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In the world of real estate, the decision between buying an existing home or building a new one can be a significant one, especially for CEOs in the banking industry. Here are the key factors to consider when making this choice.
Financial Considerations
New homes are generally 37.5% more expensive than existing ones, due to modern materials, labour costs, and builder profit margins. However, new construction often means lower maintenance costs, energy efficiency savings, and potentially cheaper homeowners insurance. On the other hand, existing homes may have hidden repair costs and higher short-term maintenance, especially if systems or structures are aging [1][2][5].
Customization and Lifestyle Fit
Building new allows for full customization to suit one's lifestyle, preferences, and work-life balance needs. This can be an advantage for busy executives who want a home tailored to their specific requirements. Buying existing, however, provides a move-in ready option, sometimes in established neighborhoods with mature landscaping and community character [3][4].
Timeline and Risk Management
New construction can face delays from weather, permits, material shortages, or builder schedules, leading to uncertainty and potential disruption. Existing homes avoid construction delays but may carry risks related to unknown repair needs and renovation costs [4].
Long-term Investment & Community
New developments might lack established community networks and mature landscaping, requiring time to build neighborhood ties and aesthetic appeal. Established homes often enjoy stable communities and proximity to amenities, which could enhance quality of life and long-term property value [1][4].
Additional Practical Factors for a CEO
As a banking executive, considerations around financing, tax implications, and asset liquidity matter. New builds might involve larger upfront capital with delayed occupancy, while existing homes might close faster. Strategic location relative to work, schools, and infrastructure would also influence the decision [1][5].
In summary, the choice between buying and building a house hinges on balancing the cost premium and customization of building new against the quicker acquisition and established stability of buying existing, while carefully managing timing risks and ongoing expenses [1][2][3][4][5].
Practical Tips for CEOs
- Those who build mainly buy the plot, so these additional costs are lower, making building a house more financially beneficial in some cases.
- Building a house can be stressful due to longer timelines, permits, contractors, and delivery delays.
- PSD Bank Munich is ready to assist with financial planning for buying or building a house.
- New windows, roof, heating, bathroom are examples of follow-up costs that should be considered when buying an existing home.
- Thomas Palus, CEO of PSD Bank Munich, will answer personal finance questions from readers.
Making the Right Decision
The question many readers have is: How can one achieve the dream of owning a home the fastest in the current situation? Moving in quickly, preferring minimal effort, and appreciating charming old buildings make buying a good fit for some. Building a custom-designed house offers near-limitless possibilities, but it's the most expensive option. Existing properties can also accommodate creativity and budget, provided the structure is sound.
Those who prefer a more established environment will likely find a better fit with an existing property, often with charm and a large garden. Thorough financial planning is crucial in both buying and building a house. Buying a property also has risks, such as hidden defects, and it's advisable to view the property with a building expert.
A new magazine from PSD Bank Munich is forthcoming, available exclusively before others. Stay tuned for more insights and advice on making the right decision for your unique situation.
- For CEOs considering personal finance and real-estate investment, the choice between building a new house or buying an existing one requires careful thought on financial considerations, customization options, and long-term investment opportunities.
- When making this decision, executives should take into account factors such as upfront capital, maintenance costs, hidden repair costs, timeline, and community environment, along with financing, tax implications, and asset liquidity.
