View Full Version : Sell house and rebuild to get ahead and simplify?
I have been an avid reader of these forums for several years, but I have only posted once or twice. I value your ideas and so I thought I'd post about our latest thoughts in terms of housing. DH and I have lived on our property for fifteen years, first in a 12x16 cabin, sans plumbing, and now for the last twelve years in a house that we have added onto three times to accommodate our growing family. Because of these additions our house has grown substantially, and we have a mortgage. Years ago, we bought the property adjacent to us and it has occurred to us recently that we could sell our current house, build a more efficient home on this paid-for property, and come out mortgage-free. This seems like a no-brainer on a logical level, but it also sounds like a lot of work. We have been under construction for fifteen years now! At the same time, we have learned a lot through all of this experience and feel like we know better how to make another house work for our family. We are excited at the prospect of designing and building another home.
We like our current home, but we have this discussion every spring--this idea is not new to us. We usually just decide to wait, but this year it seems different. We would like to minimize bills and free ourselves for other opportunities, like travel. We are talking about building a family cabin, so this will be a big change for our young sons, who are quite happy here. We are absolutely going to run the numbers to make sure this really is a sound financial decision; the emotional part is the challenge. I have read with interest many of the threads on downsizing, but I would love to hear your thoughts on our particular situation.
It's really hard for me to speak on anyone else's situation, and I'm not clear on what the "emotional" situation actually is to provide insight.
But, as a guess, it's moving your little children.
They are adaptable. As a family, my parents and I moved every 2-4 years. Sometimes to new states, sometimes new towns/cities within states, and sometimes just between houses. It was no problem at all, and we started this process when I was about 2-3 years old, so it was sort of our way of life. I wouldn't worry about it over-much. It's truly just a house.
Would you really want to live next door to your old house? The new owners could be great or always nagging you about things...
We thought we could make a parallel move, sell the old house and build a new energy efficient one and not get a mortgage. We were wrong. Mind you we're not sorry we did it, we just didn't crunch the numbers well enough to see that. That being said, a newer energy efficient home which is in a quiet neighborhood is less stressful to live in and we are saving$$ on water, heat and electricity... Hope this helps.
What Merski said - how much room do you have?
When I was maybe in 5th grade my family built a new big house about 500 yards from the old farm house and dad rented it out. That lasted about 5 years until he couldn't stand it anymore and told the last horrid renters that they had until the next Tuesday to move out because that was when the bulldozer was showing up. They were still dragging stuff out as the bulldozer started on the back corner.
What about selling the vacant land and using that money to payoff and renovate your current house to make it more efficient and comfortable for the future? DW and I had a construction business for many years. Every once in a while we had the occasion to suggest that someone could remove space from their house. That was commonplace in many cultures that used housing like the pueblos of the southwest (where our business was located). The native people would simply add on as the family grew and remove rooms as it shrank so the pueblo was always the right size. We had a few clients for whom that would have made a lot of sense, but you'd think I kicked their dog when I suggested it! The basic response was, "why in God's name would I pay good money to make my house SMALLER?" It's just not the American way! Removing one or more of your additions, repurposing space, adding amenities that you want, etc. and still having the land you've worked hard to improve and the neighbors you must like if you put up with them for 15 years might be an option. Plus, if you make a house smaller that usually lowers your taxes.
That's also a great idea Gregg.
...remove space from their house. That was commonplace in many cultures that used housing like the pueblos of the southwest (where our business was located). The native people would simply add on as the family grew and remove rooms as it shrank...
That's like the cottage DH's aunt has on the coast of Arran in Scotland: it is like a rabbit warren, you walk through rooms to get to other rooms. A planned center hall just isn't part of the structure. There's the 17th century addition and the 18th century addition and the 19the century addition.
Lorax, the assumption I have to make as I read your post is that you and DH will be doing the actual construction, correct? If not, I think you will be hard-pressed to have a house built which will be equal in cost to what you will net from your old house (which, no offense, has been built onto and has no better than average energy efficiency).
One of my first moves would be to contact a real-estate agent to get a fix on the value of your current house as well as an idea of how long it might take to sell a home like yours in your market. Subtract your mortgage payoff from the net after closing and you have the money you can put into the new house -- except that you'll likely have to get a bridge loan, because if you sell your house to get the money to buy a new one, you won't see the money till closing -- and you and DH and your DCs will have to live somewhere for however long it takes to put up the new house.
You also can look up estimates for construction costs based on the kind of house (pre-fab, ranch with basement, etc.) and the square footage you'll need for everyone and do some back-of-the envelope math. Then, if necessary, you can approach a lender about a bridge loan/construction loan.
There definitely is some logistical work to be done here. But it would be nice to have a new home ideally suited to your family. So give it a run!
Wow! Lots of ideas here. Thanks.
Zoebird--yes, you are right. The boys are really happy in our existing house and so they are loathe to leave. Children are adaptable though, so we feel confident that they would be happy no matter where we live.
Merski--Nagging neighbors! That's a good (not really!) thought. DH has talked about not wanting to be on-call for a new owner. We are taking the number-crunching very seriously and we will not even consider doing this if it does not make sense financially. We have contemplated rebuilding to get ahead for years, but this year we realized that we have a chance of making it free and clear, so it's tempting.
Float On - Hmmm. It would be close. Our current house sits at the back of a 3 acre parcel and we would build the new one in the middle of the five acres adjacent. We have been concerned about seeing our old house, which we really do love, through the woods, but we are thinking that knowing we are debt-free will lessen the possible sadness. This is definitely something to think about further and may, in fact, be the stopping point for us.
Gregg - Our current house, after fifteen years of construction, is finally finished and finally comfortable--although it is not configured in a way that we consider optimal for efficiency, too many stairs and lots to heat. We have considered selling the land behind us but as we built right on the property line a new owner might get too close, whereas if we build on the other land we could choose the location of the new structure. Because of the way we added on, removing does not make much sense at this point, but it is something to think about in the future. That's an intriguing option.
Iris Lily--Although it does seem that we have been adding on for centuries, we have not. :-).
SteveinMN--We would do the building for the most part, although we would sub some out. Sheetrock is not a favorite around here, for instance. We are most definitely considering all of the timing options you mention.
We are still pondering all of this, as we really want to be mortgage-free, but we hesitate because living behind this house would be tough. We do love our area and our neighbors--that is why we have been here for so long when initially we supposed it was temporary. We are also in a growing area and so we have seen our property values steadily rise, so perhaps waiting is the way to go--then we can build an even smaller house that would suit just two of us. Financial sensibility versus emotional considerations...Maybe I need a rereading of Your Money or Your Life?
Thanks for all of your thoughts.
I really love Greg's suggestion, and I'll put it in my hat for future use.
Also we are now 3 removed from the original owners (in 7 years-what turnover!) so the pressure lessens for us after each sale.
Get susanka's book The Not so big house and her other books for inspiration. We built a passive solar house and love it. It was designed by a not-so-big architect who is dedicated to sustainability, energy efficiency and local resources. He was worth every penny. (about 14,000) We found builders plans just awful and not good for our lifestyle.
Have you considered selling all of it and looking for a completely different piece of land to build on?
It sounds like you have a lot of options. Take your time.
Gregg - Our current house, after fifteen years of construction, is finally finished and finally comfortable--although it is not configured in a way that we consider optimal for efficiency, too many stairs and lots to heat. We have considered selling the land behind us but as we built right on the property line a new owner might get too close, whereas if we build on the other land we could choose the location of the new structure. Because of the way we added on, removing does not make much sense at this point, but it is something to think about in the future. That's an intriguing option.
Regarding the land, if you ever did decided to sell it and stay put you can put a restriction (basically a covenant) in the deed that would limit where a new structure could be placed and thereby insure a buffer between houses is maintained. You would want to have an attorney prepare that, but it should be pretty simple to do.
It sounds like you guys are fairly skilled at remodeling. Do you have any design background? There are always creative things that can be done with any existing structure, its just a matter or how long and how much it will take to do it. Sometimes bringing in an outside pair of eyes like an architect, interior designer, remodeling contractor, etc. can give you a perspective other than the one you develop while living in a place for so long. Just a thought.
I'm totally with the others who have reservations about living next to your previous house. It would probably work out just fine, but there is that small chance that it could be a nightmare if you happen to sell to high maintenance people.
San Onofre Guy
6-7-12, 3:25pm
You didn't say anything about how tight your budget is or if the mortgage is managable. Do you want to subdivide your property and selll a portion off to lower your debt? You have lived there for 15 years and love the house. Cut in other areas to save money but there are more important things in the world than being debt free.
Mortgage debt as long as it is managable and the debt to equity ratio is ok with debt service affordable isn't really much of a problem. In anticipation of upcoming college costs and to take advantage of lower interest rates I actually refinanced from a 15 year mortgage to a 30 year mortgage and my payment dropped from $1300 to $800 per month. I did it mainly for cash flow in expensive college years. I helped my nephew move into a one bedroom apartment which costs him $1200 per month. would I like to be mortgage free? Sure I would, but I prefer to pay for my children's college and fund a child's trip to Europe. This might mean that I will work into my 60's, but that isn't so bad as my Dad at 85 has been bored after being fully retired since age 73. Given my heredity I can expect to live into my late 80's or 90's and I'm not certain that 30-35 years in retirement is a good thing.
Well, the budget is manageable but there is not as much wiggle room as we would like. We would like to be saving more for kids' college and our retirement. We would also like more freedom with money in general. Travel is important to us and it is getting more and more expensive--as is everything else!
Sub-dividing the land does not appeal to us while we are living here. We have gotten used to living in the woods and can't imagine living here while someone else is on the back property. We are still pondering this whole idea--we have actually found a piece of land near here that we quite like. As several people here have mentioned and as we suspect ourselves, the best option if we do this is probably to move on to another piece of land entirely.
It's so hard to know what the right decision is! We're thinking, and thinking, and thinking....
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