Now we are cooking with fire, figuratively and financially! Looking for our forever home has been a bit of a grueling process. We are happy to say that things are now progressing as we have changed direction from buying to building. If you are new to our blog and need to catch up on the developments then start here and here.

In short, we discovered a great home in a very nice area. One that checked off all of the boxes and then some. So we decided to put in an offer despite it being out of our price range.

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It’s not that we can’t afford it, but we were trying to stay under a certain threshold. And while we are not opposed to a smallish mortgage, we were really hoping to make it an all cash deal. That wasn’t going to happen with this home. And that is where things started to get interesting.

The home was newly built and being sold by the builder. However, this isn’t like how it was done when we were in California. We are not talking entire neighborhoods with hundreds of homes being built by the same builder. This is a very large area and a builder who purchases land to build one or two homes at a time. It’s more about quality over quantity which is something we found attractive.

We put in an offer that was somewhat below asking price. To entice the seller we offered to pay over 50% in the form of cold hard cash. Of course, we expected and were prepared for a counter offer. No buyer starts at their top number and no seller takes the first offer. Having been down this road a few times we were confident the place would eventually be ours. The goal was just to get it at or near the price we wanted to pay.

After we put in our offer we were very excited. After all, who in their right mind would turn down a huge wad of cash from a sure thing buyer? Well, it turns out we found the only person who isn’t happy to get a huge wad of cash. And for or the first time in our lives we heard the words “that’s just too much cash”. It was kind of crazy and not what we expected at all.

After some back and forth it became apparent this builder had bigger plans than just the sale of the home. His counteroffers were more about financing the home through him. In essence, he wanted to sale the home and lock in cashflow for a few years. Making the sale was just the means to that end.

No matter what we did it always came back to builder financing and we were are hard “no” in that department. We already had everything we needed lined up and we were not interested. Also, putting in less cash and having a higher payment while being locked into an agreement for a number of years would be pretty dumb.

At this point another potential buyer came in and made a full price offer and agreed to the builder financing scheme. The only problem, their credit wasn’t great and they were not a sure thing financially. So we got another counter offer and a final chance to make our last best offer. We politely declined as it was clear there was no deal to be made. It just wasn’t in our best interest financially.

Things happen, or don’t happen, for a reason. While it sucked to walk away we knew at that moment it was the right thing to do. Our long term financial viability is much more important than any house, no matter how great it is. And we love living this lifestyle so we have time on our side.

After a week or so goes by we are trying to move on in our minds. But, we were still reeling a little from the negotiations and not getting the house. It was the first time we tried to purchase a house and didn’t get it so it was a little strange.

Then we had an idea, what if we could get the same builder to build that home for us? What if we bought our own land and hired him? This subdivision is 4,000 acres and the lots individually are acres of land. It’s not like we will be close to the other place. And those couple of little things that were not really our taste could also be changed. Not a bad idea!

After this revelation and having a discussion with our realtor she made the call to test the waters. We didn’t even know if this was possibility or if the builder would want to work directly with us.

As expected, the discussion started off a little bumpy as our negotiations had been somewhat tense. The builder expressed interest in taking on the job as he could see this was a win win situation. Building a house that he has already done once before would be easy and cheaper. We get the house we want and can make a couple of tweaks. Less time, lower expenses and a happy customer! Win win for everyone!

As it became clear that this could be a great thing for everyone something happened that is indicative of the reason we love Texas. The builder asked to contact us directly so we could talk and clear everything up from the prior negotiation.

It was a honest and frank conversation just like most conversations in Texas. In the end both sides understood it was just a business deal and that there were no hard feelings. Heck, if we had someone offer to pay full price for something we were selling and then agree to pay us interest financing on top of that we would have done it too.

As the call ended we agreed to meet up if we progressed to looking at properties. He even invited us to come visit him and his wife on their yacht in the Caribbean after the job if we decide to go forward. You don’t get that type of conversation or offer in California. And yes, it was, and is a, legit offer.

After clearing the air and much discussion we decided to move forward,l. But first we had to find a property. We started doing property searches in the same subdivision there were quite a few lots for sale. The only problem was that most of them were not buildable for this type of home.

After starting with eight potential properties it turned out there were only two that were possibly suitable. It was great to have two options, but a little concerning as well. We still needed the builder to confirm he could built the house on one of the lots. If he couldn’t we were back to nothing with no where to go. The deal would be over before it started.

Thankfully, after the builder looked at the properties he said they were both great and gave a recommendation. After some discussion about how the home would be situated we agreed and went forward with putting in an offer.

This time we were determined to get what we wanted so we used money and timing to our advantage. Our offer was an all cash deal with a two week escrow so the seller could have a nice chunk of money for Christmas. The only caveat, they had to sell it to us below their asking price. Oh, and we have another property we are considering so time is of the essence.

After taking the weekend to think it over the sellers accepted our offer without even making a counter. As it turns out, some people still like to get cash. Especially around the holidays.

Now that we have the property in hand the real fun begins. It’s been fun to watch the wheels turning as the builder goes through the process of securing men and materials for the build. If all goes according to plan we will have a new home sometime in the spring.

The most interesting part of this process is the financial side. The builder purchased the land for the original house at about 1/3 of the cost of what we paid for our property. Knowing this we expected that the total build cost would be somewhat close to what our final offer was on that house.

The numbers are still being gathered, but it looks like the cost to build our home is actually going to be far less. While the land is more expensive all of the other materials and the labor rates are far lower now. And any money saved on these items also reduces the builder mark-up at the completion of the build since it’s based on a percentage of the cost.

In light of all of this, and knowing what the house and property will appraise for at completion, it’s possible we could come out with a sizable chunk of instant equity at closing. While we will do our best to not get our hopes up this would be a great development. But, we will see once everything gets going and the bills start rolling in.

We don’t know anything about construction or home building. There are bound to be some bumps in the road that could eat away at that cushion. So far we have been trending in the right direction so let’s hope it stays that way.

So there you have it! Our wild ride back to home ownership continues and we are very excited.

As we said, this is not the end of our RV life journey. When things become more clear we will eventually start to transition to a different type of RV journey. This time it will be one with a home base that we own.

This will bring a little more certainty when it comes to the colder months. It will also provide us with a lot more flexibility to travel more remote areas. We look forward to exploring more off grid locations that we are currently unable to in our 40′ RV.

Stay tuned as we will provide updates as things progress. It’s going to be fun!!

See you on the road!

Joe

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