Building Futures

Lifespan of a New House

I posted an article yesterday from the Atlantic; “Stop Fetishizing Old Homes”

I got a kick out of the title, but the fact is that homes are just not designed or intended to last forever.

U.S. tax code allows depreciation on income properties over a 27.5 year period, but to keep a building in descent condition, it will need at least one major renovation (or more likely several smaller ones) to make it to 27.5 years.

Major components like roofs, windows, furnaces and water heaters will probably need to be replaced by 15 – 20 years. Bathrooms and kitchens finishes are probably looking pretty dated at 10 or 15 years and have you noticed that all the fancy appliances we have these days seem to be designed to be replaced by the time they are 5 – 10 years old.

When you move into a brand new house today, all the building components are new, all the cool finishes and appliances are new, so you have this honeymoon period of the first 5 – 7 years where maintenance and repairs are very low.

Now If you are the type of person who gets a new car every few years to avoid maintenance and repairs, you know what I’m talking about.

You’d be wise to sell after the first 5 to 7 years and buy a new house. This will get you the most appreciation, because the design and finishes are all still new enough to be similar to a brand new house, So You’ll get a price similar to what a brand new house might be selling for at that time, plus you’ll sell before you need to start to incur costs replacing appliances or doing any re-modeling.

The equalizer that rains on this parade is of course is that your transaction costs may wipe out a big chunk of your appreciation.

If appreciation is very high for a number of years (as it has been recently), you might outrun this by holding a bit longer, but what has happened in recent years is that lifestyles have changed more rapidly and the designs and finishes that people want has changed too. In this situation even houses 10 years old are may be looked at as needing more work to update them. Which of course create a bigger price differential to a new house.

This is why, you are far better off building your own custom home. I did a YouTube video talking about this and showing a comparison of buying a re-sale house to a new house or a new custom house. (from: Don’t Buy a New House! BUILD IT)

If you do it correctly, You’ll be locking in a big bump in your equity of 10 -15 % of your costs as soon as you move in and this is in addition to any appreciation, so you’ll be putting all that into your pocket after 5-7 years.

To learn how to do it, get my new book on Amazon:

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