home buying thread

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Haus

I am Big Balls!
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In my area, I'm looking at my house coming up on 4x what I paid for it in 2001. And over half the time in my neighborhood they're literally just paying for the land and razing the house.
Hate replying to my own post but this deserves an update...

So... my house currently I have a standing offer from a developer for right at 4x what I paid for the house. I was wondering why. I just looked up recent deals on these "raze it and build a mcmansion" gambits. The house across the alley from me, almost exactly same sized lot, razed and rebuilt, sold less than a month ago.... for 9.3x what I paid for my house in 2001.

Looks like project peaches is no longer "live here until we finish building in the country", it will be "Buy land, drop a double wide on it (or buy land with a workable enough small home), live there while building, while simultaneously razing and rebuilding at our current lot to then sell and pay everything off."
 
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Gravel

Mr. Poopybutthole
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In my area, I'm looking at my house coming up on 4x what I paid for it in 2001. And over half the time in my neighborhood they're literally just paying for the land and razing the house.
My mother-in-law has a trailer on a double lot that we really want to build on. But I can't really wrap my mind around how to do so.

We'll probably need to talk to a builder, loan officer, and the permit office to see what our options are. Most of that is because we don't have income though, and asset backed mortgages seem terrible if you can even get one.

We've considered selling our house here and moving into the trailer. I was thinking we could build an in-law suite (one bed, one bath, maybe 600-700 sqft), live in the trailer as it's getting built, and then tear down the trailer and build the actual house after that.

Depends on whether you can have multiple buildings on one property though. If not, I considered if we'd be able to connect the two, and basically build in stages (or thinking of it an addition...that's 3x the size of the existing structure, in this case the in-law suite). Not sure how feasible that'd be though since we can't pour a foundation where the trailer is currently until we tear it down, and not sure if you can pour a foundation next to an existing foundation.

It'd also be nice because when we don't have anyone using the in-law suite, something that size can rent for like $200ish a night in the summer.

It's in an amazing area. Close to the beach (5ish min), centrally located, but in a quiet neighborhood.

Edit: That's pretty funny, cause I didn't read your post just before mine. Pretty similar situation, although you have a job still I believe.
 

Haus

I am Big Balls!
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My mother-in-law has a trailer on a double lot that we really want to build on. But I can't really wrap my mind around how to do so.

We'll probably need to talk to a builder, loan officer, and the permit office to see what our options are. Most of that is because we don't have income though, and asset backed mortgages seem terrible if you can even get one.

We've considered selling our house here and moving into the trailer. I was thinking we could build an in-law suite (one bed, one bath, maybe 600-700 sqft), live in the trailer as it's getting built, and then tear down the trailer and build the actual house after that.

Depends on whether you can have multiple buildings on one property though. If not, I considered if we'd be able to connect the two, and basically build in stages (or thinking of it an addition...that's 3x the size of the existing structure, in this case the in-law suite). Not sure how feasible that'd be though since we can't pour a foundation where the trailer is currently until we tear it down, and not sure if you can pour a foundation next to an existing foundation.

It'd also be nice because when we don't have anyone using the in-law suite, something that size can rent for like $200ish a night in the summer.

It's in an amazing area. Close to the beach (5ish min), centrally located, but in a quiet neighborhood.

Edit: That's pretty funny, cause I didn't read your post just before mine. Pretty similar situation, although you have a job still I believe.
This is one example of what I've been looking at :


But to do that right now would involve something like...

  1. Get a mortgage for that property. (We're less than $50k to completely paid off on our current house)
  2. Move to that double wide.
  3. Finance the destruction and rebuild on our own home lot. Time est (~6 months) Cost est ~$525k. So at this point close to a Million in mortgage overhead for 6 months.
  4. Sell that house (hopefully for what the one across the alley sold for, hopefully within 3 months of completion)
  5. Pay off all loans/mortgages involved.
  6. ...
  7. Profit.
Should result in us with a great house on a small hobby ranch, and a tidy bit of a profit. Question being how much will I need in liquid assets to pull it off. I have a good pool of assets outside retirement funding right now, but would prefer to only have to liquidate a minimum of it. And still have a good income from my "day job".

One of my original thoughts was that I'd keep this house, turn it into a rental, and rent it once we lived outside town. But now I'm literally at the age to think in terms of "how much would I make total in rent off this if I rented it until I died, versus how much I'd made in a lump sum selling it now"
 

Cad

scientia potentia est
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In my area, I'm looking at my house coming up on 4x what I paid for it in 2001. And over half the time in my neighborhood they're literally just paying for the land and razing the house.
Thats only a 3.3% real appreciation rate subtracting out inflation. it seems insane because it's 4x for the same house, but thats like shitty municipal bonds return rate in general. And I'm not saying that in a "wow thats a shitty investment" way, but just that fixed assets like real estate in any kind of reasonably desirable area (anyplace north of I-30 in DFW and south of the Oklahoma border is relatively desirable with today's growth rates) should appreciate, and your result isn't really out of the norm.
 
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Kithani

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Thats only a 3.3% real appreciation rate subtracting out inflation. it seems insane because it's 4x for the same house, but thats like shitty municipal bonds return rate in general. And I'm not saying that in a "wow thats a shitty investment" way, but just that fixed assets like real estate in any kind of reasonably desirable area (anyplace north of I-30 in DFW and south of the Oklahoma border is relatively desirable with today's growth rates) should appreciate, and your result isn't really out of the norm.
Can’t necessarily look at it as shitty muni bonds, he prob put 20% down and thus had 5x leverage in a low risk situation
 

Fucker

Log Wizard
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My mother-in-law has a trailer on a double lot that we really want to build on. But I can't really wrap my mind around how to do so.

We'll probably need to talk to a builder, loan officer, and the permit office to see what our options are. Most of that is because we don't have income though, and asset backed mortgages seem terrible if you can even get one.

We've considered selling our house here and moving into the trailer. I was thinking we could build an in-law suite (one bed, one bath, maybe 600-700 sqft), live in the trailer as it's getting built, and then tear down the trailer and build the actual house after that.

Depends on whether you can have multiple buildings on one property though. If not, I considered if we'd be able to connect the two, and basically build in stages (or thinking of it an addition...that's 3x the size of the existing structure, in this case the in-law suite). Not sure how feasible that'd be though since we can't pour a foundation where the trailer is currently until we tear it down, and not sure if you can pour a foundation next to an existing foundation.

It'd also be nice because when we don't have anyone using the in-law suite, something that size can rent for like $200ish a night in the summer.

It's in an amazing area. Close to the beach (5ish min), centrally located, but in a quiet neighborhood.

Edit: That's pretty funny, cause I didn't read your post just before mine. Pretty similar situation, although you have a job still I believe.
Move trailer to a different lot. Sell house. Live in trailer. Build house on empty lot. Sell trailer when house done.
 

Fucker

Log Wizard
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Hate replying to my own post but this deserves an update...

So... my house currently I have a standing offer from a developer for right at 4x what I paid for the house. I was wondering why. I just looked up recent deals on these "raze it and build a mcmansion" gambits. The house across the alley from me, almost exactly same sized lot, razed and rebuilt, sold less than a month ago.... for 9.3x what I paid for my house in 2001.

Looks like project peaches is no longer "live here until we finish building in the country", it will be "Buy land, drop a double wide on it (or buy land with a workable enough small home), live there while building, while simultaneously razing and rebuilding at our current lot to then sell and pay everything off."
I lived out west, and people would put giant houses just anywhere. I saw a 5k+ sqft house go up, mere feet away from a loud busy street. No land to speak of, and right next to a house that was falling down. Getting out must have been a real PITA, next to impossible to back out during rush hour.

And in another place, two big houses on a micro lot...they shared a fucking driveway. A tiny, narrow driveway.
 

Palum

what Suineg set it to
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Can’t necessarily look at it as shitty muni bonds, he prob put 20% down and thus had 5x leverage in a low risk situation

Yea but then you have to subtract the total interest payments which eat further into the appreciation. Might as well take out property taxes also, and then insurance since you don't need insurance on bonds and don't pay taxes to hold them.
 
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fris

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That sounds a lot like the framework of what my wife and I are referring to as "Project Peaches". We want somewhere between 15-30 acres, build a house to our specifications (probably in the 3000-3500 sq ft range), with a big ass separate barndominium for my workshop and garage. Also with the goal of being around an hour from anything that would pass as a "big city".

My fear right now isn't even the land purchase, although any land meeting that criteria in Texas anymore is getting expensive, it's the cost of building the house.

1 hour from big city is big suburbs. for Austin, you'd probably need to be 2 hours to get that much space. Houston, maybe 3 lol
that's my dream as well, probably do that after the kids have moved out. porch all around the house, no visible buildings from many angle. enough land where me and my dog can walk the fence line.
 

Cad

scientia potentia est
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Can’t necessarily look at it as shitty muni bonds, he prob put 20% down and thus had 5x leverage in a low risk situation
If he put 20% down then we need to further subtract the mortgage interest on the 80% and the property taxes, which likely makes it a negative return investment. Palum Palum beat me to it.
 

Gravel

Mr. Poopybutthole
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Move trailer to a different lot. Sell house. Live in trailer. Build house on empty lot. Sell trailer when house done.
So the problem with that is I don't have another lot to move it to. Anything nearby is like $300k for the lot, and that's for places not on the water. It's Orange Beach, AL, which is becoming a burgeoning beach community. Theoretically I guess we could buy something much further inland (past Foley maybe), but at that point it's a chore and I'd rather just stay put.
 

Fucker

Log Wizard
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So the problem with that is I don't have another lot to move it to. Anything nearby is like $300k for the lot, and that's for places not on the water. It's Orange Beach, AL, which is becoming a burgeoning beach community. Theoretically I guess we could buy something much further inland (past Foley maybe), but at that point it's a chore and I'd rather just stay put.
Might inquire with these places to see if they have lots to rent, or know of where to look. Might get lucky.

 

Palum

what Suineg set it to
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Might inquire with these places to see if they have lots to rent, or know of where to look. Might get lucky.

deliverance GIF
 
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Pharazon2

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If he put 20% down then we need to further subtract the mortgage interest on the 80% and the property taxes, which likely makes it a negative return investment. Palum Palum beat me to it.
But if you consider that then you should also consider the money one would have spent renting if one didn't own and you come out ahead again.
 

Cad

scientia potentia est
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But if you consider that then you should also consider the money one would have spent renting if one didn't own and you come out ahead again.
Thats not as straightforward as it seems though because if you rented you could keep a lot of your money in the market that would otherwise be sitting in home equity earning negative percentages.
 
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Palum

what Suineg set it to
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Right it's not like there's no value such as privacy or hedging against vagaries in the rental market, etc., it's just not as straight forward as 'housing best investment'. Realistically, the house is the best store of value, because it prevents retards from spending it on frivolous shit and generally keeps up with inflation on its own as a hard asset, not just because it actually appreciates as areas get developed and become more popular.
 

Captain Suave

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Thats not as straightforward as it seems though because if you rented you could keep a lot of your money in the market that would otherwise be sitting in home equity earning negative percentages.
I did exactly this for most of the 2010's. My local real estate market was such that renting was ~2/3 the cost of owning at the amount I'd have to borrow. (Yes, this is an unusual situation but the rental dynamics are different when you get into upper middle/lower upper class property territory.) This let me keep money growing in the stock market that eventually let me put 60% down when we bought in early 2023 after rental prices rose a lot faster than purchase prices.

For anyone considering these tradeoffs, NYT (I know, I know) has a very detailed calculator that includes factors for essentially every relevant cost and opportunity.

 
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lurkingdirk

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Dang, I'm really glad I bought when I did. Just over 40 acres, enough of it with mature hard wood trees that I can heat my house for just about ever if I'm smart about it, lots of cleared land to farm and raise livestock, which we do, a couple acre pond that is stocked with largemouth bass, bluegill, sunfish, and crappies. I think my pond is big enough that I'm going to try Walleye this spring and see if they take. I have completely remodeled every room in my house, and I love it. It's big enough for a family of 7, and we're going to be empty nesters pretty soon, so certainly don't need anything bigger. I have a barn, a woodworking shop, storage shed, and machine garage, all heated. Well, the barn is sorta heated. I've got chickens, geese, ducks, goats, pigs, and have had cows. We also have almost 4 acres of food growing, you name it, we have it. Plus almost 5 acres of fruit trees. I made a below-ground cold storage for apples, potatoes, and everything possible to can. We eat off grid quite a lot. I have about 20 acres that is heavily forested, and this year for the first time I'm going to hunt it. And I mean really hunt it. I'm getting tags for every family member and I'm prepared to buy as many freezers as I can fill. Free food, and as delicious as venison? Yes please. I'm going to buy an industrial sausage maker. I've been saving goose fat as we've been cooking them so I can add it to the sausage. It's great.

Last night I had friends over for dinner. The wife is a realtor and this thread made me think to ask what she thinks the place is worth. It was gorgeous weather, we actually ate outside, and went for a walk and I showed her the whole property. With all the improvements, outbuildings, landscaping, and such she quoted me a figure that I could sell for that staggered my mind. All the previous estimates for property value were just based on the house and the fact that it had land. But with everything included we are talking well into 7 figures. That blows my mind. I have certainly put a lot of money in to the buildings/land, but had no idea the return on investment would be so great. And because I did the work myself, and did it in a way that I didn't have to accrue more debt I have the place paid off. Well, I get a $5K mortgage every 5 years or so in order to claim the Homesteader exemption on my property taxes.

I write all of this to demonstrate a couple things. Many people could have purchased my property back 20 years ago. House was out dated (1977 house), badly in need of a lot of repair, and the land was untouched. So anyone COULD have bought it, but very few people have the mean, the skills, knowledge, and time to completely refinish an entire house and build barns and such. Young couples have too much work time. Or they have children that are demanding of their time. They can't put four or five days a week into their own place. And many would have purchased the property and been house poor, so the funds wouldn't be there. I'm able to do electric, plumbing, gas line, carpentry, finishing, flooring, whatever needs doing. There are fewer and fewer people who have those skills, so there's a rise in companies like "Mr. Handyman," because people just don't have the knowledge to do it themselves. Add to that nearly 7% interest on mortgages, and diminishing tax rewards for being home owners, add the fact that salaries have absolutely not inflated along pace with housing costs, and add to that condos, apartments, and rentals that people can walk in to and have someone else do the upkeep, and here we are.

Imagine in 1950 a young man and his new wife bought a house. They were affordable, and people made about 50% of their home's complete value in one year. Most likely single salary, stay at home mom, all the traditional things. Now one large difference is that the dude probably knew how to change a light fixture, fix a hole in the wall, and all that basic shit. Housing was proportionally cheaper, materials were absolutely cheaper, and people had more home-ownership skills than they do now.

Honestly, I didn't expect to write this tome, but this is something I'm fairly passionate about. I genuinely feel badly for the 20 or 30 somethings that are trying to buy houses. They're making compromises like living 2 hours from work so they can afford a house. Sacrificing hours and hours a week in their car instead of with their family. It sucks balls, and it's not going to change any time soon.

I'm sure no one is reading anymore, but I'll keep on. I'm checking out building a foundation that helps younger folks purchase their first house. Helping with a down payment, then helping with things like taxes and home ownership (because no one teaches that). Teach them basic skills around the house, and once they are established, they can get a home line of credit at a good rate to pay back the down payment made on their behalf. It sounds risky, but I like some risk in my life. If they screw their credit and can't secure a line of credit, we sell the house and recount our costs. It's a new idea that is fresh to me, but I'm seriously considering it. I have four financial backers who are interested in this. Lord help me, I may be wading into something too deep.