It is no secret that existing home inventory is low. This shortage extends to many types of buyers, including those looking for a home on acreage. It can be hard to find the right mix: A little acreage, perfect setting, a nice home, an added outbuilding and all at a reasonable price. As buyers consider the perfect combination, they may start to consider finding the ideal land first, and THEN build their dream home. Is this the right path for you? Here are some questions to ask yourself as you consider this as an option.
Finding the Land. As you consider land, keep your price in check. Loosely consider that the price of the land is usually 25% of the whole build package. What are you looking for in the land? How will you use the acreage around you? Is your dream to have your kids build forts in the ‘forest’ in the back? Four wheeling? Install a pool? Knowing this will help as you look for location.
Planning out the Land. Is there already city sewer and water in the street? Or will this land need its own well and septic? Are there multiple spots to allow for septic and still fit your home’s build pad, shed, driveway?
Finding a Builder. Is this land open to builders? Do you have a builder in mind? Consider your options and contact trusted resources to find a builder that fits the style, price and general location you are looking for. Some builders focus only within their developments, so keep this in mind as well.
Financing. Will you purchase the land with cash? Will you finance the land? What is your plan to build? Will the builder request a construction loan? Will the lender allow you to do any work ‘to save a little money’ on the overall package? Keep in mind that financing land is very different than a typical home mortgage. You may find a better overall loan through a local bank.
Do you have a home to sell? Do you need to sell the home in order to afford the land and home construction? Contingent offers are usually not an option. Should you sell your home, then rent until the home is complete?
Obviously, there are a lot of factors to consider. Ask questions, decide what you are looking for, be educated on the process, and know your costs well in advance. Only then will you know if building is the right option for you!
