We are building a home!

Zombie with a Shut Gun

Building a home

We finally decided, we are building a home. It took us 6 months from the Tubb's Fire and a lot of deciding, but we did it. We made the decision and are moving forward with life.

Why are we building a home? Well it is multi-faceted.

Why build?

1 ) We want to complete our block. I know this sounds strange, but it is true. Four homes burned on my street, while 30 plus remain. One neighbor had already started building and the other 2 have signed up with a contractor. We decided it would be nice to complete the block. A symbol to the community? Maybe. Complete? Definitely! The first street completed in Fountaingrove. 

If our street had been totally decimated, we likely would not rebuild. It is tough to build a home while there is no guarantee your neighbors will rebuild. Also, there has been benzene in the water in parts of the neighborhoods. If I lived in those parts, I would be hesitant to rebuild. Particularly with a kid in the picture. 

2) By building we unlock the remaining 15% of insurance funds available to us. We were paid out the estimated replacement value of our home minus depreciation. This ended up being a 110% of the 125% we were insured for (read more about how this works with my post over at Financial Samurai.). We will also unlock money for code upgrades which may be another $20 to 50k. Makes sense to try and optimize our payouts. 

This is a lot of cash to leave on the table if we decided not to build. So to unlock that potential money we have to rebuild.

3) The value of the home, a brand new home on a complete street with a sunset view, will far outweigh the value of just the empty lot. The investment to rebuild will likely be worth more than if I just tried to sell the lot and take the insurance proceeds. Now a lot of people are not rebuilding. They are taking the insurance money, selling the lots, and moving on with life. Some are buying locally. Others are moving to Washington or Nevada. 

For us, we are going to build. If we decide to move in, we have a nice new house. If we decide to sell, well then there is some profit to be made.

Am I sure we can make a profit? 

This depends on a number of things, the main one being how quickly we could build. If we get this house up by February 2019 it will beat the flood of homes I expect to hit the market in late 2019 and early 2020. Considering there is a 3,000 home plus shortage in Santa Rosa, by building a home we help the community and I potentially make a profit. Win! Win!

 

What was keeping us from building from the get go?

1 ) We did not know what would happen with insurance. While our insurance company has been forthright and fair, we were worried we would be under insured. We did not know if insurance would pay out the full policy or a partial policy. Now that we better understand the process we can move forward well informed and knowing what to expect.

2 ) My wife has voiced concern about living in the same home. Since initially the thought was to build and move in, my wife has stated she thinks it is weird to live on the mountain top again. I get that and do not disagree. Our lives were up ended and it would be strange to move in and act like all was still the same. It is not the same. We do not need to act like it is the same. So we build and likely sale. If push comes to shove and the market falters, we move in. 

3 ) Last but not least, we were concerned about how expensive it would be to build. It is still expensive but not prohibitive anymore. We will use all of our insurance funds to build a similar house, but I estimate the home will be worth more. Once again, this is speculating, but informed speculation.

We will keep the costs down and the timeline short is by using a big, local builder. The company we have chosen has come from Sacramento and set up a local office. They are building 52 homes on the mountain and 3 in our street and 3 in a neighboring street. This is an economy of scale. Cheaper tiles, cheaper sub-contractors, etc. Plus they are on board with our plans. Build quick and potentially sale. So I think it will be a good partnership.

Conclusion

There you have it. Another decision in the recovery phase made. These decisions are what allow for progress.

I see my colleagues who are still dealing with indecision. They are the ones suffering the most. The lack of direction and certainty is tough. It makes it hard to put the fire behind us.

For us, we have been making solid progress. We dealt with insurance in a timely manner. Itemized our possessions (the most painful part of all of this paperwork). Filed our taxes in a timely manner to take benefit of the tax deductions from the fire loss. Now we build…step by step. Move by move.

Look for some upcoming posts on the building process. I hope to outline what goes into building a home from start to finish.

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