Weighing the facts about buying a new home versus buying a previously owned home and getting the best return on your investment.
Have you ever wondered why, when given the chance, someone buying a home would buy a previously owned home before buying a new one? The reason is the return on the investment.
New homes have a lot of great qualities. Everything is new so you don't have to worry about expensive things failing to work, like septic tanks and electrical systems. If something does go wrong with it, you can simply call the builder as new construction homes come with a minimum one year warranty. But there really isn't a lot that you can do aside from putting an addition on your home to increase that value quickly to get a good return on your investment.
As for previously owned homes, if anything can go wrong, it will - you can bet on this. But what you can do to increase their value is astonishing.
From a simple coat of paint in the kitchen, to changing old, wooden back door to a sliding glass door opening out to a deck that you built with your friends. All of these jobs, no matter what their size, can add value to your home. If you can do the work yourself, you will save money, therefore adding value to your home with the lest possible investment A typical rule of thumb is this: Whatever you pay for the materials, the labor is usually the same. This means that if you pay $1000 for a sliding glass door, it will cost roughly an additional $1000 to have it installed for you. Now, whatever you paid for materials and installation (in this case it's $2000), the value of your home will increase double that amount (in this case it's $4000). If you can reduce or even eliminate the installation charges, the return on your investment will go from doubling to quadrupling.
Don't get me wrong, you can do all of these things to a new home, too. People just don't seem as happy and enthused about ripping up a newly built house as they are about an older one. After all, there aren't too many homeowners taking out home improvement loans for their brand new home as there are for older homes.
If you want the best return on your investment when buying a newly constructed home, ask the builder about buying it partially unfinished. By doing this, you will save the builder time and money by not having to paint the walls and put up some of the molding in the hallways. One caveat with doing this would be if you're planning to take out a mortgage on your home. Many financial institutions will require that the home is 100% completed before you move in when you buy a new construction, with every wall painted and every hinge in place on the kitchen cabinets. Be sure to check with your financial institution about this possibility as well as ask them about a construction loan.
Whichever you choose to do, the most important thing is to make your home your own. Love your home for what it is to you, not for what it means in your checkbook.
