homebuying tips

[trupti nigam]

Hello,

What is advantageous.
1. Getting upgrades from the home builder
2. or upgrading the house on your own, not from the builder but some other resource


Thanks,
Trupti

[kayal cox]

Getting upgrades thru builder:
Might be more expensive
But builder will take care of the hassle
Will come under the builder's warranty
The cost will be factored into the home price, so you wont have to pay cash out of pocket

Getting upgrades by yourself after closing the home
You can do it at your leisure
The price might be cheaper (this depends, sometimes builders help get contractor prices from flooring/tile/cabinet guys etc, in which case this might not be cheap)
Things like exterior brickwork are best done during building, so you dont have to pay extra and tear down siding
You will have to handle the hassle of working with the upgrades guy
Best for do-it-yourselfers

In our home, we decided to do custom painting, laundry room cabinets etc by ourselves later on. The other upgrades we did thru the builder.

If cost is a concern, try to get atleast the structural upgrades done thru the builder - eg: 9/10 feet ceilings, bigger/additional windows etc. These are difficult to implement later on.

My hurried 0.2 cents. Hope it helps!

[peter wooster]

Originally posted by trupti nigam:
Hello,

What is advantageous.
1. Getting upgrades from the home builder
2. or upgrading the house on your own, not from the builder but some other resource


Thanks,
Trupti

Buy a resale, there is a better chance of judging the quality of the house and the neighbourhood and the bugs will have been ironed out. Also you can always get professional inspections of resale houses, but rarely of new houses.

[Roger Johnson]

two homes i bought were all resale home.

the first one has a lot of upgrades:
sun room;
finished basement (including a basement suite);
two level deck;
full size hot tub;
sky light;
....

when i bought the home, i thought i would live there for a while, it turns out to be only half a year. so i had a different point of view when buying my second home. there is not many upgrade, but still plenty of space. i will leave basement unfinished. from investment angle, i think my 2nd home would be a better investment property.

but of course, both of them were inspected throughly. in midwest, real estate is always buyer's market.

[Kishore Dandu]

Originally posted by peter wooster:


Also you can always get professional inspections of resale houses, but rarely of new houses.

When I bought mine, I did get professional inspection done 3 times.
1. during foundation
2. just around they put on the walls.
3. before closing.

People do take professional help just before builder warranty expires(always a fresh pair of experienced eyes helps to find the kinks)

[Roger Johnson]

when it came to real estate, it is "location,location,location".

i have nothing against new construction. but think about it, if you can afford a new home, then you can afford an older home at a better location.

of course, sometimes, a good location is where new homes are built. i also considered new construction when i bought my second home, but eventually walked away, in this area, new construcion in good location is too expensive. the only new home that is in the price range was built near a waste disposal location. my realtor told me it smells in certain weather. but i still see that sub of new home were sold very fast.
[ April 11, 2005: Message edited by: Roger Johnson ]

[peter wooster]

Originally posted by Kishore Dandu:

When I bought mine, I did get professional inspection done 3 times.
1. during foundation
2. just around they put on the walls.
3. before closing.

People do take professional help just before builder warranty expires(always a fresh pair of experienced eyes helps to find the kinks)

Most builders won't let a professional independent inspector working for the purchaser anywhere near the site before an offer is signed. Of course after they have an unconditional signed offer in hand they don't care who looks around. The advantage with resale is that the offer to purchase is almost always conditional on inspection.

And the warranty can be more trouble than its worth, it lets the builder offload the QA onto the purchaser. A friend of mine bought a new executive home in a nice suburb which had serious structural problems, eg. the fridge door wouldn't stay closed due to warped floor joists. The builder hummed and hawwed until the warranty was nearly expired, always looking for ways to postpone. My friend eventually got a lawyer on it and the builder fixed the problem at great expense. Our 75 year old and 25 year old houses never had anything that extreme.

When we sold our 75 year old house, we actually let one prospective purchaser come in with an inspector without any offer at all. They eventually bought the house at 8% over asking in a bidding war. But we knew the inspection would be glowing, for a 75 year old.

[Alan Wanwierd]

I bought a house that was 200 yrs old when I was in England..

The inspection report said (I'm paraphrasing):

"Some evidence of woodworm activity in load-bearing beams - but not currently active so this activity could be centuries old and is unlikely to have caused any serious damage, since the house is still standing firm."

he also said "..small amount of rising damp in front wall..." We figured since the house had clearly stood firm for quite some time, that it was gonna stay up for a while!

Of course, in this case I got a 1.5 bedroom tiny cottage (with loads of gorgeous character)for the cost of a new 3 bed house(tacky, thin, characterless)- but it suited my needs for a while, and then provided a rental income greater than the cost of the mortgage for a couple of years before being sold at enormous profit!

I've never heard of anyone buying a *new* house and not having problems! My 2c - Its always better to buy one thats already "settled"!!! (although 200yrs may be leaving it to settle a *little* more than is absolutely necessary!)
[ April 11, 2005: Message edited by: Adrian Wallace ]

[Roger Johnson]

by the way, where do your guys live? just try to get some ideas of local real estate market, the chance are, i may move to that area later on, you never knows

[Kishore Dandu]

Originally posted by peter wooster:


Most builders won't let a professional independent inspector working for the purchaser anywhere near the site before an offer is signed. Of course after they have an unconditional signed offer in hand they don't care who looks around. The advantage with resale is that the offer to purchase is almost always conditional on inspection.

And the warranty can be more trouble than its worth, it lets the builder offload the QA onto the purchaser. A friend of mine bought a new executive home in a nice suburb which had serious structural problems, eg. the fridge door wouldn't stay closed due to warped floor joists. The builder hummed and hawwed until the warranty was nearly expired, always looking for ways to postpone. My friend eventually got a lawyer on it and the builder fixed the problem at great expense. Our 75 year old and 25 year old houses never had anything that extreme.

When we sold our 75 year old house, we actually let one prospective purchaser come in with an inspector without any offer at all. They eventually bought the house at 8% over asking in a bidding war. But we knew the inspection would be glowing, for a 75 year old.

I completely diagree. In the area where I live(Dallas,tx) almost 100% the builders allow buyer hired professional to look around. They never objected in my case and many other friends cases.

[Kishore Dandu]

Originally posted by Roger Johnson:
by the way, where do your guys live? just try to get some ideas of local real estate market, the chance are, i may move to that area later on, you never knows

Plano, Texas(suburb of Dallas).

3500 sq feet house, I bought for $250k about four years ago. You can buy big houses for reasonable price range in Dallas area. But the home appreciation is not very high though.

[Roger Johnson]

incredible! i am in detroit area, on average, a 30 year-old 2,000 sqft home will cost $250,000 in detroit suburb.

however, here is an email link i just received today:
fremont, california

[Roger Johnson]

speaking of home tips, i came across some old Chinese crap:

Feng Shui tips for your home

House Buying Tips
[ April 12, 2005: Message edited by: Roger Johnson ]

[Alan Wanwierd]

Here in Brisbane a reasonable 4 bed home with pool & air-con (200 - 250 m2 which by my crude mental arithmetic is probably around 2000sq ft). Will now cost around AU$500K (US$380). With prices just five years ago being about 40-50% what they are now!!

..and if you think that sound pricey just remember average wages in Australia are about 50% what they are in US... and we are one of the highest taxed nations on earth!

[Roger Johnson]

is there any tax benefit for home mortgage in Australia?

here in the US, the interest portion of the mortgage payment is tax exampted, another advantage buying over renting.

Originally posted by Adrian Wallace:
Here in Brisbane a reasonable 4 bed home with pool & air-con (200 - 250 m2 which by my crude mental arithmetic is probably around 2000sq ft). Will now cost around AU$500K (US$380). With prices just five years ago being about 40-50% what they are now!!

..and if you think that sound pricey just remember average wages in Australia are about 50% what they are in US... and we are one of the highest taxed nations on earth!

[Alan Wanwierd]

Originally posted by Roger Johnson:
is there any tax benefit for home mortgage in Australia?

No... none whatsoever.... which makes investing almost impossible since I need to get a return on any investment that is more than twice the cost of my mortgage (since any investment income would be subject to 50% income tax) to justify doing anything other than trying pay off my house... Investment opportunities [at least ones that dont involve friendly exhiled Nigerian bankers] offering >15% apr are pretty rare!

There is, I suppose a tax benefit to home-ownership in that you are not subject to capital gains tax for a house you've lived in - so if I sell my house now the amount its appreciated over the last 5 years would be all mine to pocket... However, I then wouldnt have anywhere to live would I!!

Their is however a very real tax benefit in a mortgage on an investment property. The interest costs can be offset against the rental income for a property, thus properties that make a net loss can be a good for your tax return!?? (although capital gains made from sale of investment properties are taxable.. so you get slugged in the end!)

This weird mix means there are alsorts of schemes where people take out 2 mortgages, use the income from the investment property to pay off the non-deductable resident home-loan as quick as possible, keeping the investment home loan large to get the most from the tax deductions... but this seems like dodgy accounting to me!

[Roger Johnson]

Originally posted by Adrian Wallace:


No... none whatsoever.... which makes investing almost impossible since I need to get a return on any investment that is more than twice the cost of my mortgage (since any investment income would be subject to 50% income tax) to justify doing anything other than trying pay off my house... Investment opportunities [at least ones that dont involve friendly exhiled Nigerian bankers] offering >15% apr are pretty rare!

in the US, the operating loss (the difference between your expense and renting income) is tax deductable. so if your net loss on the property is $10,000, you make $10,000 somewhere else, you do not need to pay tax on those $10,000

There is, I suppose a tax benefit to home-ownership in that you are not subject to capital gains tax for a house you've lived in - so if I sell my house now the amount its appreciated over the last 5 years would be all mine to pocket... However, I then wouldnt have anywhere to live would I!!

capital gain not subject to tax, to an extent, i think $250,000 for single, $500,000 for couple, but it have to be primary home, if it is rental property, you have to live there for 2 years prior to selling it.

Their is however a very real tax benefit in a mortgage on an investment property. The interest costs can be offset against the rental income for a property, thus properties that make a net loss can be a good for your tax return!?? (although capital gains made from sale of investment properties are taxable.. so you get slugged in the end!)

yes, please see above

This weird mix means there are alsorts of schemes where people take out 2 mortgages, use the income from the investment property to pay off the non-deductable resident home-loan as quick as possible, keeping the investment home loan large to get the most from the tax deductions... but this seems like dodgy accounting to me!

your primary home should be sepearted from rental property.

on rental property, a net loss will write off tax, on a net gain, you have to pay tax.

on primary home, interest portion of mortgage payment is tax deductable.

overall, to borrow a large amout loan, you can rarely beat the interest rate of a primary home mortgage; to invest, i was told real estate is the best way to invest. but of course, there is always risk!
[ April 19, 2005: Message edited by: Roger Johnson ]