Author Topic: What kind of loan should I get for land?  (Read 10537 times)

Fred Tracy

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What kind of loan should I get for land?
« on: February 24, 2012, 06:45:19 PM »
Hey Mustachians, I am planning on buying a plot of land soon (1 to 3 acres) in Oklahoma. The cost for this land would be around $10 to $15k. I'm 23, recently debt-free, and starting to save money.

I'm planning on building an underground house, something that is labor intensive but relatively cheap to do. For that reason, my house will cost far less than my actual land. I have been considering getting a loan lately just so I could start working on the house sooner. Granted, I could buy the land in cash by the end of the year, but since I'd be able to pay off the loan in only one year, I'm possibly ok with paying an extra 800 bucks or so of interest if it means I can begin excavating and building immediately.

So, if I do opt to get a loan, what kind should I get? I will probably buy raw land, as it's cheaper and I won't be needing flat, level land or a septic system etc. I know very little about loans, having never had one. I have pretty decent credit, how easy do you think it would be to get a loan? Should I go thru the bank or land owner?

Also, do you think this is even worthy of getting a loan? Should I just save up the money and stop being impatient?

Thanks! :)

arebelspy

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Re: What kind of loan should I get for land?
« Reply #1 on: February 24, 2012, 07:10:14 PM »
Save up.

Lenders don't like land only, and they don't like amounts that small.  It'll be a hassle to get a loan, and it'll come at a high cost.

With an amount that small, save up.

(And this is coming from a very pro-mortgage guy.)
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Mike Key

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Re: What kind of loan should I get for land?
« Reply #2 on: February 24, 2012, 08:48:46 PM »
Yup, I would save up too, not sure what your income/outgo is, but do the math, how hard would it be for you to save that little amount?

arebelspy

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Re: What kind of loan should I get for land?
« Reply #3 on: February 24, 2012, 09:21:22 PM »
do the math, how hard would it be for you to save that little amount?

OP said:
Granted, I could buy the land in cash by the end of the year, but since I'd be able to pay off the loan in only one year, I'm possibly ok with paying an extra 800 bucks or so of interest if it means I can begin excavating and building immediately.


A lender would want you to put 50% down on land anyways.  You can get unsecured loans, but it's best just to save up, if it'll be within the year.  Start planning everything down to the T (permits, etc.)

Underground house sounds like a fun project.  I'd like more details, just out of curiosity.  :)

When you get impatient, go out and earn some more money and throw it at that "land purchase" savings account.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
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Fred Tracy

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Re: What kind of loan should I get for land?
« Reply #4 on: February 25, 2012, 11:34:57 AM »
Thanks guys, I'll just save up. I've been thinking about getting a second job lately just to suck away some of my energy and make this happen faster cuz I'm so excited!

Anyway, my plans are currently (if I don't find something more affordable/more awesome, emphasis on DIY awesomeness) similar to this: http://www.undergroundhousing.com/

Basically, I want to get a plot of land, preferably quite hilly and thick with trees to hide me from neighbors, and more importantly, inspectors, and then build. I want to use only materials I harvest from the land, with few exceptions. It's almost like, what would we do if we didn't have this giant complex society around us, and we were just here - how would we live, etc., - sort of like what happened when the settlers first came to America. They had to use their ingenuity to get by, and I hear they actually built underground to start out with hah.

So, I'd buy a property with a nice hill, and dig a lot of it out, but do it in a way that allowed plenty of light. No nasty basement feel. Then, add a layer of polyethlene or other waterproofing material, reinforce it, maybe some cob or something for floors/outside wall (not sure yet), and live there. It would provide for some excellent insulation on most sides, i.e. thousands of feet of earth. Should be quite beautiful and natural looking if done right, and the most important part is that I can do most if not all of it myself. There's just something beautiful to that.

And running a close second is the fact that I wouldn't need to spend huge amounts of money. I've always wondered why housing is so expensive. Imo, people don't really need much, or at least I don't. Left parents house (2000 square ft) for one bedroom apartment with two people (600 sq ft) and feel about the same. I could make this underground thing perhaps 400 sq ft, and I shouldn't have any issues.

Lastly, before I drone on too much, I want to do it for the sheer challenge. I've never built much of anything, I don't have a clue how solar energy works, or how I might design a way of collecting rain water and running it through, say, pipes going by a stove or a fire. I have no idea. But I'm extremely willing to find out!

And.. that's the idea, so far. If there are cheaper options, with similar looks and DIY attitude, then I'd def do that. Just seems like building underground is the best option with those parameters.

MEJG

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Re: What kind of loan should I get for land?
« Reply #5 on: February 25, 2012, 02:46:44 PM »
I would use cash for this type of project.  If you are truly interested in this type a building check out Wofati buildings  http://www.richsoil.com/wofati.jsp

You might want to check out the forums at Permies, you'll find lots of good info about this kinda stuff there.

Fred Tracy

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Re: What kind of loan should I get for land?
« Reply #6 on: February 25, 2012, 06:29:48 PM »
Thanks for the recommendations, I will do just that!

DavidGalloway

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Re: What kind of loan should I get for land?
« Reply #7 on: February 25, 2012, 06:56:32 PM »
I would use cash for this type of project.  If you are truly interested in this type a building check out Wofati buildings  http://www.richsoil.com/wofati.jsp

You might want to check out the forums at Permies, you'll find lots of good info about this kinda stuff there.

Ha! As I read the first post I thought to myself "I'll give this guy a link to the Wofati" but it seems there's another Permie Mustachian out there. Well met, sir! Well met!

Fred Tracy

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Re: What kind of loan should I get for land?
« Reply #8 on: February 26, 2012, 01:20:44 AM »
Wofati is a great idea.. I didn't consider how it would be good to keep some earth dry by throwing in an extra layer of plastic in the build. Good stuff!

Admittedly, I'm less permaculture oriented and more just a huge tightwad, but being ecofriendly does make me happy. I think I'll end up doing a wofati, unless I just go with a cheap conventional house that I can layer rent out. Who knows!