Ep. 067 - Sandra and Nik: An FHA Loan Success Story
Home sweet home. For most people, buying or building a home is one of the biggest purchases and projects they'll ever take on. My friends Sandra and Nick are on their fifth (yes, FIFTH) time building a custom home. They've been through it all - from their first home purchase in their early 20s to finally achieving the custom dream home they've always wanted. Their story is truly inspirational!
How It All Began
Sandra and Nick met while working at a hospital in Tucson, Arizona in their early 20s. They hit it off immediately and after dating for about 7 months, decided to take the leap and move in together.
At the time, a friend had just purchased a home with her boyfriend. Sandra and Nick thought, "Hey, if they can do it, why can't we?" They were young, ambitious, and excited to jump into homeownership.
In 2003 at age 22, they purchased their first home - a 3 bedroom, 1200 sq ft house for $130K. As first time home buyers, they took advantage of an FHA loan that allowed them to put just 3% down.
Over the next few years while Nick was in medical school and Sandra worked as an x-ray technician, they purchased two more homes - one in Las Vegas and another back in Arizona. Each time they saw their home values increase allowing them to build equity.
Surviving the 2008 Housing Crash
Then 2008 hit. The housing bubble burst and the recession began. Their Arizona home lost over $100K in value seemingly overnight.
Because Nick's medical school loans were counted towards their income, they managed to avoid foreclosure. However, once they sold the home in 2011 for a loss, they still owed money on the mortgage. With help from family, they paid off the bank to release the lien on the home.
This whole experience taught them an important lesson about real estate cycles. And despite getting burned, they knew they always wanted to be homeowners.
Getting Back on the Horse
In 2009, after Nick finished medical school, they relocated to San Antonio, Texas. After getting settled for about a year, they decided to build another home.
This time they went with a large national homebuilder and designed a 4,000 sq ft house from the ground up. The market in San Antonio hadn't crashed like Vegas or Arizona. Over the next 5 years while living there, Nick finished his residency and became a full practicing doctor.
By 2015, they had their first child and were ready for the next chapter. The homebuilder itch returned and they decided to truly build their dream home from scratch.
They found a beautiful 5 acre property with amazing Hill Country views. Working with an architect, they designed a custom 4,500 sq ft modern farmhouse. It took 9 months to build and by 2018 they were moving in.
Lessons Learned Along the Way
Over 15 years and 5 homes, Sandra and Nick have learned a tremendous amount about homebuilding. Here are some of their top lessons:
Find a builder experienced in your type of home style. Not all builders can execute every design well.
Architects don't always consider engineering or buildability. Be prepared for redesigns down the road.
Read house plans thoroughly! Mistakes get made when assuming things are included.
Expect hidden costs and overages to happen, especially with custom designs.
Don't be afraid to build during a down market. Take advantage of slower demand.
Land keeps its value. Buy property based on location more than the home itself.
Don't stretch your budget on a house you can't comfortably afford.
Be ready for lots of decisions - it can put strain on relationships. Pick your battles.
For resale value, limit overly custom features that next owners may not like.
Despite many obstacles over the years, Sandra and Nick maintained their vision of owning beautiful custom homes. Their persistence and willingness to learn from mistakes allowed them to achieve this dream. And the journey isn't over - I'm sure house number six is on the horizon!
Here are 10 statistics about building custom homes and 10 statistics about the Texas Hill Country real estate market:
Building Custom Homes:
The average cost to build a custom home is $318 per square foot (National Association of Home Builders)
66% of custom homes have 4 or more bedrooms (HomeAdvisor)
The average size of a new custom home is 3,000 square feet (National Association of Home Builders)
It takes an average of 9-12 months to build a custom home (HomeAdvisor)
75% of custom home builds experience at least one design change from original plans (Architecture Study)
The #1 regret of custom home builders is not allocating enough budget for overages (Architect Magazine)
70% of prospective custom home buyers want smart home technology installed (BUILDER Magazine)
Top amenities for new custom homes include open floor plans, large kitchens, media rooms (NAR)
1 in 3 custom homes include an outdoor living space like a patio or deck (American Institute of Architects)
Only 10% of single-family homes built each year are custom homes (National Association of Home Builders)
Texas Hill Country Real Estate:
Median home sales price in 2021 was $465,000, up 23% from 2020 (Austin Board of Realtors)
66% of homes purchased in 2021 were by out of town buyers (Austin Board of Realtors)
Average home in the Texas Hill Country sits on 1.5 acres (Zillow)
Housing inventory is 50% lower than historical averages (Austin Board of Realtors)
68% of homes sold over asking price in 2021 (TexasRealEstate.com)
Homes spent an average of just 45 days on market last year (Austin Board of Realtors)
10.4% annual home value growth forecast next 5 years (Zillow)
Average 30-year fixed rate mortgage was 3.11% in 2021 (Freddie Mac)
$1 million+ luxury home sales doubled from 2020 to 2021 (Austin Board of Realtors)
New home starts only made up 15% of sales despite huge demand (Metrostudy)