View Full Version : Need Sound Advice About Building Cottage...
Hi, I haven't posted on this site for a very long time so I am glad to be back.
I feel very stuck right now with a decision my dh and I are trying to make.
Here is the situation.
Last September we were forced to demolish our cabin. It was very old and rotten and when I bought it 4 years ago(paid $50K for it with an out of court settlement), I knew one day the cottage would be gone and that day has come. My dh and I have 985K in our retirement portfolio. He is 56 and has a great job but it isn't even contract work-it is Purchase Orders but the company tellls him they will keep using him(in IT) for another year. He can clear $600 a day for four days a week, so like I said it is very good money but just no job security. I am a stay at home mother who homeschools her two youngest children-7 and 11. We have two more at home - a 17 year old and a 20 year old. Our 24 year old is on her own but we kick in money here and there to help her out.
So now the dilemma. I don't know whether we should go ahead and build right now. Should we take a mortgage out or even a Secured Line of Credit @ 4% to build this cottage. My dh is not handy at all so we are looking at a pre-fab-likley be time all shakes down will cost between 70-80K.
I have alot tied up emotionally with having a cabin because I always wanted to have something for my kids and I to use in the summer months. This was my goal when I received this out of court settlement.
So I would love for anyone to give me their wise, sound advice here please.
Thank you so much for listening and responding.
Zeal235
As much as I appreciate Simple Living I'm going to recommend you ask this question over on The Money Mustache site. The do a LOT of financial decision making and might have good input on the construction aspect as well.
http://www.mrmoneymustache.com/forum/index.php (http://www.mrmoneymustache.com/forum/index.php)
All in all it sounds like a great adventure to me!
May I suggest that you consider a temp situation to give yourself some time, some enjoyment with the place and peace of mind?
There are a lot of mobile (think used travel) homes on the market that are compact and convenient and reasonably priced. Get electricity hookup, a holding tank and some water hookup and you will be set. You will need these three for the cabin as well.
What you might get in a cabin for $70-80,000 is very limited. There is a lot of maintenance in a building as well. You could have several large mobile homes over the years for the same money.
There are a lot of unanswered questions here. What are your current monthly expenses? Is your primary residence paid off? Do you have any debt? If your DH could never find work after a year, would you be OK living off your retirement funds for the rest of your life, even with a cottage? If you had to retire tomorrow, 4% of 985K is roughly 39K, not including taxes. Can you live on that forever? This is how I would answer your question. I've worked in IT. I have to be honest, it's not a friendly environment for older people. When this work runs out, what other opportunities are there in your area? I've known people over 40 who routinely run into age discrimination in the tech field, despite their experience and skills. You might be able to find work, but it may pay a lot less than you are currently used to.
A quick calcuation shows that a 15 year mortgage for a loan of 64K (I assumed the cost would be 80K, less 20% down) would run around 450 a month, excludiing maintenance, taxes and insurance. If you had a long stretch of unemployment, could you cover that payment, plus your recurring expenses? Do you have liquid savings? Or is some of your retirement money in a Roth IRA at least so you can access your contributions (I'm assuming you aren't 59.5 yet)?
If it were me, I would wait until DH has a firmer grip on employment or until I could pay cash for the cottage. He makes a lot of money, how much of that can you save in a year? If he clears 600/day, that's net right? Assuming he works 20 days a month, that's a net salary of 120K. That's 10K a month. That's a lot of money. If the cottage is important, why not just save up the cash? Unless your expenses are out of control, you should be able to save enough to build a cabin in two years or less. Assuming you do bring home 10K a month, that still leaves over 6K a month to live on. If your expenses are that high, you need a lot more money in retirement to maintain your lifestyle anyway, so you should think long and hard about building a cottage. Are you paying for college for your 17 and 20 year old? If I had already committed to helping them with school, that seems more important than a cottage, in my opinion. What about your younger kids?
Sound advice so far. I second the idea of a mobile home. One of my favorite authors, Mary Pipher, said the one regret she had in raising her children was not having had a regular getaway spot (am paraphrasing). Childhood passes quickly and kids cherish these special bonding times and aren't going to care of it's fancy or not.
If the site had an existing cabin, then I'm guessing you already have water, sewer and some kind of electrical or propane setup already? Some kind of basic modular home won't cost much and you can start enjoying it now. Don't wait, is my advice.
Hi Ceclia, thank you for responding to me. I did try posting at this other forum but I didn't quite get the response I got with this one. It does sound like a great adventure but I am not sure I want to go into the debt right now. Thanks again for taking the time to respond to me.
Wow, thank you all for responding. First to answer the mobile question, the R.M. where our land is located(northern Saskatchewan, Canada) has a bylaw not allowing mobiles to be on your own property. Also, the new place you build must be 600 square feet. So this is out of the question. Our only option is to build ourselves or have someone build it. No, we have no mortgage on our house. It is true that IT is not kind to older workers. My dh totally agrees. On one hand I want something for my children like this author had stated it is something she regretted not having while raising her children(nice to hear of this btw) and on the other hand I don't want the debt. I am afraid of my dh losing this contract right in the middle of building even though the company reassures him he is still very much needed.
Our expenses average around $4500 per month but this is adding a $500 mortgage for a cottage starting in January 2012 in my FI tracking for the future building of a cottage. The past years we spent lots-like 74k in 2010 and 68K in 2011 but I am really trying to be more conscious financially. I know we can save for the cottage for the next year. I guess I am impatient to have something for my family to go to for the summer. It would take us all summer just to frame and enclosed and lock it up in the fall before the winter so we wouldn't even be using it this summer. We can put a trailer on the property but only while we are building and we must show the RM that we are indeed building. No, we are not paying for the children's education but we help them out from time to time with money gifts.
I so much appreciate all your comments. YOu have been very generous and thoughtful. I really need all your input into this decision.
If anyone of you or anyone else can comment again, please feel free. I could use all the help I can in making this huge decision.
Zeal235
thinkgreen
5-27-12, 1:41am
Have you looked at what it would cost to sell your land and buy land with a cottage on it? Depending on the market circumstances it can be cheaper and easier than going through the construction process.
If you're in a community that is picky enough to ban trailers, it sounds like it may be one where the finished property would have some recreational value, with things such as a lake, and restaurants or other amenities not too far away. I'm skeptical of resort properties without some recreational amenities. One has been in my family for a couple of generations and has been underused.
Talk to an appraiser or real estate agent and ask what the property would be worth with your new cabin on it. Does putting a cabin on the land create value? Does building an $80K cabin make the property worth anywhere near $80K more than the piece of vacant land?
If you do build, at least in the U.S., small to mid-sized cabins are readily available in standardized designs. A quick Googling suggests the same for Canada. Don't mess with the standardized design to keep costs down, and let a builder who puts up THE SPECIFIC DESIGN get it able to be occupied quickly.
One bath and a nearby kitchen sink simplifies plumbing and winterizing. Tying up the money in land and having your kids grow up without the cabin is not worth spending two summers building something that could be built in two or three months. If you go with it, keep it simple. It's a recreational cabin, not Bill Gates' house (http://en.wikipedia.org/wiki/Bill_Gates%27_house).
@Redfox-we cannot build a yurt according to the bylaws.
Thank you to all who have responded to my request for advice. My dh and I have decided that even though his job makes good money it is not secure enought to go and build a cabin this year. The plan is to save enough to get it started-possibly next spring. I appreciate all of you taking the time out of your busy schedules for all your advice.
Powered by vBulletin® Version 4.2.5 Copyright © 2024 vBulletin Solutions Inc. All rights reserved.