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Thread: I want to buy land

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    #1

    I want to buy land

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    This is not going to happen for a few years but I want get land to build a home. I'm thinking a bigger piece of property (30-50 acres) and have a general idea of where (smokey mountains) but I'm not sure of the process. I figure that it's different than buying a house and when I get it I don't plan to immediately get to building on it so I'm curious if anyone else here has done it.

    What type of land were you looking for? Price range? etc?
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    #2
    I googled it the other day, but I'm no expert by any means From what I read, property loans are generally with local banks, but a shorter length of time (3-15 years, not 30) and a higher interest rate. Some require more than 20% down too.

    I also read that it "used to be" that if your land was paid for when you wanted to build, you can get a construction loan to build your house without any down, because your land is a paid-for security interest. I would think that's still true, but someone on the internet said "those days are gone."
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    I know this is an old post but being that we are closing on our land in a couple of weeks, I figured I could answer your question

    1) You either have to go to a local bank or do owner financing
    2) You need either 20-30% down typically, most are interest only for 3-5years. Some banks will do normal amortization though
    3) Whether owner financed or bank financed, many have a stipulation that you can NOT make any improvements on the land while there is a note on it
    4) if it is after a year since you bought the land, most banks will assess the land based on appraised value to determine your down payment for the construction loan. If it is less than a year, they use purchase price.
    5) To start construction, you need usually 20% down. This plus your closing costs and construction management fee are due when you break ground. If there is a note on the land, the bank pays that off & wraps it into the construction loan

    Good luck on the building process. If you have any questions, let me know, DH and I are going to talk to an architect when he gets back from deployment because after you get the land, the first thing you need to do is get plans drawn up so you can start getting firm estimates from contractors to give to your General Contractor. The GC then takes that estimate to the bank and the bank will only loan you that amount. So if in the construction project you want to add this or that, you have to pay cash for it but if you go under that amount, you only borrow what you used so it lowers the overall project amount.

    For us, if we are living in our new home by the end of next year I will be thrilled but I've been warned it can take up to a year to get all the permits we need & we live in a rural area. The power company ( oh, also look at where power is to the property... I know you want 30+ acres but the further the power company has to go to get power to the house! the more money it will be) has told me it may take up to three months to get permitting approval.

    Anyhow, hope this helps.
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    #4
    One thing to keep in mind is that when you buy land you may only be buying the lsnd and not the ineral rights. This can be important especially with the gas and oil industry booming. Its not a big deal if you dont own the mineral rights but the purchase price needs to reflect that.
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    #5
    I also forgot to answer your other question. Regarding land and price range... Etc

    DH wanted 20+ acres (basically his response was as much land as he could afford but 20 acres would be the minimum he'd consider)

    But he originally wanted land in Missouri... So we started browsing

    Then I brought him back down to reality that if I was going to be supporting him in retirement, it would be best to stay in our local area. I have a good job and good earning potential where we currently are & it makes better sense to stay here vs both of us uprooting in his retirement and being unemployed, thus pushing the project even further out when the kids are grown and our plans will or may have changed

    BUT land out here is much more expensive. Around $15k to $30k an acre. Whereas Missouri was around $1000-5000 an acre. So I found a compromise with around 10 acres that adjoins BLM land and lots of it. The topography isn't what he wanted... He wanted gently rolling and green but once I started talking to builders, his preferred type of topography would add significantly to the cost to build the house. But his compromise was... When he retires, he doesn't have to work. So it was a give and take & ultimately he wasn't that attached to Missouri to have to work in his retirement.

    Then factoring in, what do you want to do with the property? Eventually I want horses, a pool, etc. he wanted the ability to go dirt bike riding, camping, hiking, horseback riding on it... So that is where the BLM land proximity came in. We may be getting a smaller parcel but it's affordable for us while still giving him the freedom to do what we want. Plus we have some amazing views of two mountain ranges.

    For land rights, that will depend where you want to be. So many rules are based on locality from water rights, mineral rights, air rights, etc that you really have to take advantage of the "Due Diligence" phase of the buying process. That is where you usually have around 20 days during escrow after the seller has accepted your offer to do all your research on the parcel to make sure it is the parcel for you regarding easements, how to get power to the property, if there is water on the property, etc

    In addition to talking to a bank, I would suggest talking to local builders in the area & real estate agents and brokers. Most people when you tell them that you want to build a house will be happy to help because home building is expensive and if they can get their piece of the pie, then they are happy to do so. Your general contractor will usually add around 10-15% of the cost of the build on just for his fees. A broker will be ever so happy to help because when you refinance from construction to permanent, they get their cut too.
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    #6
    Thanks for taking the time to make this informative post.

    I've haven't really thought much about purchasing land, but since the information was right here in front of me I read it anyway.

    I'm certain someone who is in the market for land will find this all very useful.

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    #7
    Quote Originally Posted by SinisterLex View Post
    Thanks for taking the time to make this informative post.

    I've haven't really thought much about purchasing land, but since the information was right here in front of me I read it anyway.

    I'm certain someone who is in the market for land will find this all very useful.

    I found it super helpful. Land buying is the route DH and I eventually plan to use.
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