I have $30,000. I want to build my own house. The area I'm looking at,
the 30 grand is plenty enough for the land I need, while I plan to go
into debt for the home itself.

Specific question: Should I go shopping now for the land and just write
a check for it, or should I get the construction loan first?

I know when you add up the numbers, there's really no difference, but
I'm thinking there might be some kind of technicality here that could
bite me in the ass later. Things like taxes, write-offs, even PMI,
etc., if I don't technically get the loan for everything.

I know what I want, but I don't have any blueprints, permits
(obviously) or even a timeline, really. I ain't got nothing but 30
grand, good credit and an area with a relatively low cost of living.

Oh yeah, part of the deal is I get to be the general contractor and do
what I want myself. No compromise on that point. It's that way or I
just buy another place.

General question: Any advice on a plan of attack here?

Thanks.

On 22 Mar 2005 15:18:07 -0800, whilst I was lookin "Woods"
wrote:

I have $30,000. I want to build my own house. The area I'm looking at,
the 30 grand is plenty enough for the land I need, while I plan to go
into debt for the home itself.

Specific question: Should I go shopping now for the land and just write
a check for it, or should I get the construction loan first?

I know when you add up the numbers, there's really no difference, but
I'm thinking there might be some kind of technicality here that could
bite me in the ass later. Things like taxes, write-offs, even PMI,
etc., if I don't technically get the loan for everything.

I know what I want, but I don't have any blueprints, permits
(obviously) or even a timeline, really. I ain't got nothing but 30
grand, good credit and an area with a relatively low cost of living.

Oh yeah, part of the deal is I get to be the general contractor and do
what I want myself. No compromise on that point. It's that way or I
just buy another place.

General question: Any advice on a plan of attack here?

Thanks.

If you really want to be careful about this you might want to first
see how much of a loan you can qualify for. Once you know what you
can actually qualify for it will give you that much of a comfort zone
before you actually "write the check".


Rose
http://members.aol.com/Roseb441702/grants.htm
Grant Basics 101!

In article .com,
"Woods" wrote:

I have $30,000. I want to build my own house. The area I'm looking at,
the 30 grand is plenty enough for the land I need, while I plan to go
into debt for the home itself.

Specific question: Should I go shopping now for the land and just write
a check for it, or should I get the construction loan first?

Neither. Pick a general contractor or builder first. The
builder may have an inventory of land, or they may have
a selection of places where they have rights to land to
build on.

The one thing a builder does not want is to build a house
on a piece of land that he/she does not own, and then have
the customer not able to pay for the house. That leaves
the builder owning a house on land that they do not own.
As a result, many builders will insist on buying the land
prior to starting construction, even if they buy if from
you. You can avoid the two land closings by letting the
builder do it themselves.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708
Newave Communications http://www.johnweeks.com
================================================== ====================

On Tue, 22 Mar 2005 19:44:51 -0600, someone wrote:

Neither. Pick a general contractor or builder first. The
builder may have an inventory of land, or they may have
a selection of places where they have rights to land to
build on.

The one thing a builder does not want is to build a house
on a piece of land that he/she does not own,

What a crock of ****. My house is on land that I owned first, and I
hired a builder for. I have also sold many pieces of land to just
plain folks to build on now or later. Builders build on other
people's land ALL THE TIME and it is NOT A PROBLEM. The only
potential problem is not who OWNS the land but what is OWED on it, and
in this case OP will pay cash and own it clear so no problem,
builder's potential lien (until he is paid of) will still have
priority.

Besides, OP didn't want a builder or contractor anyway, he wanted to
build himself.

If you pick a builder with an inventory of land first, then you are
limited to the lots he owns. Often in a cookie cutter subdivision
next to the identical houses he has built for other customers. No
builder has a patent on style of house, but a piece of land is
potentially unique. If you have the time and up front money to pick
your land, get the piece you want, and then you can have any style
house you want put on it, or build it yourself.

We sought out our site, bought it, then we designed a house for that
site. Actually, I was the designer of record and GC of record, but
one contractor did maybe 90% of the work. I repeat, he had NO PROBLEM
with me owning the land. They do that all the time.

-v.


Reply to NG only - this e.mail address goes to a kill file.

v wrote:
On Tue, 22 Mar 2005 19:44:51 -0600, someone wrote:

Neither. Pick a general contractor or builder first. The
builder may have an inventory of land, or they may have
a selection of places where they have rights to land to
build on.

The one thing a builder does not want is to build a house
on a piece of land that he/she does not own,

What a crock of ****.

Better answer. We're moving from suburban subdivision heaven (hell?) to
a more rural area, and it's funny how all our subdivision-dwelling
friends can't imagine why we wouldn't want to just put this next big
step in our lives in the all-knowing, all-capable and, of course,
all-altruistic hands of a builder -- preferably, they tell us, a
builder in a subdivision.

Why do I have to play by some builder's rules, cover his mark-ups,
etc., etc.? Most of the people I talk to seem to think that's the only
way -- that normal people just don't build their own homes anymore.
It's too complicated. There are too many zoning laws.

I agree with this guy. That's a crock of ****.

It seemed to me that buying land and then building a property on that
land was a pretty normal thing to do.

Some close friends of ours (no kids, which doesn't describe me, so I'm
under no illusions that I could go this far) have been in a cycle for
the last 20 years of buying land, buying a temp trailer to live in,
building a house, living in it for a year or two, then selling it. They
have been paying cash since house #5. They're getting ready to build
#10 now.

Back to the original question: Should I buy the land now and let it sit
until I'm ready to build or is there a good reason (taxes?) to have the
land wrapped up in the same loan? I've asked our friends, but they
didn't know for sure. I don't think they think that much about money
anymore.

In article .com,
"Woods" wrote:

It seemed to me that buying land and then building a property on that
land was a pretty normal thing to do.

Perhaps it is given that you are professional in this field.
But for the other 99% of America, those who don't know about
building and the construction trades, there are so many ways
to get in trouble that I cannot begin to count them, and any
problems you do have will have the potential to be very expensive
to solve.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708
Newave Communications http://www.johnweeks.com
================================================== ====================

"John A. Weeks III" wrote in message
...
In article .com,
"Woods" wrote:

(snip)
Neither. Pick a general contractor or builder first. The
builder may have an inventory of land, or they may have
a selection of places where they have rights to land to
build on.

The one thing a builder does not want is to build a house
on a piece of land that he/she does not own, and then have
the customer not able to pay for the house. That leaves
the builder owning a house on land that they do not own.
As a result, many builders will insist on buying the land
prior to starting construction, even if they buy if from
you. You can avoid the two land closings by letting the
builder do it themselves.

????? Perhaps true for a McBuilder that carries their own loans, but not a
custom builder. I grew up in the business, and building on customer-owned
lots was quite routine. My old man built very few spec houses. Anyway, the
build doesn't start until the customer has financing (or a real big bank
account). The bank is usually very involved in the build process, doing
'draw point' inspections at various stages before they release progress
payments. I often had to work punch lists ahead of the bank guy, making sure
no piddly little items off the checklist were incomplete.

Anyway, OP wanted to be his own GC, so the question is moot. Very few
financial institutions will write paper for an owner-built, unless they can
show they have the skills and time to complete the house in a timely
fashion. A half-built waterlogged folly is poor security for the principal.

aem sends...

Woods wrote:
I have $30,000. I want to build my own house. The area I'm looking at,
the 30 grand is plenty enough for the land I need, while I plan to go
into debt for the home itself.

Specific question: Should I go shopping now for the land and just write
a check for it, or should I get the construction loan first?

A few more thoughts.

I bought land in 1990 and built in 1992. Property taxes in my county
on raw land is double the rate for that of developed land. Ie. land
appraised at $25,000 might have property tax of $500 while a house
appraised at $100,000 would have a tax of $1000. After getting the land
I spent a year figuring out house plans making use of a designer and
structural engineer. Once I had plans I started visiting custom home
contractors. Once I had selected a contractor and agreed on a price
I went shopping for a construction loan. There was no way I could
have obtained a construction loan without a build agreement with a
contractor. The construction loan was in my name and I had to sign
for the monthly draws. You don't want a construction loan any longer
than necessary. Once the house was finished the construction loan was
replaced with a permanent loan. I saw every bill for all of the subs.
I was amazed at all of the contacts my contractor had and his ability
to get these people to do the work when he wanted them. I would not
have been so successful since I did not continually work with these
people.


I would recommend buying the land first, picking a site that follows
the real estate motto of location, location, location. After that build
a house that fits the site. Check on restrictions such as height and
size for the area. I know in my area houses had to have a minimum
size and under a maximum height. If you want a walk-out basement then
pick a site that supports it. Make sure you know exactly, or as close
to as possible, what you are going to build prior to building. Making
changes during construction can be very costly. Going throught the
effort of actually designing and building a house, with the help of
a contractor can be very rewarding. I know my house was appraised at
about $25,000 more when I moved in than what I had put into it, and
that was 13 years ago.
Mark

Woods wrote:

I have $30,000. I want to build my own house. The area I'm looking at,
the 30 grand is plenty enough for the land I need, while I plan to go
into debt for the home itself.

Specific question: Should I go shopping now for the land and just write
a check for it, or should I get the construction loan first?

I know when you add up the numbers, there's really no difference, but
I'm thinking there might be some kind of technicality here that could
bite me in the ass later. Things like taxes, write-offs, even PMI,
etc., if I don't technically get the loan for everything.

I know what I want, but I don't have any blueprints, permits
(obviously) or even a timeline, really. I ain't got nothing but 30
grand, good credit and an area with a relatively low cost of living.

Oh yeah, part of the deal is I get to be the general contractor and do
what I want myself. No compromise on that point. It's that way or I
just buy another place.

General question: Any advice on a plan of attack here?

Thanks.

If you were interested in USDA Rural Housing loan, the builder would have to
buy the land AND build the house, since only he would be legally liable for
completion.

If you're going to be general contractor, you had better get your financing
completed before starting. But I suspect that you won't have the latitude
you propose.

All the owner-builders I knew, used their own cash, and no financing.

It's a catch-22. If you want other people's money, you have to accept other
people's rules. If you don't need other people's money, you can do what you
want.

On Fri, 25 Mar 2005 18:45:35 -0500, someone wrote:

If you were interested in USDA Rural Housing loan, the builder would have to
buy the land AND build the house, since only he would be legally liable for
completion.

So don't get that kind of financing. Actually I think if you compared
nationally, you'll find that's a niche product that accounts for a
very low percentage of homes built - even though in certain specific
areas it might be common. I have heard of ZERO people in my area
using that method.


If you're going to be general contractor, you had better get your financing
completed before starting. But I suspect that you won't have the latitude
you propose.

Of course you get your financing lined up before "starting" - starting
the house that is. There is no need to have financing in place before
buying land, if you have the cash for the land. I bought my land
first for cash, and so did the last several people I sold lots to in a
subdiv I owned part of (in a different location from my own house).


All the owner-builders I knew, used their own cash, and no financing.

And myself and the owner builders I know, all had bank loans. You
show the bank your detailed professionally prepared drawings (not just
"plans" but the elevations, sections, mechanical, specs, etc.) and
demonstrate that you know how to get them built and have a realistic
plan to do so, and they approve the loan.

If your buddies were trying to cheap out, had a home made sketch on a
napkin, vague ideas, unrealistically low budgets and the hope to get
used materials, close outs and surplus materials, and said they were
going to build it nights and weekends after work, then no, they are
not going to get a bank loan.

IMHO it is true this can be beyond the "average" person - but that
wasn't the Q. Also IMHO the "average" person is better off going to
see existing homes because they cannot propoerly envision the
completed home and all the details from a builder's "plans" for a home
not yet built, and they are at grave rsik of being screwed during the
construction process, even if they buy from a builder in the builder's
subdivision - in fact even more so.

Its still a free country, so buy as you will.

-v


Reply to NG only - this e.mail address goes to a kill file.

Mark Barrett wrote:

Woods wrote:

I have $30,000. I want to build my own house. The area I'm looking at,
the 30 grand is plenty enough for the land I need, while I plan to go
into debt for the home itself.


Specific question: Should I go shopping now for the land and just write
a check for it, or should I get the construction loan first?


A few more thoughts.

I bought land in 1990 and built in 1992. Property taxes in my county
on raw land is double the rate for that of developed land. Ie. land
appraised at $25,000 might have property tax of $500 while a house
appraised at $100,000 would have a tax of $1000. After getting the land
I spent a year figuring out house plans making use of a designer and
structural engineer. Once I had plans I started visiting custom home
contractors. Once I had selected a contractor and agreed on a price
I went shopping for a construction loan. There was no way I could
have obtained a construction loan without a build agreement with a
contractor. The construction loan was in my name and I had to sign
for the monthly draws. You don't want a construction loan any longer
than necessary. Once the house was finished the construction loan was
replaced with a permanent loan. I saw every bill for all of the subs.
I was amazed at all of the contacts my contractor had and his ability
to get these people to do the work when he wanted them. I would not
have been so successful since I did not continually work with these
people.

Our situation was very similar. We bought a large "farm" and had to go
through a farm credit bureau for the loan to buy the land (normal bank
would not handle more than 30-40 acres). Then found some house plans,
shopped for builders, agreed on a price, got a construction loan that
would allow us to wrap the land loan into it (better rate), then
converted to permanent loan after construction. I would recommend buying
the land first then you can choose to build at your leisure but as other
posters have said, get the land you really want. We were sick of the
subdivision life and are so happy with our "farm".

"medusa" wrote in message
...
Mark Barrett wrote:

Woods wrote:

I have $30,000. I want to build my own house. The area I'm looking at,
the 30 grand is plenty enough for the land I need, while I plan to go
into debt for the home itself.


Specific question: Should I go shopping now for the land and just write
a check for it, or should I get the construction loan first?


A few more thoughts.

I bought land in 1990 and built in 1992. Property taxes in my county
on raw land is double the rate for that of developed land. Ie. land
appraised at $25,000 might have property tax of $500 while a house
appraised at $100,000 would have a tax of $1000. After getting the land
I spent a year figuring out house plans making use of a designer and
structural engineer. Once I had plans I started visiting custom home
contractors. Once I had selected a contractor and agreed on a price
I went shopping for a construction loan. There was no way I could have
obtained a construction loan without a build agreement with a
contractor. The construction loan was in my name and I had to sign
for the monthly draws. You don't want a construction loan any longer
than necessary. Once the house was finished the construction loan was
replaced with a permanent loan. I saw every bill for all of the subs.
I was amazed at all of the contacts my contractor had and his ability
to get these people to do the work when he wanted them. I would not
have been so successful since I did not continually work with these
people.
Our situation was very similar. We bought a large "farm" and had to go
through a farm credit bureau for the loan to buy the land (normal bank
would not handle more than 30-40 acres). Then found some house plans,
shopped for builders, agreed on a price, got a construction loan that
would allow us to wrap the land loan into it (better rate), then converted
to permanent loan after construction. I would recommend buying the land
first then you can choose to build at your leisure but as other posters
have said, get the land you really want. We were sick of the subdivision
life and are so happy with our "farm".

if you can't write a check for the land, you can get a loan for the land,
and then wrap that into the construction loan. then, your first draw would
be to pay off the land loan. make sure you don't have prepayment penalties.
it's easier if you get both loans at the same place.

In article ,
"Charles Spitzer" wrote:

your first draw would
be to pay off the land loan.

Can you do that? When I built my house, the first draw was for a certain
amount of construction.

Here in Littleton, by the way. I interviewed once at Stratus.

Ilene B

"Ilene Bilenky" wrote in message
...
In article ,
"Charles Spitzer" wrote:

your first draw would
be to pay off the land loan.

Can you do that? When I built my house, the first draw was for a certain
amount of construction.

Here in Littleton, by the way. I interviewed once at Stratus.

Ilene B

i did. maybe it depends upon the bank. i purchased my land by putting up 20%
down, owner carried the rest with monthly payments to him until i got the
construction loan , which paid off the rest of the 80% on the land as part
of the first draw (the other part was paid to the gc for a down payment for
his fee). you just have to have a construction loan that is large enough to
pay to build the house and buy the land too, and be able to carry both loans
until you can sell your current home and move into the new home, if
applicable.

regards,
charlie
cave creek, az

On Mon, 11 Apr 2005 21:32:07 -0500, someone wrote:

Can you do that? When I built my house, the first draw was for a certain
amount of construction.

Who was first and who was second?

The construction lender would have to be nuts to have his loan behind
a first lien on the land itself. Did the land lender agree to
subordinate? Inquiring minds want to know. Its all in how it is
structured.




Reply to NG only - this e.mail address goes to a kill file.

Well since you are paying off the land loan, the first on the land
would go away and the construction note would hold the first. The
original land owner would have to release the collateral upon paying
off the land note.

Buy the land with your money and use it as collateral when getting your
construction loan. If you wait and buy the land as your first draw you
will spend some time paying interest on the land while grading,
excavating, pouring etc. It says a lot to the lender that you will
also have something to lose if things go south. I've had some people
take the money and put it into a 6month CD and use that as collateral
along with the land and future home. Then when the house is completed,
they cash it in and use it as the down payment. Liquid collateral says
a lot more than some dirt. Lenders dont like to have to liquidate
anything.

Go get an approval from your mortgage lender and take that and the deed
for the land over to a construction lender and get it done. I don't
know too many lenders that would turn this down. Buying the land first
may save you some fees also. When starting a construction note where
the first draw is to buy the land I usually like to have the loan
closed at the title company since it is a real estate acquistion, but
if you already own the land I'll close it at the bank. That should save
you title closing fees. Plus if the land is $30K and the house is $150K
then the construction loan will be $180K and you have to pay title
insurance on $180K whereas you buy the land first you only need title
insurance on $150K. Might save a few bucks there also. Just some
thoughts. Oh and bring your plans and estimated costs to the lender so
he can get an appraisal done on those also, speeds up the process.

In article ,
(v) wrote:

Inquiring minds want to know. Its all in how it is
structured.

Ah. I built a house on the ruins of a crumbling cottage that I'd bought
and lived in for eight years. The remaining mortgage on that cottage
(and the lot) were rolled into the new construction loan.

Ilene B

On 12 Apr 2005 14:49:33 -0700, someone wrote:

Well since you are paying off the land loan, the first on the land
would go away and the construction note would hold the first.

Mike,

I was replying to the guy who said that is NOT how he did his
construction loan, who claimed that this 1st draw went to construction
and NOT to the land note.


Reply to NG only - this e.mail address goes to a kill file.