Once we realized that buying a ready-to-live-in home was just one of many options for us, we soon realized just how many options we have. We’re literally still thinking of new ways to attack the “where are we going to live?” problem. This blog post is an attempt to capture each idea, along with its pros and cons.
0. Buy the house we’re currently renting
Our landlord has repeatedly offered to sell us his house. Just getting this one out of the way first, as Mrs Foundry has already veto’d it.
Pros: no moving. Cut out middlemen to decrease sale price. We’re very aware of the house’s shortcomings
Cons: it’s on a busy street. We’re very aware of the house’s shortcomings.
1. Buy a house that’s ready to live in
This one’s pretty obvious since it’s what most people do. You buy a house that’s been kept up well and/or remodeled recently so it doesn’t need much additional work put into it.
Pros: move in right away. No getting your hands dirty.
Cons: more expensive. No customization. Someone else reaps the sweat equity of remodeling the home.
2. Buy a fixer-upper
Perhaps this one gets the silver medal for obviousness. I haven’t seen too many fixers on the market, but it’s something to consider. I could see us moving into an outmoded—yet functional—house with good bones (picture green shag carpet and harvest gold countertops) and remodeling room by room. We could do many things ourselves and pay to have professionals do the rest.
Pros: move in soonish. Don’t have to start from scratch. A remodel is easier to get permits than new construction.
Cons: fixers are actually pretty expensive. Don’t get to pick the floorpan. Depending on the condition, living in a fixer is probably stressful.
3. Buy a too-small house and add an addition
Mrs. Foundry thought of this one last night. For instance, we could buy a small rambler and plop a 2nd story on top of it. Probably easier said than done. There are lots of combinations of existing homes and possible additions (build into the back yard, build a 2nd story, build a tree fort with a zipline into the house)
Pros: Expands the selection of homes to choose from. Potential cost savings? A remodel is easier to get permits.
Cons: Have to work around the constraints of the existing structure. Potentially time-consuming.
4. Buy a teardown
Buy Bob’s Crusty Shotgun Shack and host a sledgehammer party. Then, see Option 5.
Pros: doens’t matter what the house looks like as long as the lot is nice and foundation is solid. Companies like Re-Store will pick up demolished materials for a tax write-off. There’s already a foundation, utility connections, etc. Building the new home could be considered a remodel, which is easier to get permits for.
Cons: extreme shortage of these. I think I’ve seen a total of two teardowns on the market in the past four months. You still pay for the value of the house, and then pay again to have it demolished.
5. Buy land
Like Option #4 without the sledgehammer party.
Pros: don’t have to pay for demolition. Can start completely from scratch. Get to choose everything, a completely custom home.
Cons: shortage of vacant lots in Seattle. Need to do more work ahead of building, such as geotechnical reports and foundation. More permitting red-tape.
So it’s five options, that’s not too many, right? Wrong! Each of the options that involve building (either an addition or an entire house), also involve sub-options!
Apparently when you build a house on-site, it’s called stick-built. This is what everyone pictures when they think of building a house so I won’t go into too much detail.
Pros: everyone understands this process. Easier to get loans (compared to prefabricated, see below).
Cons: materials get damaged by weather, stuff gets stolen, can take a while
Prefrab gets a bad rap because many people think of mobile and manufactured homes. But “prefab” simply means building some of the house offsite. The house itself can still look awesome when it’s done. Prefab includes “modular,” where the house is built 90% offsite and lifted onto the foundation. I’d call this the “legos” school of homebuilding. There’s also Structural Insulated Panels, or SIPs, which are like pre-built walls. I’d call this the “construx” school of homebuilding (remember those?). Those are just two of the many ways that some (or most) of the home can be built offsite.
Pros and cons here are less straightforward because it’s really on a case-by-case basis. Furthermore, you’ll rarely get a straight answer from professionals because most of them have skin in the game for one or the other. Proponents of prefab will tell you “you wouldn’t send a team of mechanics to build your car from raw materials in your driveway, so why do the same for your home?” Detractors will point out that for single-family homes, the economies of scale just aren’t present to make prefab a cost savings approach.
Then there’s financing. Fewer lenders are willing to make loans for prefabricated homes, so there’s less competition in the market which drives mortgage rates up. Apparently the modules are considered “personal property” until they’re installed on the lot. Only then are they considered “real property.” Personal property is riskier to lend money for (that’s one reason credit card rates are higher than mortgage rates), and banks are understandably skittish about loaning money for enormous, hundred-thousand-dollar cubes of wood that are literally trucked across the country on the back of flatbeds.
So there you have it. About a dozen different approaches to owning a home. We’re keeping our options open (you don’t even want to see how many spreadsheets and saved real estate searches I have going), but there will come a time where we’ll need to pull the trigger and start the journey down one of the aforementioned paths.
Anyone have experience with any of the non-traditional routes?