Author Topic: New build plus land  (Read 2905 times)

alaskacobalt

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New build plus land
« on: December 26, 2014, 03:34:50 PM »
Not totally a Mustachian question, but due to the respect I have for everyone here, I feel this is the best place to ask any question involving such an important purchase.

I am looking to BUILD a home on some acreage.  I have zero experience with this, so I would obviously be hiring a builder to do the work for me, but I want to monitor it and have a home that is suited to my exact needs and style.  I also want land, not a huge amount, but at least 5 acres so I have space to spread out and grow. 

My question really comes down to the difficult of obtaining a loan for a new build.  Do I need to buy the land first or can I wrap land and a new build into the same loan?  My credit isn't perfect, mid 600's... and the home would probably be modular on a slab in order to reduce the cost of the build and allow us to get a bigger house with less investment. 

Beyond the loan, what should I expect as part of the process?  I have never owned a home as I have always assumed I got a better return from renting and investing than from a mortgage, but as rental rates have jumped dramatically in my area, the cost of a mortgage/maintenance has dropped below what I pay to rent, making it a viable and more intelligent option. 

Any help or experience anyone can provide would be greatly appreciated.  This would be my very first home.  I do qualify for a VA and I assume FHA as well since I would be a new homeowner. 

Spork

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Re: New build plus land
« Reply #1 on: December 26, 2014, 05:18:29 PM »
so... I've done this... but I actually bought the land first and lived in an out building for several years.

I am sure there are many ways to go on this, but you're right -- it won't be a traditional loan.  In our case we went to a small local bank -- where the loan officer was one of about 5 VPs.  Our problem was that the land was worth more than the building (which was essentially a really nice tool shed).  They were able to structure a loan outside of the box.  It was probably 1% above market at the time and was structured with a balloon payment.  (We had discussed with VP that we had every intent on paying off the loan quickly, so the balloon wasn't a problem.  It was paid off before the balloon came due.)

So nutshell, my advice is find a local small bank or savings and loan and start there.  I am going to guess that VA/FHA is not going to be an option -- but the bank might tell you differently.

alaskacobalt

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Re: New build plus land
« Reply #2 on: December 26, 2014, 05:38:25 PM »
Good advice.  My biggest concern is the combination of a home build with land, which from what I am reading are the two hardest things to get loans on...  The hard part is that the land will probably cost more than the house itself, because I want to keep it somewhat in the Tampa region, not prime real estate, but something close to family/friends that are already established.  My goal is to avoid taking a 401k loan to pay for the land in advance, but it may be my only option if I want my dream home to become a reality. 

Rural

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Re: New build plus land
« Reply #3 on: December 27, 2014, 06:33:39 AM »
We did something similar to Spork, except that we took a loan on the land only ("farm loan," again from a small bank) and then paid cash for the build over time. Ours was a DIY build.

Spork

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Re: New build plus land
« Reply #4 on: December 27, 2014, 08:00:33 AM »

...and to elaborate a tiny bit:  When we lived in the shed, we were living really low and saving every dime for the house.  We used that plus the money from the sale of a previous home and built mostly traditionally -- with a builder.  In our case I worked out a deal before hand with the builder such that I was the subcontractor for all the easy stuff:  paint, tile, trim carpentry, site cleanup, final grading after the build, etc.  We also only built the downstairs of a 2 story house.  I.e: we finished enough to move into.  I have been doing the upstairs myself piecemeal when I have time.

While it isn't as badass as Rural...  I think my wife would have stabbed me in the eyes if I had tried to do 100% of the build.

Rural

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Re: New build plus land
« Reply #5 on: December 27, 2014, 08:30:04 AM »

...and to elaborate a tiny bit:  When we lived in the shed, we were living really low and saving every dime for the house.  We used that plus the money from the sale of a previous home and built mostly traditionally -- with a builder.  In our case I worked out a deal before hand with the builder such that I was the subcontractor for all the easy stuff:  paint, tile, trim carpentry, site cleanup, final grading after the build, etc.  We also only built the downstairs of a 2 story house.  I.e: we finished enough to move into.  I have been doing the upstairs myself piecemeal when I have time.

While it isn't as badass as Rural...  I think my wife would have stabbed me in the eyes if I had tried to do 100% of the build.


Yours seems pretty badass to me. Plus you lived in a tool shed for longer than we lived in an ancient trailer. :-)

alaskacobalt

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Re: New build plus land
« Reply #6 on: December 27, 2014, 12:15:38 PM »
You are all much more badass than I am.  I was thinking I would install the appliances myself... ie: let Home Depot deliver them and I will point where they go.  haha.  I would definitely build things like my deck, storage sheds, a pond, etc... but when it comes to the main structure that protects my wife and four kids, not going to trust my ability to watch YouTube.  But I do plan on doing consider work ont he outside of the house myself.  I want a bass pond, obviously a dock for it, and quite a few other features on the land that will make it fun for four young boys.  Those things I'll use as ways to bond with my sons. 

You guys have me excited about the possibilities.  I didn't know I could pay as I go for the home.  With the considerable disposable income I have right now, I could easily push that towards the build instead of funneling to investments just so I can make this happen since it looks like trying to finance both sides of it may kill the deal altogether.