I am going to take you through the process of how we built our first house and the things we learned in the process. As this has been a fairly big life experience for me, this post will be completed over about 4 parts. I hope you enjoy it.
Buying a house
The decision to buy a house is not something that should be entered into lightly. There are lots of things to consider, and for many people, it is the single biggest financial commitment of their lives.
In my early twenties I decided that it was time to spread my wings and leave the relative safety of my parents nest. I had a couple of options – Rent a place, share a place or go for the big step and buy a place. I decided that I didn’t want to be paying off someone else’s mortgage by renting/sharing, so that made the decision to buy a house the only option left on the table.
At this time in my life, my wife and I were only dating and weren’t living together, so I had to assume that any house I bought would have to be paid off by myself without help. This meant that I didn’t want to take on too much of a debt burden, especially considering that I was only on an average wage at work.
I started my property journey by perusing real estate websites and weekend papers, I was looking for something in the $300,000 range, as this is what I had calculated would be an acceptable amount that I would be able to afford.
I quickly found a handful of places that looked ok, so I contacted a number of the real estate agents to find property viewing times. It’s one thing to see photos of a place, but I wanted to get first hand experience and actually see the properties in person
What I found was that not only did the real estate agents not give me the time of day due to my young age, but that the houses which looked so nice on the internet, were actually fairly run down and would need quite a bit of further maintenance work – All of which would cost money on top of the 300K I was willing to spend.
After a few weekends of disappointment and not finding that diamond in the rough, I decided I would change tack. My mum had suggested that I look into buying a unit or a town house/duplex as I didn’t need anything large seeing as it was just me living there. Plus I probably wasn’t going to need any extra bedrooms any time soon.
To my surprise, most of the units and town houses in my price range were quite nice and many of them were brand new. I thought I was close to finally finding a place to move into, when I remembered just how annoying it is to share a wall with your neighbours.
I had gone to inspect one of the units that had taken my fancy, when during my visit, the people on the other side of the wall decided to switch on their TV. About the only thing I remember being impressed about was the clarity of the TV through the wall, it was so clear I could determine the play by play action of the football they were watching. Almost immediately, I was turned off the idea of town houses and units and was back at square one.
Having limited success with pre-built houses in my price range, and not liking the idea of sharing a wall with a noisy neighbour, I decided that maybe this moving out stuff wasn’t for me and so I parked the idea.
Why did I choose to build?
It was about 2 weeks after I had given up looking to move out, that I was driving to my girlfriend’s house and saw an advertisement for blocks of land. The $130,000 advertised on the sign seemed cheap and so I made a mental note to check it out within the next couple of days.
Within hours, I was in front of the loans officer at my bank signing up for a loan to buy a block of land.
The Land
Let me be 100% clear – This was dumb!
- I did no research
- I did no comparisons
- I did no negotiating
While everything ended up working out for the best and I am happy with my decision, it was more due to luck than any forward planning on my part. I had no idea about building a house or any of the costs involved.
So back to the question – Why did we decide to build? Because I now had a block of land in my name and I wanted to move out from my parent’s house.
Despite my impulsive land purchase, there are plenty of reasons why building your own house can be a better option than buying an established home:
Pros:
- You get to select your own floor plan
- You can choose all the furnishings (Doors, windows, handles, light fittings, flooring, roofing)
- Less maintenance for the first couple of years of home ownership
- Normally costs about 10-20K less than an established premise (at least in Australia)
Cons:
- Have to wait between 4 and 6 months to move in
- Building can be delayed due to any number of things (weather, materials Ect)
- You are paying for something you can’t live in straight away
Part 2 – Builders, Display Homes and Hidden Extras
Part 4 – Saving Money on Building a House
If you liked this post and want to hear more from me then please consider subscribing.
As always, please leave any comments that you might have below in the comments section. I would love to hear from you.
Thanks Glen
Glen, this is a great idea for a series of posts – it took serious balls to do what you did! I don’t think I have the patience or temperament to build my own house. Looking forward to part 2.
James @ Free in Ten Years recently posted..Thou shall own and ride a bicycle
Serious balls or serious stupidity – I’m still not sure which…
It is great that you decided to do it at such a young age. And were able to. Don’t know about real estate prices over there but 300K is a lot for a first house. Now that I am fixing an old house I can see the benefits of making something new instead of trying to fix stuff that will break again tomorrow.
Pauline recently posted..Earn money while traveling? (part 2)
House prices in Australia are some of the highest in the world (or so the media keeps saying). You would think with only 20 million people and the same land area as the US, things would be a bit cheaper.
It seems like everyone I know who has built their own has been really stressed out and had a bunch of problems and unexpected expenses. I’m glad it worked out for you!
Holly@ClubThrifty recently posted..“Best of Craigslist” – November 2012 Edition
Don’t worry, i’ll get into the unexpected expenses and the problems in one of the later posts. We certainly had a few issues along the way.
This caught my eye “Normally costs about 10-20K less than an established premise (at least in Australia)” because in the US I have heard time and time again that it is cheaper to purchase an existing property, especially during the recession. If it is cheaper to build, why not? Good for you.
I would consider building down the road, but a lot of the land close to the cities are developed here so finding a house that already exists would give me more options as far as location. If I was willing to live further away in an exo-suburb I would definitely consider it.
DC @ Young Adult Money recently posted..7 Home Upgrades I Want…Someday
It takes us about 30-40 minutes to get to the city from our house so we are hardly close to the city.
I originally thought it was going to be more expensive to build as well, but brand new houses around the size of ours were all selling for at least 10-20K more. My theory was that it’s because you have to wait for so long before you can move in.
In Canada the costs between building and an existing home are fairly close. The BIG difference is that a new build comes with lots of hidden expenses, like window coverings, finishing the basement, paving the driveway, building a deck and fence.
Mandy @MoneyMasterMom recently posted..The Big Cook
I’ll be sure to go into detail on all the extra expenses that we discovered. There is always more than you think and often you just have to draw a line in the sand and make do .
Great idea for a series Glen! We had thought about building our own house when we bought five years ago, but the timing was a big thing for us. I think it definitely might be in our future. I would love to be able to set our own floor plan.
John S @ Frugal Rules recently posted..October Blog Goals Update
You can thank Kim @ Eyes on the dollar – she was the one that prompted me to think about it
Great series. My parents have always built their own houses (I come from a long line of craftsman) and my boyfriend (hopefully future husband) is a carpenter/builder so we have always wanted to build.
Around here, finding a plot of land that is less than $400,000 (for a decent plot) is hard to do. Then you have to build on top of it. The worst part is you have to put 50% down on the land, otherwise you can’t mortgage it. So it’s really hard to do.
Daisy @ Add Vodka recently posted..What I Bought This Week
I hope it’s a big block of land for $400,000? Our land cost us $135,000 but it’s very small (520m² = 621yd² | 8.23320ft²)
Very cool, Glen. (Lord if you had my neighbors upstairs at our apartment in the city…every time they hanky-panky, jars fly off the top of our fridge, lol. ) Did you purchase your land lot because you felt pressured to do so and were desperate for a solution, or were you following a gut instinct despite your lack of knowledge? So glad this seems to have a happy ending for you!
Jennifer Lynn @ Broke-Ass Mommy recently posted..Is Your Significant Other A Spender Or A Saver?
That sounds like some serious hugs and kisses going on…
I think I purchased the land because I was young and naive. I fell for the slick brochures and was really keen on moving out and starting my own life.
The only gut instinct was one of complete terror/fear that I was locking myself in for such a huge amount of money.
This is definitely very interesting to look at! My friend is building a house, and I agree, they are generally cheaper here as well. Hers is almost done though and they just started last week. INSANE!
Michelle recently posted..iPad Mini and $100 Cash GIVEAWAY!
Sometimes they look like there almost done, but it can still take a long time for it to actually be completed. I remember waiting for ages after ours looked finished and wondering what on earth was taking so long.
What a great post. We would love t o buy a plot of land and build a house. I look forward to reading this series mate.. good one! Mr.CBB
Canadianbudgetbinder recently posted..Make The Most Out Of Black Friday Deals Without Crossing the Border
Thanks Mr.CBB
Also, thank you so much for forwarding my posts onto your Facebook readers.
Sometimes luck works in your favor. Glad it worked out for you in this regards and you are happy with your purchase.
Jason Clayton | frugal habits recently posted..Why are some People Successful and others Not?
It was definitely all luck. I still can’t quite believe how lucky I was to have it all work out so well in the end
Great idea for a series. I need to see what $300K in Australia is compared to the US. That is expensive. We bought our first house for just under $90,000. We then built one a few years later. I should share that experience sometime. Do I ever have any original ideas or do I just steal from other blogs?
Kim@Eyesonthedollar recently posted..How To Have a Cheap European Holiday
Original ideas?!?!?! You are the one that suggested doing a post on property in Australia. So thank you for such a great idea for me to post on
$90,000 sounds amazing! I wish it were that cheap. If it’s still that cheap in the US I would even consider a move over there (provided I could find a job)
Excited for part 2! I am very impressed to hear that you built your own place so young. For me this was always a dream for one day… but maybe that is sooner than I thought!
Savvy Scot recently posted..Have You Thought About Dying?
Thanks! I didn’t feel young at the time, but looking back now it certainly was a pretty big thing to jump into.
I’m very impressed with your initiate at such a young age. I think of people who have houses built as being in their 40′s rather than their 20′s.
I just hope everything went well with the builder. My uncle had several issues when he had his house built, luckily it was under warranty.
I’ll definitely be back for part 2. I’m curious as to how it all turned out for you.
justin@thefrugalpath recently posted..Friday’s Fork in the Path: Posts that Kept me on Track 11/9/12
Thanks Justin
It wasn’t something I ever planned on doing, it just seemed like a logical step.
We had a few issues with our builder, but it wasn’t anything too bad.