Mroyal, Home Buyer in Portland, OR

Pros and cons on building a house in Portland

Asked by Mroyal, Portland, OR Mon Sep 22, 2008

We are thinking about building a house in Portland but are concerned that it would be way more expensive than buying or remodeling an existing home. We really want a large flat lot (.3 ac ) for our two kids, but all the houses we've seen on large lots in our price range ($500k) so far would be major remodeling projects. Is it worth the time and effort to build nowadays? What about the difficulty of getting a construction loan? We can pay up to 35% down in cash but would need to finance the rest. Also, if anyone can recommend a reputable (and solvent!) builder, I would really appreciate it!

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7
Bill Eckler-Florida,’s answer
M,

The con of building a new home any where right now is there are too many opportunities to purchase new or nearly new resale properties at a fraction of the new built price.

Our recommendation is to seriously consider and investigate the availability and savings of purchasing one of these homes. Explore your options thoroughly prior to building.

Good luck
0 votes Thank Flag Link Fri Jan 9, 2009
No is the answer.

if you have $175,000 in cash, you can't buy the land, get a loan and build a home and come out ahead for your time and effort.

Builders stopped doing this, that is the sign.

If selection is your key issue, there is sure a lot to choose from.
0 votes Thank Flag Link Fri Jan 9, 2009
Greeting Mroyal,

Funny, my answer is similar to the previous one, in that I too wanted to build my dream home, bought a fabulous acre property that is actually 2 half acre lots, one which has a house and the other vacant and ready to build (still).

Personally and professionally I would suggest you buy the best home you can find in the location you want. I say this personally because building is very expensive, always cost more then you think and takes more time then you plan. This does not mean you should not build, but you really need to make sure you have the resources to do so and don't end up with more house then you want or not being able to build for a variety of reasons.

From a professional stand point there are a lot of deals in today's market for a buyer of your caliber and for $500k you can find a fantastic home in some great neighborhoods that are move-in ready or at a lower price that just need surfaces and updating. With interest rates dropping you may even find that you can bump the price of the home you purchase a little to get the home of your dreams at the same monthly payment.

The bottom line is take the known entity and enjoy! Good Luck.
0 votes Thank Flag Link Thu Jan 8, 2009
Hi Mroyal, like you I wanted to build or remodel a house on a larger lot in Portand for the schools. After I bought the lot with a house that needed allot of work I had the plans drawn up by my architect and I was living in the house that I would have to move out of to do the big remodel I was told by the city Portland , Multnomah Co hat my plan would not work for my existing house. They passed some terrible rules in regards to remodeling. You can only cover 26% of the lot with your house and garage and any covered porches. If you want to build a new house you don't have to deal with this crazy rule or tear the walls off and add on to the existing foundation You will need to find a tear down house on a close in lot probably about $200,000-$350,000 which is probably not practical. I suggest looking around since there are some great deals out there. With your large down you could do a remodel and tie it all in to one loan. Most of the new condtruction is not in Porltand but I could check on it for you. The infill lots are usually hard to build on and not flat or they would have a house on them already. Even if you find a seller to sell you 1/2 of there lot the city might not let you do it if the zoning over lay has a higher density the CCR's of a neighborhood over rules the city density rules. Best bet to buy something existing and you might just get a great deal with the rates where they are today. When you take out a construction loan you don't get today's rates usually about 1/2 point higher so it makes sence to buy an existing house. Good Luck.
Tom Inglesby, Broker
RE/MAX Equity Group Inc.
ABR,CRS,CLHMS
503-495-5416
0 votes Thank Flag Link Mon Sep 22, 2008
'morning Mroyal,
as you have heard from the other Realtors, you have a lot of choices. A lot of the new construction for speculative building in the last few years in your preferred price range has tended to be built on smaller lots (more lots per development equals more profit for the builder). Finding a lot, securing plans, identifying a builder and making the decisions necessary to build a custom home can be quite an undertaking (especially with the demands of two small children). I do have two homes listed right now in SW Portland for $449,900 and $470,000 with a 10,000 sf lot and almost 9000 sf lot that might work for you. They are located at 5525 SW Coronado & 5528 SW Idaho. go to http://www.janeesejackson.com to view photos & video tours!! If you have a real estate agent, he/she can simply call and make an appointment to show. Otherwise, I'd be happy to show you either or both homes. I can also offer an excellent home search site at http://www.fabulousportland.com (a direct link from our Realtor's multiple listing site). Good luck in your search...
Janeese Jackson, Principal Broker
Real Estate Resource
503-709-0802
0 votes Thank Flag Link Mon Sep 22, 2008
Have you looked at everything that's available in your price range?

I did a quick scan of the greater Portland area and found 63 properties from $400,000-$550,000 with 4+ bedrooms and .3 acres or better lot sizes. Sellers are currently quite anxious for buyers, and you might be able to even look a little bit higher, as some are willing to reduce their list price more than 10% to get their property sold - so with a good interest rate and a motivated seller, your buying power might be even greater than you think. (There are some great low down payment FHA loans that would free up your cash for remodling)

The major remodeling you are concerned about on an existing house is nothing compared to building a new house - so my advice would be to continue my search with an open mind to remodeling and looking for a bargain that is likely out there for you. I think we'll look back at 2008 as the year of the housing bargains - and you're lucky to be in a position to snap one up. (If only I needed a condo right now!)

If you need help with finding a great remodeler, or locating some of these available properties, I'd be happy to assist you.
Web Reference: http://www.caryperkins.com
0 votes Thank Flag Link Mon Sep 22, 2008
Mroyal;

The lot will be the main thing. You can find lots from about $100K to $200K but they tend to be spot lots in an infill setting.

Their are so many short sales and steals on new homes that I think your best move here is to exhaust all efforts on a new home search and make sure there is not a builder that has a home deeply discounted that works for you. Your down payment is great and you will have no issues financing no matter what you do.

When I hear Big Lot I think older homes. Most of the best locations and large lots went to homes that were built over the past 50 years. I am seeing some intriguing deals on home on .5 to even 1 acre lots that have settings and locations that you can not beat! So remodeling a resale home on a super nice lot makes even more sense to me. That is where I would focus my search and I think your upside is better as you would have the nicest upgraded home in one of the favored areas.

As far as a builder I have worked with more than most. Steve Close of Medallion Homes is superb and is doing just fine. He will be very fair with you. His number is 503-475-5040 and make sure to tell him I sent you!

Good question and best wishes. Of course don't hesitate to call if I can be of any help to you. My 25 years of experience in resale and home construction may prove to be a great resource to you!

regards;

Dirk T Knudsen
Re\Max Hall of Fame
#1 Rated Re\Max Team in Oregon
503-799-8383
Web Reference: http://www.nwhomecenter.com
0 votes Thank Flag Link Mon Sep 22, 2008
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