Are barndominiums a good investment? Barndominiums, with their unique design and layouts, have become a rage in the real estate market.
Being a modern take on the traditional house, barndominiums offer a convenient living space with all the necessary amenities that a homeowner could ask for.
These self-contained homes have become the latest rage among those who want to live more isolated without giving up on the comfort and space synonymous with modern urban living.
But with the increasing popularity of barndominiums, many people have started to wonder; whether barndominiums are a good investment.
With high demand and limited supply, the value of barndominiums has been on the rise. So, they must be a good investment.
Well, the short answer is yes, barndominiums are a good investment, but still, many factors contribute to the value of a barndominium and make it a better investment than a regular home.
This article will discuss some of the important factors that make barndominiums a better investment than a regular home.
- What is a Barndominium: Know Before Building Or Buying
- Are Barndominiums a Good Investment
- Should You Invest in a Barndominium?
- Why You Invest in Building a Barndominium House?
- How Well Do Barndominiums Hold Their Value?
- How Much Do Barndominiums Appreciate?
- Challenges of Appraising a Barndominium
- Advantages and Disadvantages of Barndominium:
- Will Banks Finance a Barndominium?
What is a Barndominium: Know Before Building Or Buying
A barndominium is an apartment, condo, or loft you can build on your lot.
A barndominium can be small or large, depending on your needs and dreams. It will be located right on your land, where you have plenty of room.
This means it can share some walls with your house if you want to, but it will still feel private due to its distance from your main residence.
A barndominium often has a smaller area for sleeping and personal space while having a much larger area devoted to a common living space.
Typically, you’ll have one or two floors in which all or part is used for either work, living, or storage purposes.
Are Barndominiums a Good Investment
Definitely! If you can afford to invest $280K to $300K, a barndominium will be a great investment for you. You don’t have to choose between enjoying your property and making money.
You can enjoy your land and still make money by turning some of it into an apartment or home office space.
In addition, you’ll own more land and have added living space which will make your entire property more valuable over time.
If you decide to sell your house at some point, chances are that you’ll be able to sell all or part of your barndominium as well and thus maximize both earnings and enjoyment from your land.
Should You Invest in a Barndominium?
Yes, you certainly should. A barndominium can be designed for your needs and dreams and your personality.
It will provide all that you need from it now as well as serve as an investment opportunity for later on when you may wish to downsize.
In addition, a barndominium is much more affordable than many other homes or apartments available.
If you have wanted to invest in real estate but have been waiting for better times, there has never been a better time than now!
Why You Invest in Building a Barndominium House?
In this day and age, it’s hard to find an affordable home in a safe neighborhood.
If you’re looking for something different from the usual condos or townhouses, you may consider investing in a barndominium.
There are many advantages to owning your barndominium. Look at our top 5 reasons why investing in one of these unique homes can be a smart choice!
1. Growing Trend Among Youngsters and Individuals with Limited Budget
Although barndominiums are not new, they are now becoming popular among young people who want to buy their homes at an affordable price.
Most young couples have very limited budgets but want to own their own homes at some point.
They do not always go for regular houses because they are too expensive for them.
But barndominiums offer them everything that is required at an affordable price, making it easier for them to move into these newly designed condos without worrying about getting their budget stretched too much.
So, if you’re planning to invest in a house, then investing in a barndominium can help you generate maximum returns on your investment over time.
Another group of individuals investing in these self-contained spaces is those moving from smaller towns and cities who cannot afford to invest or buy space where they live or want something different from what is available.
2. Low Construction Costs
Costing just $280K to $300K on average, barndominiums are comparatively cheaper when compared to regular houses.
And because of their low construction costs, you can easily rent out your barndominium even before you have moved into it.
So not only will you be able to cover most of your initial expenses but also generate some money by renting out your newly purchased space for some time before moving into it yourself.
This will give you more time to save money and come up with funds for regular mortgage payments later on.
When you are ready to move into it permanently with your family or live there on your own, depending on what you planned when investing in a barndominium in the first place.
3. Low Maintenance Costs
As you are not required to spend extra on repairs and renovations, barndominiums offer you hassle-free living with lower maintenance costs.
Not only will your finances be stretched less by investing in a barndominium, but also by cutting down on maintenance and repair costs; it will take less time to generate profit from your initial investment.
And regarding the resale value of barndominiums, there’s another good news for investors.
They sell fast due to their high demand among people looking for affordable living space that offers them everything required at an accessible price tag.
4. Often, You Find Inexpensive Land Options
While buying land for building traditional houses, you may have to pay $200K-$300K for small areas of land depending on where you are located in.
However, several areas around big cities come with bigger plots of land at affordable prices compared to surrounding areas or neighboring cities with bigger budgets for investors looking forward to investing in barndominiums.
This is because many people cannot afford regular house construction costs. Therefore, they invest in cheaper options like barndominiums instead of getting separate apartments for living purposes or buying smaller homes.
So, before you make your final decision about investing in barndominiums, check out some local real estate websites offering property listings with affordable home prices.
5. Great ROI
Most investors are not buying real estate to live there; they are looking for profitable investments that generate maximum return on their initial investment down the line.
So how much money can you make by investing in barndominiums?
As mentioned, average construction costs for building barndominiums are around $280K-$300K, including amenities and finishes but excluding land costs.
The average resale value of homes is always more than what you paid at purchase.
While market values differ depending on location, condition, and other factors like school districts, etc., barndominiums usually sell at 3-5% above construction price within two years.
After which another 2-4% appreciation happens over the next couple of years, depending upon its location & condition again.
How Well Do Barndominiums Hold Their Value?
A barndominium will typically hold its value very well. Even if you are currently building one, it’s never too early to think about selling some of your lands for increased profit.
One can always build more later, but why not capitalize on your investment today?
Have you ever heard that real estate is usually best purchased as an investment when it is least needed for that purpose?
A barndominium can be purchased without the intention of living in it or renting it out at first and still prove to be an excellent real estate investment.
Yes, they are nice homes, but their main purpose isn’t solely as homes; they are also great ways to increase one’s property values over time.
How Much Do Barndominiums Appreciate?
While homeownership might be great, there are reasons why it may not be for everyone.
If you’re interested in buying property but don’t want to worry about maintenance, taxes, insurance, etc., think about opting for an alternative home—such as a barndominium.
What is that exactly? It’s essentially an updated version of living on farmland or rural land.
Instead of a small house with an attached barn, you get a whole homemade from scratch inside a big barn.
In other words, if you love old-fashioned farmhouses but want all your modern comforts too, barndominiums may be your next dream house!
And to answer the question of how much barndominiums appreciate?
They can appreciate quite a bit (upwards of 10% per year!) due to their uniqueness and reputation for luxury amenities.
But make sure you keep tabs on local zoning laws because barndominiums aren’t allowed everywhere.
Challenges of Appraising a Barndominium
1. Location of Your Property
Most residential appraisers and real estate agents agree that location is critical in determining a home’s value.
2. Condition of Your Barndominium
If your barndominium is over 10 years old, you might want to remodel it before selling it. It’s also a good idea to know if you have an HOA and if there are any restrictions on what can be done to your property; most appraisers and agents will require you to fill out an HOA questionnaire as part of their home appraisal process.
3. Availability of Modern Features
No one wants to live in an old-fashioned barndominium that hasn’t been updated in years. You must remember that appraisers and agents will determine your home based on how it looks; if it doesn’t have any modern conveniences, it will be tough for them to justify a high value on your barndominium.
Advantages and Disadvantages of Barndominium:
1. Design the Way You Want
Your barndominium can be designed by you and built exactly how you want it. This is convenient and allows you to customize your home specifically for your needs. Maybe you need extra storage space or an office for work, etc., then it can be built with those considerations in mind.
2. Safe Against the Elements
Unlike many apartments or condo complexes, barndominiums are not often at risk of being destroyed by fire or even storms. This can be particularly comforting if you live in areas where these are common problems.
3. Low Cost
Even with a limited budget of ~$300K, you can design and build your barndominium exactly how you want it. It will suit your lifestyle and still be affordable for an average individual or couple.
Many barndominiums cost more than $500K, but those are only necessary if you require extra amenities for living, such as swimming pools, etc., or if you’re building one for large-scale commercial use.
1. High Initial Cost
Building and buying a barndominium can be expensive. The initial cost of building it will vary greatly depending on your choice and where you live. Still, as mentioned above, investing wisely can be an excellent investment opportunity for your future real estate needs.
Will Banks Finance a Barndominium?
Regarding barndominiums, there can be some confusion around whether banks will finance these unique properties.
The short answer is yes; they will; however, it all depends on what type of bank you’re dealing with (commercial or residential) and if they’ll like your barndominium as much as you do.
If you find one that meets your needs and gets their approval, chances are high that you’ll get approved for financing!
You might even be able to take advantage of programs designed specifically for these homes. After all, many banks want to work with homeowners who don’t have much financial experience or who want a no-hassle home purchase.
While it’s easy to conclude that buying a barndominium is an excellent investment opportunity, only you can decide if it’s right for you. In some cases, renting might be a better option for your particular needs.
For example, if you’re single or looking for extra space now but aren’t sure how much room you will need in ten years, renting might be more economical than buying.