Read This Before Building Your Dream Home

While there’s something special about building your dream home, there are some things to know before you start.

Jun 28, 2014 at 2:00PM

House Almost Done

Among the most-watched economic figures each month are new-home sales. To many, these is a simple statistic upon which models are built, stocks are sold, and decisions are made. However, each one of the 433,000 new homes the United States is on pace to build this year is more than a statistic; to someone, it's their dream.

My wife and I realized this dream just over a month ago when we moved into a new home built by PulteGroup (NYSE:PHM). While our home is as close to a dream home as we could reasonably afford, not everything about moving into a new community is dreamy. Those considering building a new home should be aware of some of the pitfalls of turning your dream into a reality, so you can be fully prepared for what lies ahead.

The grass is always greener...
Everything about a new home is new, including the lawn. A newly sodded lawn needs to be babied. It needs to be watered much more frequently than an established yard, which can typically survive on rainfall alone. For us, rainfall has been rather scarce since we moved into the house.


That meant I was outside virtually every day moving the sprinklers and cursing the weatherman for promising rain that never came. Needless to say, those moving into a newly constructed home need to budget time every day to make sure the lawn is watered, though that doesn't mean it will actually quickly turn into a luscious green.

While it's a highly crafted product, it's still a manufactured good
Every dream home comes with high expectations that the world will be a better place when you move in. That dream, however, can take a few lumps along the way when, say, the toilet breaks in the first week or the drawer falls off a kitchen cabinet.

It's situations like these where the builder really matters, and in our case, PulteGroup has done a phenomenal job righting any wrongs. This is why homebuyers must make sure they completely understand what the builder will and won't do after it turns over the keys. Warranties and customer service can vary a great deal between companies, so it's imperative to choose the right builder so your dream home doesn't turn into a nightmare.

Booms aren't quiet
New communities are more like construction zones at first. They can come with quite a number of extra hassles, such as construction traffic that blocks every entrance to your home, or construction workers who do not respect the boundary between private property and the lot they are working on, or even the unsightly portable toilet that sits right outside your front window. Not to mention the lovely pre-dawn wake-up call as the refuse company unloads the construction Dumpster across the street every single morning.

Construction Zone

In a boom community like ours, construction can continue from first light until late in the evenings for six to seven days a week. That means your neighborhood might need a few months, or even years, to become the nice, quiet community that was expected. This takes some getting used to, with the light at the end of the tunnel being the thought that it will look great when it's done.

It can still be well worth it in the end
While there are a number of downsides to living in a community still under construction, it's still well worth it in the end. Sure, the place can be crawling with construction workers, but building my home created their jobs. In fact, the National Association of Home Builders says 2.97 jobs are created for every new home built. That's a statistic to be proud of these days, when job creation is low.

Furthermore, the average new home today is 30% more energy efficient than an existing home, and many can be upgraded to be even more efficient. The energy costs of our home are about 15% less than our former apartment, even though it's nearly twice the size. Those savings will add up over the years.

Then, of course, there is the feeling of joy and the sense of accomplishment watching the dream come to life. That is amplified by the enjoyment of living in the home, knowing we built this (or at least created the jobs that built it). So while living in a new development certainly has its pitfalls, the joy of living in that dream home can make these minor inconveniences quickly fade. 

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Matt DiLallo owns shares of PulteGroup. Matt DiLallo has the following options: short October 2014 $18 puts on PulteGroup and short October 2014 $20 calls on PulteGroup. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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