Am I doing the right thing RE: Building a new house?

[OriginalGeek]

So 4 years ago I inherited my grandpa's house. It is nicer than our house at the time so we moved there. Grandpa and grandma had it built in a nice subdivision in the mid-70s and changed nothing in all the years they lived there. It really is a lovely neighborhood BUT part of the reason for that is the HOA - they do their job and the place is nice but it is also a pain in the ass. I have to get their permission to repaint trim even if it's the same color. They sent me nasty letters for not getting approval to replace my mailbox out front when it got knocked down - we stayed within the guidelines for color/height/shape and all that but failed to get pre-approved. I needed a mailbox, wen tot he store and got one and a bag of quickrete and put it up. They routinely harassed my grandpa about his Airstream trailer in the back yard because you aren't supposed to have an RV parked where people can see it from the front yard - well he bought his lot (and was approved in 1975 to put his trailer there) specifically because it was a corner lot that was configured so that he had a street on both his front and back. So he had his Airstream parked there for almost 50 years and pretty much every time a new board was voted in ahe had to go educate them on why his RV was allowed.

Anyway - we hate the HOA. We love the neighborhood but the house is in need of a lot of repairs. Grandpa kept it up very well but stuff just gets old - especially pipes and wiring that we are slowly replacing. And it's straight up mid-70s ugly lol. We've replaced 40 year old carpet with tile and other things but it's getting to be another pain.

But the biggest strike is this house is way on the other side of the city from our kids and grandkids. We used to live a 5 minute drive and now it's over an hour or worse when traffic is bad.

So this summer my wife inherited her aunt's house. It is in an up and coming neighborhood that is slowly getting gentrified. Not a historic neighborhood or anything but it is close to downtown and neighborhoods around it are really booming. Auntie's house is a 700 sq ft cinder block box. Nothing historical or interesting or anything about it. It is over 70 years old and has had virtually nothing replaced in all that time. Her aunt lived there almost all her life and never spent any money on anything.

What we want to do is sell my house an knock down aunt's house and build new on her lot which is back within a 5 minute drive the kids and grandkids and all the things stores and restaurants we enjoyed for the first 36 years of our marriage.

We have to live in grandpa's house while the other is being built so we think the best course of action is to get a home equity line of credit on grandpa's house and add that to cash on hand to build the new house and then as soon as we can move in over there, sell this one to pay off the HELOC.

We should end up with a new house, no mortgage and some money left over for retirement (not counting my work retirement stuff - I'll be working for 10 years or more)

We have never built a house before but I love the builder we picked and have had several delightful meetings with them so far. Their ideas are getting us very excited about it all. We know everyone in the neighborhood because we have been visiting over there all her life and the last 40 years of mine. It is NOT a scenic neighborhood with an HOA but w are ore used to that than having the HOA lol. We ain't fancy. We will have a front porch to sit on and drink beer and welcome family and friends and that makes me pretty happy.

Am I forgetting something? It seems too easy (inheriting land and money helps a lot but still). Is HELOC the right thing to do or is there another way to pay the builders using what we have now?

If all goes well we should be able to move in before christmas next year.

thanks!

[Shermann]

1. We may be in a housing bubble right now

If I had a house which needed to be sold in the near term, I'd waste no time getting it on the market. I'd try to lock in the current high prices and sell the property as-is without having to do a lot of upgrades or repairs.

All that said, the housing market could continue to rise.

[Phoenix61]

2. Check with the zoning department about

set backs etc. You may do better with a construction loan rather than a home equity.

[Lars39]

3. Another option....

Sell house now, rent with your savings, and use a construction loan. Builder might not have as many hoops to jump thru with HELOC versus construction loan. Might be an added layer of protection for you.

[Nittersing]

4. up and coming neighborhood that is slowly getting gentrified...

Double check with the city planning department. Just make sure the city doesn't have it's eye on your aunt's property sometime down to road.

[jimfields33]

5. If you build a garage, add to it.

That’s the one issue I hear people wish they did. Add to the garage. If you are having a two car garage, make it two and a half or three even if you only have two cars. Get the larger cabinets (I think 14’s). Get a lazy Susan for corner as you don’t want to be crawling on the floor trying to get that pot out of the back of a cupboard at 80 years old. Do the outside deck now because most add later. Basically make sure you make every desire now as there’s only going back and it’s better to add some pricing on to the house now then try to do the changes later.

[msdogi]

6. talk to your bank or find a good loan agent

They can be very creative with ways to make this work. Also, visit a project in progress or two where you're going to build and talk to the contractor or owner to get an idea about local building departments and what kind of problems they've had.

[ret5hd]

7. I'm going to go counter to most here, I think.

If it were me (and I have long wished I had) I would:

1) Build as small as would be comfortable
2) no 2x4 construction—2x8, sprayed foam insulation
3) triple pane windows (check out some of the windows they use in Germany and other northern countries).
4) solar power, solar hot water (which includes heated floors that are warmed with water tubes embedded in the floor slab)

Etc etc etc. Try to make that house as efficient as possible.

[OriginalGeek]

10. Yeah that's one thing this builder does

energy efficiency is a top priority and we are already decided on sprayed foam. We are downsizing several hundred sq ft from grandpa's house but we still have to fit 2 adult differently abled children that we will have to care for forever. probably won't have to worry about heated floors in central Florida lol. But then we will absolutely have to worry about AC.

The utilities where we are moving to are a LOT cheaper than where we are now and we hope to mitigate the larger house (compared to the one we are tearing down) by making it 2022 efficient as opposed to 1940 efficient.

[hunter]

8. Watching what our parents and some of our siblings have gone through building their dream homes...

... I'd never do that.

Only my wife's parents and one of my brothers managed to build true lifetime family homes. The other houses all got sold off or rented out for various reasons, usually within a few years, any profits they made hardly worth the effort they'd put into building the houses.

From an environmental standpoint it's usually better to upgrade and make additions to a house than tear down the old and build from scratch.

[mnhtnbb]

9. Sell grandpa's house now and find a rental

near where you are building so you can keep an eye on it while it's under construction. Make sure demolition and new construction will be easy to get permits. If there's asbestos in the old house, demo could be very costly.

My husband and I built a new house on the lot where our previous house was destroyed by fire. We planned to sell the interim house we had bought and remodeled before deciding to rebuild. No market for the house and we ended up having to rent it for 3 years before the market finally turned around.

Good luck! It is fun to build and get what you want. But be sure to do your homework on the demolition and permits first. And I'd sell grandpa's house now and rent while you build.