Buy Existing or Build New

[Max Smetiouk]

I am wondering if building log cabin is going to create more equity vs buying an existing log cabin?

How would someone approach analyzing it and what are the different things to consider? 

When is it generally better to build something vs buy existing. 

Thank you for your input.

[Jason Wray]

Max,

That's a loaded question...First will you be using financing or getting a construction loan. You have to consider will it be a primary, Vacation home or investment. Each carry a different option in terms of Max LTV, Rate, and overall cost. The location is also super important to know if it's in an amenity area, Rural area, suburbs. When you build from the ground up in todays market you are paying top dollar for materials, builder costs, land lots, rates, etc.

Log cabins can be tough because most appraisers will only use other log cabins on an appraisal to support value. So if there are a lot of home sales but limited log cabin sold comparable sales it may hurt your value. If you have inventory in your area that require renovations, distressed homes, outdated and you can pick it up for a good deal. That may offer a better option to gain equity faster on the ARV.

I would also take a look at the total time spent into a new log cabin build, overall costs and compare to recent sales of exact log homes. Does the profit margin make enough sense to put all of that time and money versus buying an outdated home and doing some renovations in a shorter period of time.