Let’s start with a basic fact: I don’t think this question should be asked. Ever. There is no right answer to this one. For me, it’s clear – I would never buy a new home. End of story.
I am of the persuasion that you buy history and then evolve it to match your style and taste. You buy, you improve, you personalize and you make it yours. A new house is impersonal to me. It has no feeling, no heart and no history.
But enough of what I think! Let’s look at it this thorny question a bit more objectively.
If you like new homes, you are choosing something that requires no work when you move in. You want to be the first one to live in a house where everything is sparkling and clean. It will have that smell, the smell of new paint, bubble wrap and new appliances. You are probably buying a home for you to live in and do not view it as an investment. Investors rarely buy new homes because the profit is already made by the builder. It will take some time for any profit to build up because a new home often comes with a high price tag.
A busy person who is looking for a house and has the money would probably buy a new home. No headaches, no worry, just four painted walls ready to be lived in.
If you buy an older home, it’s a bit more complex. You probably fall into one of these three buyer profiles:
– You like to invest in your home and you want to renovate it to build equity into it. You can use the Kukun ROR (return on renovation) calculator to determine your potential equity.
– You are romantic and you want to buy a home with character, history and charm.
– It’s the only house you can afford.
Renovation and Return-on-Investment Lovers
If you like homes, then you like renovations, adding your own touch and building equity into a house. In this case, you are making a great financial decision, but there will be some headaches on the road to a renovated home. However, with the right research, preparation and tools, you can have an amazing home. A home that is reflection of you. Plus, you’re likely to end up a few thousand dollars (if not hundreds of thousands) richer since you probably bought your home at a lower price and will gain equity as you renovate it.
I am a big fan of this approach and I think everyone should follow it (but I do understand that not everyone will). You can afford more house when you use this approach, a better house in a better location – because you bought a home that those who only like move-in condition homes don’t want. They will end up giving their money to the builder. You get to keep that money because you are willing to work for it. In return, you will be rewarded with more equity in your house, and a sense of accomplishment and purpose.
Those Looking for Romance and Character
If you are a romantic and want an old home with character, you are probably not an investor (they rarely invest in romance). This is a rewarding experience if you like history, and the sense that lives were made and enjoyed in the same space. Perhaps old homes take you back to times you perceive as romantic and beautiful (you may have watched too many old movies). But this comes at a price. Expect repairs, endless repairs, unless you gut it out and change the piping, electrical lines, appliances, bathrooms, kitchen, insulation, etc. You are also more likely to have asbestos issues.
If you decide to buy a charming old home, gut it completely and bring it to this century, you will need a great architect who can do it without destroying its charm and character. This does not come cheap. In this case, the cost of your remodeling will be higher, but the emotional and financial rewards will be greater. Your home is an emotional investment and when you combine your remodeling (building equity) and emotional instincts, you end up appealing to buyers from every category, and your home will be worth a lot because it combines the best of history and the best of modernity. This is not an easy task, so make sure you have the right aesthetics and professionals who specialize in these types of homes. I have done this kind of project twice so far and, though they were both costly, they were amazingly rewarding in the end – both financially and emotionally.
Those Who Can Only Afford a Fixer-Upper
If you are of the third type, you simply cannot afford a move-in condition home, so you bought an old home even if you don’t know how to renovate it. Don’t worry, you are still doing a great thing – if the house is in a desirable neighborhood. You may just have to live in it for few years while saving for the remodeling projects it needs.
As I’m sure you’ve noticed by now, I’m definitely an advocate for buying older homes and renovating them, as long as they are in the right neighborhoods. I’m sure you’ll find that the financial and emotional payoffs are tremendous. Bottom line: Buy old and make it YOURS.