Opportunity to buy land, help!!!

[nuisance26]

~I just spent several hours walking through 5 wooded acres of land for sale. I'm in love! It's very reasonably priced for our area. There are restrictions to how/where we build on the land since it's in a protected zone.
Here's the description from the listing:
"5 Acre Home Site. Wetland Delineation completed and building envelope established. Final permits are buyer's responsibility. Home site is 400+ feet from the road in a nice private setting. With appropriate down payment, seller will hold first mortgage."
I've called a real estate lawyer(the one we used to buy our current house)but he can't get back to me until Monday.
I keep telling myself that it's meant to be God will hold it for us.
And here's the kicker, it's 1/10th a mile from my parents' property.
I want it really bad!
I also want to know how big of a pain it is to buy land and build.
Any advice for me?
Our current mortgage is $450. The land payment would be about $250(I think?). We can pay extra on it and have it paid off in 2.5 years. Then we can sell our house and live in a trailer on the property while the house is being built or rent somewhere for a while.
At this point we would still have a one year EF, a paid for lot and about $50K from our sold house.
Or we can sell now and get a construction loan right?
I want about 1500 sq. ft. so that would mean a mortgage of about $100K(2015) in the first scenario and $135K in the second(2011).
I really really really need advice. My mind is just going crazy with the possibilities!~

[NikoSan999]

No advice but sure wishing you all the luck in the world. Sounds like a dream for you.

Only thing I can think of is a trailer on the property may not be allowed. Some places, even rural, can be sticky about that.

Truly hope it all come to pass for you with no problems.

[dwnloom]

I'm not sure what the best advice is. However, it does sound really nice. Good Luck with whatever decision you make.

[shp1055]

Is your husband a handy-man? You really should check into and do a lot of research on vertical or stockade homes. I mean lots of research. I want one bad. We have the land, the timber and I ordered dh a portable sawmill last week ($2,000.00). From what I gather, it only takes a couple of acres of timber to build a house. A woman in Montana? (Dorothy Ainsworth) built one with very little help except her boyfriend. ...and it wouldn't cost you a $100K mortgage. There are very few books on the subject, you have to dig. You usually use 8' long, smaller diameter logs. It's an early French type of building method and some of the longest standing log homes are vertical. Dh will retire in 2 and 1/2 years at 61 and I'm 55 now & I am willing to work with him to build a small house on our farm...I HATE living in town, but the farm is too far away for a daily commute to work for me, so I'll have to stay where I am for a while. I does take about a year for the logs to dry.

You have to think outside the box on this one.

[Judi Dial]

Also you might consider shelter kit. They're for owner builders. Info here:

Owner-Built House, Cabin and Barn Kits from Shelter-Kit®

Judi

[frugalfriend]

I have no experience in this to offer advice, but just wanted to say I hope it works out for you! It sounds amazing and I'll be praying for wisdom and peace while making this big decision. What do your parents think?

[Spirit Deer]

You're not going to like me.

We bought our seven acres on a contract for deed and then built our homestead. I'm not saying it's impossible, but there are a lot of things to consider.

For starters, there's that 400 feet of road you'd have to put in, maintain, and plow in the winter. Not a small consideration. You would also have to pay for 400 feet of power line to be run back to your house, which may or may not include the expense of clearing many trees to make the space for the line. You will also need to run in a phone line, unless you plan to go completely wireless.

What does it cost for a well and septic system in your area? Our well was supposed to cost $4,000 and ended up costing about $15,000 after they went down 450 feet without hitting water and then had to hydrofrack, which of course cost several thousand dollars we hadn't counted on. That was in the mid-nineties. Part of the cost here is because we're sitting on the Canadian shield. All but the first fifty feet of our well is drilled through solid rock. Which saved us money on well casings. You're not on the Canadian shield, so you may not have the issues with ledge rock we do here.

A contract for deed usually comes with a higher interest rate than a bank loan.

Construction loans are hard to get and also tend to have a higher interest rate. You wouldn't believe the hoops to jump through. Banks don't like to loan money based on your intentions and stuff on paper. They want to be able to send out an appraiser and see what is actually there. And if you do manage to get a construction loan, you can't make any changes as you build. You have to do it just exactly the way you told them you would. That really sucks when you realize you're about to make a big mistake that could be corrected before the place is done, but you're not allowed to make any changes. They also usually want a larger than usual down payment, and they also tend to frown on having the owner do any work because they want to make sure they're not going to be left holding the bag on a bunch of amateurish work if they have to foreclose. There are a lot of DIYers who think they're God's gift to construction, but don't really have a clue, and the bank would have no way of knowing whether you can really do professional-quality work or not. They also will not allow you to drag out the work, so everything has to be completed in a fairly short time frame. You might not be able to finish up just working a few hours a week on the house.

We ended up building out here using the equity in our house in town after we sold it, cash on hand, and massive credit card charges. Once it was all done a few months later, then we got a mortgage. It was much easier because we didn't have to try to convince them what our intentions were, we just had them come out and appraise what was actually here. Much, much easier, the down payment was a lot less, the interest rate was considerably lower, and it was just smoother all around.

Basically, we started with a used single wide trailer, two additions built on that (which was an expensive mistake), the well, and the septic system. A couple years later we built the garage. By then interest rates were getting to be ridiculously low, so we started thinking about getting rid of the trailer. As we looked into it, we realized a stick-built house would be too expensive for the square footage we wanted, so we went with a double-wide manufactured home. It's been a good decision for us. We've been very happy with how things turned out. The expensive additions on the single-wide were moved and placed back to back, and became my three-room office and storage to help replace the basement we don't have.

If you start thinking about building, I strongly suggest factoring in a fairly large chunk of money for cost overruns, like 25%. They WILL happen, and if you've tried to estimate costs down to the penny, you could end up in serious trouble. If you don't spend that reserve, then great, but if you find out you need it, it'll be critical to have it.

I think your estimate of $100K to build a house is quite optimistic. I could be wrong, but knowing what it cost us over fifteen years ago to build up our property, I don't think I am. I'm not trying to be pessimistic, just realistic. Your best bang for the buck is going to be factory built homes, either modular or manufactured homes. Because of the methods of construction used for those, they can be built for a lot less than houses built on site.

All this was in the mid-nineties, and halfway across the country from you, so things could be different at this time and in your area. I'm just saying how it was here and then.

Good luck. It sounds like a great property.

[Spirit Deer]

Forgot to mention, for us all the hassle and aggravation has been worth it and then some. We have a small but beautiful home on a lake with a million-dollar view in one of the prettiest areas in the world. We are very glad we took the plunge back then and worked our way through all the problems. We can't imagine living anywhere else now.

[nuisance26]

For starters, there's that 400 feet of road you'd have to put in, maintain, and plow in the winter. Not a small consideration. You would also have to pay for 400 feet of power line to be run back to your house, which may or may not include the expense of clearing many trees to make the space for the line. You will also need to run in a phone line, unless you plan to go completely wireless.

~My parents live nearby and my dad keeps his car in a carport near the road during bad weather so he only has to clear about 15 feet. We plan to do the same. I'd love to be able to pave the drive(for the kids, skating and stuff)but we haven't even paved our current house so I think I'll be too cheap for that.
We'd like to rent a backhoe and clear ourselves in the two years we're paying on it. I think it'd be fun! And all that free firewood!
I was thinking that with it being so far back we'd go wireless. I'd like to heat with wood(furnace, not fireplace). I prefer natural gas but I don't want the expense of running it all the way back there so maybe propane to cook with? I think I legally have to have electric or it'd be nice to go with solar and have nothing to run. ~

What does it cost for a well and septic system in your area? Our well was supposed to cost $4,000 and ended up costing about $15,000 after they went down 450 feet without hitting water and then had to hydrofrack, which of course cost several thousand dollars we hadn't counted on.

~This is coastal South Jersey: Pinelands/Wetlands. The water table is very low and no rock. I actually estimated $15K for water and sewer. I know my in-laws paid $10K a few years ago to put in an all new septic at their home. It was a complicated job on an existing home though so I think that's why it was so much. We'd have our pick of spots on new land.~

A contract for deed usually comes with a higher interest rate than a bank loan.

~I kinda figured this since the owner holds the mortgage. He/she isn't a business so I assumed 5% although I know we could get better with our excellent credit.~

Construction loans are hard to get and also tend to have a higher interest rate. You wouldn't believe the hoops to jump through. Banks don't like to loan money based on your intentions and stuff on paper. They want to be able to send out an appraiser and see what is actually there. And if you do manage to get a construction loan, you can't make any changes as you build. You have to do it just exactly the way you told them you would. That really sucks when you realize you're about to make a big mistake that could be corrected before the place is done, but you're not allowed to make any changes. They also usually want a larger than usual down payment, and they also tend to frown on having the owner do any work because they want to make sure they're not going to be left holding the bag on a bunch of amateurish work if they have to foreclose. There are a lot of DIYers who think they're God's gift to construction, but don't really have a clue, and the bank would have no way of knowing whether you can really do professional-quality work or not. They also will not allow you to drag out the work, so everything has to be completed in a fairly short time frame. You might not be able to finish up just working a few hours a week on the house.

~Very helpful info, thanks!~

We ended up building out here using the equity in our house in town after we sold it, cash on hand, and massive credit card charges. Once it was all done a few months later, then we got a mortgage. It was much easier because we didn't have to try to convince them what our intentions were, we just had them come out and appraise what was actually here. Much, much easier, the down payment was a lot less, the interest rate was considerably lower, and it was just smoother all around.

Basically, we started with a used single wide trailer, two additions built on that (which was an expensive mistake), the well, and the septic system. A couple years later we built the garage. By then interest rates were getting to be ridiculously low, so we started thinking about getting rid of the trailer. As we looked into it, we realized a stick-built house would be too expensive for the square footage we wanted, so we went with a double-wide manufactured home. It's been a good decision for us. We've been very happy with how things turned out. The expensive additions on the single-wide were moved and placed back to back, and became my three-room office and storage to help replace the basement we don't have.

~A trailer on the land is an option too. We wanted to do this when we first got married but couldn't find any land we liked back then. But now we have kids.
As long as I'm dreaming, I'm dreaming of a home that my oldest child will have full use of right away. Once we pay off the land deed and start building he'll be 11. That's not too many more years with us and I want to spoil him. Just being honest so long as I'm thinking about a dream home!~

If you start thinking about building, I strongly suggest factoring in a fairly large chunk of money for cost overruns, like 25%. They WILL happen, and if you've tried to estimate costs down to the penny, you could end up in serious trouble. If you don't spend that reserve, then great, but if you find out you need it, it'll be critical to have it.

I think your estimate of $100K to build a house is quite optimistic. I could be wrong, but knowing what it cost us over fifteen years ago to build up our property, I don't think I am. I'm not trying to be pessimistic, just realistic. Your best bang for the buck is going to be factory built homes, either modular or manufactured homes. Because of the methods of construction used for those, they can be built for a lot less than houses built on site.

All this was in the mid-nineties, and halfway across the country from you, so things could be different at this time and in your area. I'm just saying how it was here and then.

Good luck. It sounds like a great property.

~It'd actually be $185K all together. I just subtracted the land(since it would be paid off)and the $50K equity we'd pull out of our current home.
We'd still have our 1 year EF(which would not go as far in the new place)which is 15% of the house estimate. I'd hate to touch that but at least it's there.~

You're not going to like me.

~On the contrary, I loved that you shared your experience and I love that you're happy with your homestead!
I know it would be insanely hard(we thought buying a regular home was a pain and this is a much bigger thing!)but it is something we've been thinking and talking about for 12 years. We're excited about the challenge.
I know I won't be able to have half the features I'm dreaming about right away but it's impossible for my mind not to see my ideal. If we get the property it will probably take 10 years to get to my ideal because of how much everything costs.~

[Booklover]

It sounds lovely! However, around here the wetlands could pose quite a problem since there are so many restrictions surrounding them. You might want to really ask someone at the DNR very pointed questions about your plans, since I don't think realtors can know all there is to know about that. Nothing worse than planning something and being told you can't do it after you bought it.

Good luck!

[mommy2krj]

I have nothing to add really in the advice department, though it looks like you've gotten some good advice already. I just wanted to add my congrats on your opportunity and good luck in making your decision!

I will admit to being a touch jealous too. The land sounds beautiful and how nice that it's so close to your parents land! Good luck and I'll keep my fingers crossed for you that everything goes smoothly in the way that you want!

[Debbie-cat]

Sounds like a wonderful property nuisance!

We built 4 years ago now on our existing 20 acres. We are 600 feet back from the road. The electricity was the most expensive part. They had to install one of those big green electrical boxes about 50 feet from the house but we had to fight for that. They like just running lines and adding poles but you then pay an extremely high electrical rate because of voltage drop so make sure you fight for a box. The electrical ran use about $16K

Our well was $13K. We had to dig 200 feet through solid Canadian Shield rock. Our septic was $10K and we were able to house a regular septic and not a mound which I did not want.

We ran our own phone line off the little house which we still use for guests. We had our own backhoe and dug the lines. The wire ran us $800.

The backhoe saved us alot of money. We bought the backhoe for $6K and sold it for $5K after we used it for everything we needed it for. We dug our own septic lines and water lines from the well to the house. That alone knocked of $4K. We also used it for levelling the ground where the house sits, clearing land and making our pond bigger. So I would say get a backhoe if you can find a good deal. Some days we wish we still had it!

As far as loans go, we paid cash for everything even the house. It is a modular home. We are not sorry for paying extra to be 600 feet back at all except some times in the winter and we have a wild snowstorm!

We have propane heat with our own tank behind the house. I use it to cook and heat the house. The tank runs $1K to fill once a year. Not bad considering we are in a very cold climate in winter.

Good luck and I hope all your dreams come true.

[Spirit Deer]

We went through parking down by the road for one winter and couldn't take it anymore. We had a front-wheel drive Buick sedan (after our fat down payment on a 4x4 truck went into a hole in the ground drilling the well). The car could not make it up the hill to our house in winter. It got really, really old schlepping groceries from the road to the house. Not to mention our car was snowplow bait. Of course, the fact we're up a steep hill didn't help. But we weren't sorry to be able to drive up to the house again. We will never own anything less than a 4WD or AWD again as long as we live here. I think that Buick was the only car we ever owned that we didn't drive to death. It for sure was the only one we ever traded after just a year.

I wasn't referring to paving a road, but it's going to cost some money to clear the road and add Class V gravel and all. If you had a backhoe and could do some of that yourself, that would help cut costs. In our area, there is so much rock and the rock is so huge there are a lot of dirt contractors who can't even do the job. We hired the company with the biggest equipment because we had car-sized boulders to contend with. A backhoe would be handy to clear the driveway in the winter, too. Keep in mind if you don't have a road in and you need service people (like the propane delivery guy) there may be problems with getting service.

If you buy the land, MAKE SURE you put a contingency in the purchase agreement about the septic system. If you're looking at wetlands, you may not have a good place to put one, and you can about imagine how much fun that would be not to have one. With a contingency releasing you from the sale if no place can be found to put the septic system, you're covered in case there's a problem. If the seller won't sign it, then don't buy. Chances are you'll be able to place it somewhere, but better safe than sorry.

You might not have as much choice as you think about placing a septic system, as that can be affected by the water table and other factors. Here, because we're on a lake, the DNR has a mile-long list of regulations pertaining to septics and set backs and what we're allowed to do or not. I can only imagine it's at least as bad out east.

Being from northern Minnesota, the first thing I think of when I hear 'wetlands' is 'mosquito nursery.' You might want to go out to the property at dusk and see how bad it is.

If you're interested in building a house on a pay-as-you-go basis and you're handy, think about building the basement or the garage and living in it while you build in stages. My doctor and his wife did that here, living in the garage till they had the house built. Some other friends built their basement and lived in that while they built the upstairs as they could afford it. Of course, both approaches took years but they ended up with beautiful houses and no mortgage.

We had thought we wanted a two and half story house with walk-out basement, but ended up with a one-story with no basement. As we're getting older, we're really happy not to have any stairs in the house.

If I had it to do over again, I'd have gotten rid of WAY more stuff and ended up with a smaller house. We pay real estate taxes per square foot, and since we're on a lake, we pay a higher rate. Smaller would have saved us a ton of money.

I still feel $100K for just the house itself is too low, but I'm the first to admit I could be wrong. All I know is, once you get into a project like that, the money goes FAST.

[Anna43]

I'd want to have a LOT more details on wetlands. There are so many restrictions connected with them that you might find you want to give this property a pass. Wetlands cannot be "used". Septic might be a huge problem. I'm not saying forget it just to do your homework and get expert opinions. Do not take a realtor or seller's word for anything.

[mauimagic]

It is so important to fall in love and have dreams!! No matter what happens - you can build on them!!

Love all that I am learning here too - keep the info coming folks!!