[Palisade]

If I want to buy some land and then build a house on it later, what are the main things I should consider?

It looks like the rules regarding buildable land, surveying the land, and actually building on the land are quite complicated and convoluted. Also, it looks like even if I manage to comply with all of the legal gobbletygook, I still may run into major problems when they start putting in the foundation.

What are the main factors I need to consider in seclecting the land, getting it surveyed (if necessary?), and purchasing the land?

What type of professional should I hire to make sure the sharks out there aren't taking advantage of me?

Also, assuming I do purchase the land, what can I do to make it earn money for me until I start building the house?

What resources are out there to research these things?

This post has been edited by Solar Wind: 21 February 2006 - 11:41 AM

[Delvo]

Solar Wind, on Feb 21 2006, 11:32 AM, said:

It looks like the rules regarding buildable land, surveying the land, and actually building on the land are quite complicated and convoluted.

Whether land is buildable or not, and why, and what can be done about it, depends on the local geological details. Ask a surveyor, a building contractor, or real estate agent about the quirks of a piece of land you're considering. It's usually not that the land can't be built on, but that something would have to be done in a certain predetermined way to deal with an issue. Soil that expands and contracts too much with moisture, temperature, and phase changes between ice and water, for example, might call for an architectural feature called "frost footings" to prevent damage to a building in that soil, but it doesn't make building there impossible or illegal. It just means builders know to use frost footings there. (And they're required by law in some places like Minnesota.)

Ask other propety owners around there about tax rates. Many local governments are getting greedy lately because they've figured out that there's almost always a richer buyer available if you price an owner out of his/her land and nothing will happen to you for doing it. In some places, you can expect them to roughly double the tax rate every 5-10 years.

Also, avoid places that big businesses might want later on, because if you buy such a piece of land, you don't really own it; you just rent it from the local government until some big rich company has a whim to take it from you, at which point the local government has no hindrance to declaring that business's ownership of that land a "public interest" that outweighs your property rights and warrants seizure of the property from you.

Do you care about creeks, rivers, lakes, and ponds? Land with one of those alongside it or in it costs more, so if you don't care, avoid water bodies in order to save money. Also, bordering some roads would probably cost more than bordering others, so you could save some by buying land that only touches a "cheap" road if you don't care about that personally.

Counties usually have "codes" (lists of technical requirements) that houses must meet in order to be legally built there, and might also restrict the construction of your own privately owned utilities like wells and septic tanks/lagoons. Sometimes they also regulate something about land transfers or permission to build, like one county I used to live in that would not allow parcels smaller than five acres or wouldn't allow a house to be built on less than 5 acres or something like that, to combat property fragmentation and deruralization. But those vary, so there's no generalized advice that can be given about those. Just ask the local government office about any such requirements they might have... and what their definitions are of their zoning terms.

Surveying is simple. You get a surveyor to come out and mark the boundaries and verify the price-affecting measurements like area, street frontage, and water frontage. Their word becomes the official data for that land and that sale, so their job is to make it clear to everybody just who owns what and what is and isn't being sold.

Utilities are something to watch for because land that doesn't have buildings on it yet hasn't had utilities extended to it yet, and it would be harder and more expensive to extend them to some places than to others.

Solar Wind, on Feb 21 2006, 11:32 AM, said:

Also, it looks like even if I manage to comply with all of the legal gobbletygook, I still may run into major problems when they start putting in the foundation.

It's not common because most land doesn't present such major obstacles, and in those cases where it might happen, you find out at least what the risk is before you get that far, by asking building contractors what building there might entail, and possibly also asking the surveyors and/or the local government office that keeps track of land parcels and ownership.

Solar Wind, on Feb 21 2006, 11:32 AM, said:

Also, assuming I do purchase the land, what can I do to make it earn money for me until I start building the house?

Other than farming, which is not a thing for amateurs to dabble in short-term, I don't know of any business that would be really land-related and have much of a chance of substantial returns in a short time. A relatively cheap "quanset"-type building could contain most kinds of buy/sell/trade businesses or small-scale work shops, but that only matters if you've got such a business in mind. Depending on what kind of land you've got, you might be able to charge other people to use it for camping, hunting, or such, but only if you could first find takers, which would be very hard to do, and then it wouldn't be enough to cover the mortgage. Your best bet might be selling timber trees, but that can only work to the extent that you're willing to de-tree your own land, and the land has trees of marketable size on it. And then you can't do it again for a long time. Selling parts of the property you aren't interested in could also bring in lots of money all at once but can't be repeated, and depends on the property in question actually having such "extra" land in it.

This post has been edited by Delvo: 21 February 2006 - 07:57 PM

[Palisade]

^ Thank you.

Until I build the house, the government would only be getting property tax on the land. If a developer wanted my land, would the government be able to take my land from me under eminent domain? After all, the developer would have the finances to build now.

[Delvo]

http://www.exisle.ne...showtopic=29023

[Palisade]

^ YOUCH!

So after paying interest to the bank and paying property tax to the local government, I can just have my land nabbed out from under me? I'm not even guaranteed to receive the dollars I need to buy an equivalent piece of land?

Even if I do build a house, they can just nab my land & house, demolish my house, and put up a bigger & better house for whoever happens to be richer than me?

[Delvo]

The issue there was people being kicked out for commercial enterprises, not other people's homes. Even the commercial thing's not supposed to happen, since the "taking" laws were intended for government functions only, but extending it to residential replacement is a superstretch that hasn't happened.

Takings are supposed to be rare, and for the most part they still are, and a government that is using it to boot someone is required to pay the bootees for the property. The issue in that thread was just that the court had failed to prohibit governments from claiming that a business, as opposed to something like a police station or a new road, counts as the kind of public need that the takings laws were meant for. And as you can see in that thread, legislators did move to disincentivize lower governments from doing it anyway.

Because the threat, such as it is, is from big businesses, I would still probably avoid buying land that looked like a good business location: wide flat ground and/or land adjacent to a major road or especially a major intersection in the area.

BTW, it's no more likely if you buy land to build on than if you buy a house that's already built, so your plan to buy a house would have faced the same thing.

[Palisade]

^ Could an apartment company get the land taken? In addition to the increased tax revenue, the apartment company could argue that this way the land is being used to provide shelter for 20 or so people instead of just 1.

This post has been edited by Solar Wind: 21 February 2006 - 10:43 PM

[Delvo]

The justifications that have been used have been in terms of jobs and cash flow to the area from having a new major employer, not residency stocking.

[Delvo]

An afterthought on making the land make money before the house is built, which I thought of including before but didn't: Instead of thinking in terms of making money, you could think of it as saving money. I don't know if you'd be willing to do this, but if I had land and couldn't have the house built immediately, I might move in there in some other form first, thus avoiding having to pay rent or mortgage elsewhere simultaneously. Cheaper buildings than houses could be used instead, such as a large shed or "quanset hut" or a parked trailer/mobile home (the latter of which can provide substantial living space for something like a fourth or a fifth of the price of a house). Also, you might be able to start with a very small, simple house at first and expand on it later, or save construction costs by learning and doing some parts (or all) of the work yourself. (And I'm not sure but I suspect there's a class of buildings called something like "vacation cabins" that are essentially small houses but cheaper than houses due to both small size and less severe technical requirements.) That would have the advantage of not being "down the drain" like the cost of a shed or quanset building would be when the "temporary" stage was over, because you'd be keeping and still using the original core house/cabin building even years later. The cost of a trailer, likewise, can be recaptured when you're done with it because they can be resold and moved when you're done with them. If it were temporary enough, I'd even live in a big walk-in tent on the site for a while.

The general idea in any of these cases, though, is that even if you can't make money off the land, if you can't get the house built on your land yet, you could still save some money by finding a way to live there in the interrim anyway, thus not having to pay for a home somewhere else at the same time until the house is built.

[Delvo]

http://www.ownerbuildersolutions.com/

The OBS FAQ said:

How does Owner Builder Solutions save me money?

Cost savings are realized primarily in the elimination of the general contractor. Traditionally when a consumer has a general contractor build their new home the price they pay is not general contractor’s cost to build, rather it is the highest price the general contractor can charge based on the anticipated value of the home when it is complete. The difference between the cost to build and the actual price of the home can be as much as 20 to 25 percent. This difference is the general contractor’s profit. To earn this profit the general contractor manages the construction process, this does not necessarily mean they actually build the house. These days most general contractors hire a series of subcontractors to perform the actual work of building a home. Their job primarily is the process of gathering bids, scheduling the work and final payment of the subcontractors. By eliminating the general contractor and their fee, the homeowner can realize substantial earned equity.

[Broph]

^Easier said than done, of course. It's not just scheduling the contractors; it's watching them, calling them when they don't show up on time, etc.

It's having the expertise to deal with city hall and local lawyers.

It's the expertise of knowing the type of blueprints you need.

There was a guy in a local city who decided to put up a house on a piece of land he owned. He didn't get the proper permits and OKs. He was $120,000 into the project when he was told he'd have to tear the whole mess down.

[Palisade]

So what would I have to do to get the water and electricity companies to hook up the house?

You know, if the homebuilders would build your basic three-bedroom, two-bath, one dining room, one living room, one rec room house, I'd be golden in a few years. Instead, everything new seems to have five bedrooms, TWO laundry rooms, vaulted ceilings everywhere, personal spaces, super expensive exotic hardwoods, and master suites you could get lost in. TWO laundry rooms? WHY?

This post has been edited by Solar Wind: 25 February 2006 - 05:57 PM

[Broph]

Probably differs city to city, state to state. Depends on what's already available on the road. There's a town not far from me where the entire town is on septic tanks; no sewer system at all. Other towns only allow existing septic systems and force you to go to sewer if you're building new.

Water, electricity and gas are probably dependent on how far away you are from existing service, as well as ground conditions in the area. I went to an open house in an area where all the houses were slab ranches. One person asked the realtor about gas availability in the area. The realtor said she didn't know. I told her that there was no gas availability in the area; the ground was loaded with granite. Sure, they got water and sewer for the area (no way could you dig a septic), but gas is a private company, regardless of the fact that it's a monopoly. Slab ranches generally have a garage with the radiant floor heat (and what happens to those pipes in the concrete over the years - scary stuff), with the heater in the kitchen. Wouldn't be worth the while to even try to get gas run up.

BTW, although water, sewer and gas are all run underground, you're talking about 3 different trenches in pretty much all cases; cities don't like to mix pipes in trenches in case one leaks.

[Delvo]

Solar Wind, on Feb 25 2006, 05:56 PM, said:

You know, if the homebuilders would build your basic three-bedroom, two-bath, one dining room, one living room, one rec room house, I'd be golden in a few years. Instead, everything new seems to have five bedrooms, TWO laundry rooms, vaulted ceilings everywhere, personal spaces, super expensive exotic hardwoods, and master suites you could get lost in. TWO laundry rooms? WHY?

The link I gave above and this one both contain plans for much smaller houses, even down to some with 1 or even 0 bedrooms, which you can order and have a builder follow for you. Also, if you pick up a newspaper with classified ads or a local apartment or real estate guide/book for your area (similar to classified ads but with a lot more listings), you can find the smaller ones. They're just not the easiest to find in a casual search, but they're there.

[Palisade]

^ Delvo, the homebuilders in my area are building a limited number of "economy starter homes;" however, they are few and far between. They also tend to be quite far away from where I work.

The homebuilders make more money building the expensive homes so that's what they will predominantly build for as long as the market has sufficient demand.

[Delvo]

Solar Wind, on Feb 26 2006, 02:35 PM, said:

the homebuilders in my area are building a limited number of "economy starter homes;" however, they are few and far between. They also tend to be quite far away from where I work.

Do you mean "have already built" as well as "are building"? Most houses that exist aren't new. Of course, maybe it is both. But then that's why when you pick your design and hire someone to build it, you tell them what you're hiring them to build instead of letting them make it up.

[Palisade]

^ There were a couple of new "economy starter homes" in last year's Parade of Homes. Keep in mind that the "economy starter homes" still gave me a bit of sticker shock. Prices are well above what a similar house would cost where I grew up.

The homebuilders interviewed for the Parade of Homes newspaper feature expressed lukewarm interest in building more of these "economy" homes. However, if they are in fact being built and put on the market, they're not easy to come by.

[Delvo]

What does the fact that few people seem to buy in cold weather mean for a buyer who doesn't care about that and is deciding when to go for it? I can imagine potential good things in it and potential bad things in it, but I think the descriptions I've read of houses lingering on the market unsold for a long time in cold seasons would mean, in terms of the old supply-demand equation, high supply and low demand... which is usually good for the buyer... which would mean that even if I can/could buy sooner, I'd be better off waiting for a winter anyway...

[Broph]

Hard to say either way. I've moved in the Summer and I've moved in the winter. Neither one thrilled me. Buy in the Summer and you don't know how things get in the Winter. Buy in the Winter and you don't know how the lawn looks in the Summer. It's a tough call either way.

[Delvo]

Another nifty option to look into for having your own home built is steel. I think most parts of the country have a steel construction contractor or a few of them around. It seems to allow more freedom of placement of interior walls to make the layout the way you want, cost less, allow you to save even more by doing some or all of the work yourself, and result in a better product (stronger against wind, hail, and snow weight, better when hit by lightning because the energy passes through it to the ground easily instead of getting absorbed along the way, and impossible to rot or burn... which is reflected in insurance rates). The only thing I'm not sure of is how you'd mount something to an internal wall, like a shelf I just put up in my living room recently with screws in the wood studs. If there are no wood studs, how would you do that? But it's also possible to hybridize steel with conventional construction, building with steel structural beams but also including some non-steel parts like wall studs, sheathing, roof, siding, and such.

Anyway...

Looking through the ads for already-built homes for sale, I notice that some say "for sale with owner". What does that mean? I know that for sale by owner means (s)he's not using a realtor to sell, and if it doesn't say that you can assume (s)he's going through a realtor, but "with owner" is a new one.