Need Advice/opinions On Choosing/purchasing Land And House Building Options.
Hello all. This is my first post. Great forum, I hope to learn a lot and help others when I am able.
I'm looking at buying land. I've outlined some basic goals and have some general questions I'd like opinions on.
Background info.
land in my area runs about $12k to $40k /acre. (Based on the size of the lot and location/neighboring houses.)
Goals:
Buy 3-10 acres to:
build a house.
keep 1+ acre forever.
parcel off and resell the remainder in the longterm, maybe 25+ years from now.
Financing:
I have about $90k equity on a duplex and about $35k in cash (rainy day fund).
HELOC at 90% LTV gives me about $59k to work with.
Use all of my rainy day fund and half of my HELOC, leaves me the other half of the HELOC for a rainy day.
I could find other methods for financing for a larger lot of 10 acres or a nicer smaller lot.
land contract? Construction Loan? or stick with using just my HELOC?
Size of lot to Buy
Most likely even if I buy a 10 acre lot, it is already zoned as small as the county will allow.
Should I be counting on being able to rezone to smaller lots in a time period of 25+ years?
Neighboring Houses/Mobiles
My county has almost no restrictions on mobiles.
land near nice homes is about 3x the cost but otherwise seems no better.
Some people tell me the increased cost is already built into the more expensive land and that the cheaper land near mobiles has more room to appreciate. Other people tell me no matter what house I build it wont be worth much near even nice mobile homes. It is very normal in this area to see nice houses next to mobiles and is quite hard to find land that is all nice homes.
Opinions on Future Home Value Based On Neighboring Houses/Mobiles?
More general question: Spending the same dollar amount, better to buy a small expensive lot (2-3 acre) or a less expensive larger lot (3-10 acre).
House to Build, modular vs at site built
I've seen some very nice modular homes, I haven't found a site that will give actual dollar costs but some articles say about 80% of the cost of on site built comparible. I would be building a 3500+ sqft 2 story home.
Any one have any experience or opinions?
Who Should I Have Help Evaluate Property
Who is the most qualified to evaluate raw land for building?
I haven't been very happy with the two real estate agents i've worked with. I pretty much do all the work myself.
Thank you all.
Gary
[ Edited by garstud on Date 02/21/2004 ]
[ Edited by garstud on Date 02/21/2004 ][ Edited by garstud on Date 02/21/2004 ]
Some general thoughts.
First, try not to think of the price for residential land of X$ per acre, but rather as X$ per building lot. Before buying any land parcel, I would verify its current zoning which will tell you, among other things, minimum lot size and lot width requirements, uses allowed. In my area, ability to rezone is no "no brainer" so work your scenarios based on current, not prospective zoning. If you're planning to do a subdivision, you should have a real estate attorney and will also need a civil engineer & surveyor. The engr can explain what the approval process is for a particular municipality.
My experience is with "stick built", not mobile or modular homes. I would be cautious about building any home where your land cost + building and site prep costs greatly exceed the value of the homes surrounding you. In other words, don't overimprove relative to the neighborhood's values.
Before buying any land parcel, have your attorney review the contract and your builder inspect the site. The builder is the best one to evaluate the site since he would be doing the building. May be a good idea to have a "due diligence" contingency in the purchase contract.
Thanks for the reply Nancy.
It's hard not to look at it by cost/acre. The bottleneck for the number of homes a lot can support is most often the zoning and not the physical attributes of the land. Nearly all the buildable land in this county is set for 1 house/5 acres or 1 house /10 acres.
Regardless, you are right, and I will try and look at from that prespective.
Thanks again.
Don't forget that if you use your HELOC, the interest is tax deductable.
You're welcome. Most people, including real estate agents in my experience, do look at residential land on a per AC basis. This may help--if it's 10AC listed for $100K but the zoning would allow only 1 house to be built on the property, it's a $100K building lot.
One other thought--on the issue of spending the same money for a smaller or larger lot. The quality of location is very important and I would probably be inclined to go for the smaller lot if it has a better location at the same (or even higher) lot price. For better or worse, you're "stuck" with location. Bells & whistles in the house won't make up for a property that's "location challenged."