"Build on Your Lot" Builders and Other Newbie Questions

11 years ago

All -

This is my frist post on this forum and my first house to own or build. My fiancee and I inherited an acre of land in an unincorporated part of a suburb of Houston (make sense?) - it's technically in "Brazoria County." We're in the very early research stages of the "is this right for us" and here's the quick back ground:

It is a full acre
It has been "developed" if you will (1970's trailer home, not livable; various wooden and aluminum sheds; gravel/crushed concrete drive; well; septic system)
The well and septic system are basically a loss and will need to be rebuilt / filled in / redrilled,
My student loans and fiancee's current school payments keep us from currently being able to afford more than $1200 on a house
payment
It's not on enough land to classify it as "country" but it's not city enough to have things like street lights and sidewalks.

We're looking at established builders because we feel like developing this property to a livable-by-current-standards home is a good decision (can sell for significantly more than it's worth, walk in $30K up due to land value), and believe that a major builder that builds standard houseing would be the most expedient, cost-effective way of doing it. We don't want to be in this house forever, or even more than 10 years, so we're trying to make it a good investment by spending as little as possible to get the most impact.

This is all a round about way of saying - pelase give me some advice! I've been reading the internet and talking to people that I know to get anecdotal evidence about building a home, but everyone I'm able to speak to did this when they were my age (late twenties) and that was 40+ years ago.

I don't, at this point, even know what questions to ask. We think we've figured out a good estimate for the taxes, insurance (WindStorm area II - yay not area I!) and what the monthly payment would be for the mortgage, but I'd like to get a good feel for the actual PROCESS.

When do you actually have to start paying fo the mortgage loan? I assume it differs if you get a consttruction loan and then pay that off with the mortgage, but good estimates of that v. time building the house v. time havnig to find houseing while paying for a mortgage as well would be helpful.

Help!

TL:dr: I'm a first time home owner, builder, looking for some general advice or good literature to read about the process.

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Comments (5)

mrspete
11 years ago
I'd start by having someone come out and give a price on removing the mobile home and upgrading the utilities. That's likely to be costly, but you have to do it. Can you and she do any of this work yourselves? I personally wouldn't have the skills, but it'd be a huge money-saver, if you could.

At that point, you could investigate selling the lot "as is", though an empty lot isn't the easiest thing to sell. Does the neighborhood have other empthy lots? Is this a neighborhood into which people want to buy?

Once the lot is "ready", then talk to some builders about what they'd charge to build a small, simple house. Since you obviously aren't attached to this lot and are looking at it as a temporary fix, choose a floor plan that's very generic and will appeal to many people. In your situation, the goal is always to own the smallest house in the nicest neighborhood; that's the easiest house to re-sell.

Is $1200/month a reasonable price for a mortgage in your area? It would be fine here, but I know that's not true everywhere.
I have the impression this'll be a financial stretch for you. Don't go too close to the financial edge; that's never a good idea. If you have to wait 'til your student loans are paid off, do it. Those things are crippling.
virgilcarter
11 years ago
I'd start by talking with an experienced realator in your area to find out what s/he thinks the property is worth and what comparables in your area for improved lots may be.

You should talk to a bank for exploration of lending terms.

You should talk to the applicable regulatory agency for their building and permit requirements and costs.

A reputable builder or two should be able to give reasonable, but ball-park costs for various types of construction, ie, 1-story, 2-story, etc.

Talking to an architect or designer will give you an idea of these costs.

You have a lot of due diligence to do before making a decision to do anything. Good luck on your project.
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I agree with much of what's been said, and I think you can improve upon this layout: Garage: A back entry garage is going to require a turn-around type driveway. Do you have space to make this turn comfortably? I'm thinking this back garage concept is only workable if you're building on a corner lot. Your kitchen isn't spacious. Does this fit with your cooking style? You have something of a door log-jam around the garage-kitchen entrance. I'd consider having the garage-entrance door in the utility room and eliminating the broom closet altogther -- nothing's going to fit in that tiny triangular room anyway, and you have a good-sized utility room right there. Opening up that corner will not add functional space, but it will add visual space. Your dining area is tiny; really, it's the same size as your laundry room, and your master bath is larger. PLUS the dining area IS the walkway from the garage. In reality, the table you've pictured will not fit there; you'd comfortably be able to have a small 4-person table in that area, but it still would be a bit cramped. I think this is the biggest problem with this layout. I totally agree with the poster who says that the dining room French doors should become windows. You still keep the light, but windows are cheaper, and they are one less set of doors to secure every night. And with another set of doors right there in the living room, the dining room doors are not necessary. You asked about cost-effective. All those angles are the exact opposite of cost-effective. And for little purpose; for example, the triangular linen closet by the secondary bedrooms isn't even going to hold towels. Your public living spaces are quite cramped, yet your foyer is spacious. This isn't where I would allot my square footage. My best suggestion for opening up this public room space: square off the back wall of the house. That is, extend the living room /dining room area a bit. Since angles are so expensive, this will probably end up being almost a wash financially. This'll give you space to breathe in your dining room area (remember, this is a main walkway too), and it won't hurt the living room area. You can still have the back porch -- and without the angles, it'll be more serviceable. Unlike lots of people here, I do like the jack-and-jill bathroom concept, but that's personal preference. IF you were to change to a hall-bath, you could elminate the half-bath. If you were to eliminate the half-bath and take a little space away from the master closet, you could use that area as a small office. If you place the desk against the wall, you'd have a small but usable space. Why? Because then the current office could become the dining room, solving the biggest problem in this layout. Six doors in the master suite is an awful lot, but I would eliminate only one: The bathroom door between the linen closet and the sinks. It's only a few steps to the right or the left to enter through another door -- this door isn't needed. Plus it eliminates that seeing-the-shower-from-the-foyer problem. Still on the subject of doors, I would get rid of the silly little double-doors in two places: They pose a problem when it comes to light switch placement, and mixed doors in the same space are just odd. I think you've allotted too much space to the master bedroom closet -- too much, that is, in proportion with the rest of the house. This closet is as big as the kitchen, larger than the dining room. I do, however, love that one spouse can go into the closet, turn on the light and make noise without disturbing the other sleeping spouse. I think the layout of the whole bedroom area will function well. The master closet, though, is far from the laundry room. Carrying laundry baskets through the living room and kitchen/dining area, threading your way through furniture, is going to get old. With all that space, you could include a stack-up washer/dryer in the master closet and eliminate the carrying. One note of caution about the location of this master suite: Where will you locate the TV /stereo in the living room? If the answer is above or beside the fireplace, you're going to want to include extra insulation or gyp-board between the living room and the master. Otherwise a person going to bed early is going to be disturbed by the noises in the living room. This isn't a design problem -- just a detail of which to be aware during building. I would take the window out of the shower and move it to the toilet room. Actually, I wouldn't have the toilet in a separate room -- closing oneself in a tiny cabinet to use the toilet feels too enclosed -- but that's an unpopular choice around here. My overall impression of this house: It's okay, but nothing great. It looks like a starter house (in terms of size) but with a nicer master suite. With some tweaking, it could be much nicer.
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User
11 years ago
What you're talking about doing here is building a house on spec. Even experienced builders are losing their shirts doing that right now. Even if you 100% built it with your own hands, you wouldn't save enough from that for any significant profit from the venture. And, it would take a ton of your time and energy. If you are looking to build something for you to inhabit, that's one thing. You'd still be better off by buying something existing. It's cheaper, and it sounds as though your budget can't take the hit of even doing an conventional home purchase right now.

Really, this inheritance is nothing but an albatross around your neck. With all of the questionable structures on it, you're lucky that the municipality doesn't classify it as an attractive nuisance and make you tear it down right now. Your best bet would be to sell it as quickly as possible for however much you can get for it and apply that towards your student loans. In Texas, land is the absolute cheapest part of the home building equation. And unless this is located in a VERY desirable spot, no way are you going to do a spec home and come out ahead.
tnsongbird
11 years ago
This would be an excellent question for Dave Ramsey, who hosts the call-in show for financial advice and alot of callers ask similar questions to this w/ specific housing questions, etc. and what the best option is for them. I'd do that before anything so you can get an understanding of how taking advantage of this inheritance will work the best for your situation. You can find his show and when to call on the link below. I listen to his show all the time and find it very valuable!

Here is a link that might be useful: Radio Show
zone4newby
11 years ago
I don't know what you ought to do, but I will tell you about what our process has been to build on our own lot.

We started by asking around for recommendations of builders. You could also go on the parade of homes to try to find builders. We took the design/build route and are building a custom home, but since cost is a big issue for you, I'd recommend picking among plans the builder builds regularly, because he can probably build those plans more cheaply than a house he's never built before.

Then you can get quotes for the plan(s) you're interested in. Make sure the quote is as complete as possible-- if there's an allowance, price out what you want and make sure the allowance is sufficient. Then add in a buffer for whatever you and your builder forgot to account for. Once you've got it all worked out, you will sign a contract with the builder and apply for the construction loan.

The bank will want to ensure 2 things: that you can afford the loan, and that the property (house+land) will appraise for what you will owe when it's finished. If you are approved, and appraisal is good, then you can go forward with seeking the building permit.

Once you have a building permit, then you can start building.

Payments for your construction loan begin as soon as your builder starts drawing money from it. There will be procedures in place to ensure that your builder only takes money as he needs it to build your house-- he can't take the full amount immediately.

FWIW, I'd do as much as I could to clear out the old mess before getting the builder involved. The bank doesn't want to see any kind of construction having begun before the loan closes, but you could certainly clean up the lot. And that will probably be a good thing even if you decide that you're better off selling the lot.

"Build on Your Lot" Builders and Other Newbie Questions

Comments (5)

mrspete

virgilcarter

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tnsongbird

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