Home Buying in Boulder>Question Details

Raza, Other/Just Looking in 08540

Planning to move to Boulder and looking to make a housing decision that is also a good investment. Is it better to buy, build or remodel.?

Asked by Raza, 08540 Tue Apr 24, 2012

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Hi Raza:

There are several components to your question as you frame it below.

First of all, it is very possible to get a nice home in Boulder for less than $1 million. Average Boulder sales prices run in the mid-$600s while median sales prices tend to be in the mid-500s.

Even with views, you can find some pretty nice homes under $1 million. But that does not mean you are finding everything you want in a home.

We are having an inventory shortage throughout Boulder County. It is not too much of a problem in the higher price ranges, but , it sometimes pays to wait for the right home to come on the market and be ready to make an offer when it does. What I have been telling my clients is to show patience about finding the right home, and a sense of urgency once that home appears on the market.

However, looking for a home in the mountains can be another solution. As a mountain-dweller myself, (Sunshine Canyon and Pine Brook Hills) I am a little disappointed that mountain home prices have not held up as well as prices in some other Boulder County areas during the last few years. I do think we have bottomed or are very near the bottom, but it is possible I am wrong.

Nonetheless, there are some good bargains in the mountains, both for homes in very good shape and for homes that need a little work. Relatively new homes are almost non-existent. Few new mountain homes have been built during the last few years. I have been seeing a number of existing mountain homes come onto the market recently and I would suggest that you probably could find one in your price range that is in excellent condition, and probably one that has been updated during the last 6-7 years.

As for which remodeling option works best, you will need to talk to some contractors and really work your numbers. I would never presume to suggest that I could come up with figures off the top of my head.

But, it is very possible you will find that one of two options will work best. 1) Find a home that is relatively close to what you want and do some updating to make it work for you. 2) Buy some property and build from scratch.

In talking to contractors you may find that any serious remodeling could end up costing more than starting from scratch, especially with newer building codes that may require significant energy efficiency and environmental updates to the existing structure. One builder has suggested that the new codes add about ten percent to the cost of building a new structure but can add considerably more to updating an existing dwelling or to use older building plans.

Please feel free to contact me if you have any additional questions.

Kind regards,
Ron Rovtar
Prudential Real Estate of the Rockies
Days: 303.981.1617
Evenings: 303.473.1926
ron@rovtar.com
http://www.rovtar.com
2 votes Thank Flag Link Tue Apr 24, 2012
Over the last few years, I have been counseling my buyers to buy for the lifestyle not the investment. I am sticking to my guns on this one. If you want to invest in real estate, buy a piece of property that is a good investment (cash flow). If you are looking for a place to live, then buy a home that will suit your lifestyle and values well.

To answer your question:
1) It is less expensive to buy a gently used house than to build a new one in Boulder County. So, a resale house is a better investment than building new. This does not even start to account for the onerous building regulations
2) Homes that are fixed up (Pottery Barn Style) obtain a significant premium on the resale market. This premium, in my opinion, is significantly more than if you were to hire the work out. So, remodeling is a better value than buying a home that is already fixed up.

The best investment is to buy a home and fix it up.

How does lifestyle play into this?
How much is your time worth, will you enjoy fixing up a house? Would you rather design and build a dream home or buy someone else's dream home? The best values are generally not in the best locations or may not have the best layout - how will this affect your lifestyle?

When you originally pictured yourself living in Boulder, what did it look like? This is the best investment for you because it will make you the happiest!
2 votes Thank Flag Link Tue Apr 24, 2012
The best investment in Boulder is to buy a home that has "good bones" in a great location that just needs a little updating (flooring, counter-tops, paint). Vacant lots cost almost as much as a fixer-upper and there are many costs associated with building from scratch. Almost any lot west of Broadway will be a safe investment, especially if it has views and/or is close to a trail-head. Boulder has a very restrictive building code (even for major renovations), so it's necessary to use an agent who is familiar with floor area ratios, solar shadow, and green points. Feel free to contact me directly if you have more questions. I'm happy to help -- no obligation.
2 votes Thank Flag Link Tue Apr 24, 2012
Update please.

We're happy for your decision to locate in Boulder. Did you buy, build or remodel?
1 vote Thank Flag Link Thu Jun 6, 2013
Hi Raza,
If it were me, I'd start with searching foreclosure properties to remodel and then compare those property values to regular resale. The important factor with remodeling is finding a licensed and qualified contractor to hire for the job and to make sure the upgrades are reasonably priced and add to the value for the long term.

I would then interview reputable builders who can give a quote on the plan that suits your needs and wants, being as specific as you can. Ask them how long they have been in business and ask for referrals (if you can meet with them in person, that is best). Finding affordable land with utilities will be a challenge, however, a broker can assist you in gathering the information for available lots.

I truly wish you the best!

Lori Jarrett, Broker/Owner
Take Me Home Real Estate, LLC
GJ Gardner Homes
http://www.takemehomerealestate.com
877-856-3466
1 vote Thank Flag Link Tue Apr 24, 2012
Building from the ground up in Boulder has its challenges. (I wouldn't listen to folks from out of state who aren't familiar with Boulder's market!). There's limited land available, building codes are very restrictive, and what vacant lots are available, sell for a premium. Do you need to be in Boulder? There are lots of great communities surrounding Boulder (Lafayette, Louisville, Erie & Longmont) that are less expensive, and have more new construction options. I've lived in Boulder County for 20+ years and I'm very familiar with all of the different communities.
1 vote Thank Flag Link Tue Apr 24, 2012
Unless you are looking to end up with a home well in excess of $1,000,000, building in Boulder really isn't a serious option. Lot's are rare and generally run over 500K...and often more than $1,000,000 themselves. And whether remodeling or buying something already fixed up just depends on what you find on the market. If you're remodeling though, you need to have 10s of thousands in cash to do the work with.

Two notes:

1. We have a lot of historical data on prices and appreciation rates for Boulder and Boulder neighborhoods on our web site http://(www.agents4homebuyers.com).
2. You'll find dozens if not hundreds of places on the web which will give you "return on investment" analyses for remodeling jobs...indicating...for example...you'll get 75% of your money back if you remodel a kitchen or 40% if you put a new roof on. All of these numbers are useless...other than maybe giving you a sense of whether you'll get a better return on a kitchen or a roof. A house that would cost you $800,000 in West Boulder might cost you $150,000 in Thornton. Redoing the kitchen with granite and stainless steel and high quality cabinets might cost you 50K in either case. You wouldn't have a chance of recouping that investment in the 150K Thornton house...that money might easily move the value in Boulder from 800K to 900K...so that you'd double your money on resale.
1 vote Thank Flag Link Tue Apr 24, 2012
I've seen a lot of people gaining equity quickly by remodeling. If you have the funds and the right personality, especially if you can live in the house while you remodel and choose a good location, house with 'good bones'. But I don't know what your definition of 'better' is. If you buy new, or buy a house that needs no remodeling, what you paid is what it's worth and there's no way to increase that value. But if by 'better' you mean building equity, remodeling is the way to go. Just be sure not to over-improve.
1 vote Thank Flag Link Tue Apr 24, 2012
Agreed that it totally depends on specifics. No easy answer to that question. I will say (as someone that built new in North Boulder myself) that building new is tough from the standpoint that the costs to acquire a lot (and presumably scrape an old house) are so high, that the final value is so high that the pool of potential buyers for the product down the road is going to be smaller.

Boulder can be a very "street by street" market in my opinion...so the answer to your question will depend on exactly where you are talking (even though the market as a whole is "solid".)

Good luck!
1 vote Thank Flag Link Tue Apr 24, 2012
Thanks a lot everyone for your responses.

If life style choice is not a consideration, then I would say buy a house that doesn't need a lot of work. There are lot of good buys, you move in immediately and don't have to worry about the head ache with remodel or build.

We found some great houses that didn't need any work but we ended up buying a house thats probably not the most logical choice.

Our house is in sugarloaf area, with a top of the mountain location and absolutely breath taking views from every room in the house, however, the house needed a complete remodel. The remodel took about 6 months, it was not easy and we are just about done with the exception of a bathroom.

If I were to sell the house now, I am sure if I will not get our money back; but we have not intention of selling for a long, long time. We love our home, its just the way we want it and its amazing that we are so connected with nature and only 20 mins from pearl street.
0 votes Thank Flag Link Thu Jun 6, 2013
Hi Raza,
A lot of interesting responses so far! There is no one best answer to your question. Any one of us would look forward to your visiting here and taking a look at a few examples of the different strategies.

I would like to know more about your lifestyle, hobbies/interests, etc. and your priorities And what you are used to. I moved here 12 years ago, having lived most of my life on the East Coast so I know some of the differences you might find in Colorado. You can also consider living to the East of the city of Boulder (15 minutes from the downtown) and get a view of the snow capped peaks at a much lower price.

Feel free to interview me to see if I am a match for you for real estate consulting.

You can search the actual, updated MLS through my website.

Evie Cohen
RE/MAX Alliance
303-507-7001
eviebc18@gmail.com
http://www.eviecohen.homesincolorado.com
0 votes Thank Flag Link Tue Apr 24, 2012
Well you picked the right city to move to in Colorado. I would say it is better to remodel in Boulder than build new. The cost of land in Boulder is high because the city is surrounded by 45,000 acres of open space. Because of this, land value is at a premium. Not only do you have to pay a high price for land, there are building codes for floor area ratios, solar shawdows and green points. To answer your question, is better to buy, It's always better to buy than rent. If you are moving here from out of state; however, I would suggest renting for a short period of time. If you live in Colorado, you don't face the challenge of jumping on a plane when the right house comes on the market. To make the best investment you can, interview agents here to act as your buyer's agent.
0 votes Thank Flag Link Tue Apr 24, 2012
Hello Raza:
I'm a Longmont Realtor. I've worked for builders in Boulder County for a good part of the 27 years I've been in real estate. I can put you in touch with several who do "dirt start" construction as well as remodels.

On your question about ROI: Boulder County is an improving market. As others have noted, some areas have held value better than others.

Generally, you can say that there are examples of real estate that can be acquired from the inventory of foreclosures and short sales that represent good potential, and some may actually be priced well. For the better homes, there is some competition. You may want to work with someone who has a good eye and knows a good value. In this market where available homes are not so plentiful, someone with a construction background can be very helpful.

As for guidance on ROI, a good answer depends on a number of factors. For instance, how long do you plan to live in the home? If you're contemplating custom, how custom? How much do you plan to spend and what are you going to be spending it on?

You really should have more than a 20-minute conversation to get into many aspects of what you are contemplating. If you are going to be working with an agent, you should interview at least three. Of course, I will add myself to Realtors you should contact. Call me. I would be happy to sit down and go over your objectives and what makes the most sense for you.

Best regards,
Suz
PML property movers of Longmont
720.810.1534
720.810.0683
bouldersuz@gmail.com
0 votes Thank Flag Link Tue Apr 24, 2012
Thank you so much for the quick responses, I realize that I should have been more specific.

So we definitely want a house with a view, and for someone willing to spend less than $1M, I realize that there aren't a lot of option in Boulder. So, I have been looking at areas that are close by in the foot hills or on SunShine Canyon Dr area (10-15 mins drive to Pearl St).

There are lot of nice houses and a few that need a surgery (probably $200K+ remodel), there are a few lots for around $200K as well.

So putting the financing options aside for a moment, what do you think has the best ROI. Buy a $750K house remodeled with views, buy a $400K house and renovate big time or just start from scratch.

Thanks again
0 votes Thank Flag Link Tue Apr 24, 2012
I would go with build if you can. Then you will know all the history of the home and get no surprises.
0 votes Thank Flag Link Tue Apr 24, 2012
Like many decisions in real estate, that depends on the location and what you plan to build or remodel. It is not as easy to get back all of your investment when you remodel these days, though that again depends on the neighborhood and the scope of the work you do. Generally speaking though, the Boulder market is very strong and homes that are in good condition and priced well are selling fast with multiple offers. Central and North Boulder tend to hold their value the best.
0 votes Thank Flag Link Tue Apr 24, 2012
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