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Old 02-06-2012, 10:28 PM
survivor-alex survivor-alex is offline
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Hello,

I had been planning to move out of this tiny little place and get a "moderate" house that would be a little more comfortable, while saving for land and a long-term house to raise a family in. (I'm still young.....)

Then someone suggested a different idea. If I do the above, I'll be paying mostly interest on that 'moderate' house while saving all extra cash for 5 years. So most of that money would be thrown away.

So, does it make economic sense to stay in this small place with a small mortgage, save a large downpayment say over the course of a year, and then buy acreage when the right property comes up. I would then try to pay off this land as fast as humanly (or at least comfortably) possible. Once the land is paid off, then build a house on it.

What implications arise out of building a house (with a loan) on land that is paid off (or at least largely paid off).

I like this option because in addition to getting a "BOL" it gives me the land I desperately want when I feel cooped up here. Plus, if I spend 5 years paying off the land before I can contemplate building, I can still grow a garden, get trees, going, etc. etc. etc.

Is this a good idea, or am I missing something?
Old 02-06-2012, 10:44 PM
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if I was young, knew then what I do now...famous last words..

I'd buy the property, get me a motor home, or some type of study structure if I had a family with me, move onto the property, and build as I go along, incorporating my families help and support, so they'd appreciate it more.

In my opinion, notice I said MY, not yours, there is no sense, other than political correctness, and level of familiar habits and comfortability, to justify paying huge mortgages, or high rent, when you can put your money into something that is yours, your dream, your design, not someone elses.
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Old 02-07-2012, 01:28 AM
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Quote:
Originally Posted by survivor-alex View Post
Hello,

I had been planning to move out of this tiny little place and get a "moderate" house that would be a little more comfortable, while saving for land and a long-term house to raise a family in. (I'm still young.....)

Then someone suggested a different idea. If I do the above, I'll be paying mostly interest on that 'moderate' house while saving all extra cash for 5 years. So most of that money would be thrown away.
So, does it make economic sense to stay in this small place with a small mortgage, save a large downpayment say over the course of a year, and then buy acreage when the right property comes up. I would then try to pay off this land as fast as humanly (or at least comfortably) possible. Once the land is paid off, then build a house on it.

What implications arise out of building a house (with a loan) on land that is paid off (or at least largely paid off).

I like this option because in addition to getting a "BOL" it gives me the land I desperately want when I feel cooped up here. Plus, if I spend 5 years paying off the land before I can contemplate building, I can still grow a garden, get trees, going, etc. etc. etc.

Is this a good idea, or am I missing something?
For the first 5 years of a 30 year mortgage, you'll be paying damn near ALL interest, 15 year mtg isn't much better.

I'd say that your idea of staying put in your current abode while purchasing land for a future build would be a better move. For one, buying land is a little bit different than buying a residence in than buying land typically has shorter terms and the loans are harder to qualify for. Owner financing may be a good option if the seller is willing and able. Buying land and then building on that land with a mortgage on the land and construction loan on the house is even tougher when you are talking about a sizable peice of land because it becomes a specialty property that the bank will have trouble getting rid of in the case of default, in theory anyways... But, if you own the land outright prior to building you are in much better position and like you mentioned, you can utilize the land and turn it into what you want it to be until the day you can make the move.
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Old 02-07-2012, 07:29 AM
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If you buy land try to avoid borrowing to build on it. It may take years building as you go (if you have the capability) but the amount you save by not having a mortgage is substantial. Being young you can tolerate a bit more roughing it. As your family grows you will be adding to your place and making it more comfortable. The only problem you might face is any zoning law or building codes where the property is located. Make sure you know these ahead of time.
Old 02-07-2012, 08:39 AM
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I went from a small house to a moderate house, intending to buy land.

Life kicked me in the teeth a few times, and it was 20 odd years before I got the downpayment for the land saved up. Then life kicked me in the teeth AGAIN!

I am still in the moderate house, though I go out to the land we bought about once a week. The kids are now teens and we may well not ever live out there, though I have enjoyed establishing asparagus and a few other usefull things out there.

Now, we HAD to move out of the little house as we needed to follow the work, and we were fortunate to get this moderate house as it has a honkin' big back yard that is now full of fruit trees and such. But, life *DOES* happen and in my humble opinion you should save up hard for 2 years, and then see if you can buy some land that is really cool before the prices of land go up again. IMHO.

Mind, my advice might be worth just what you are paying for it: nothing! This is just my 2 cents!
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Old 02-07-2012, 09:18 AM
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Originally Posted by Kansas Terri View Post
I went from a small house to a moderate house, intending to buy land.

Life kicked me in the teeth a few times, and it was 20 odd years before I got the downpayment for the land saved up. Then life kicked me in the teeth AGAIN!

I am still in the moderate house, though I go out to the land we bought about once a week. The kids are now teens and we may well not ever live out there, though I have enjoyed establishing asparagus and a few other usefull things out there.

Now, we HAD to move out of the little house as we needed to follow the work, and we were fortunate to get this moderate house as it has a honkin' big back yard that is now full of fruit trees and such. But, life *DOES* happen and in my humble opinion you should save up hard for 2 years, and then see if you can buy some land that is really cool before the prices of land go up again. IMHO.

Mind, my advice might be worth just what you are paying for it: nothing! This is just my 2 cents!
This sounds like my story, though we never managed to buy the land! Lifes a gamble, with hind sight I'd have borrowed more to buy the right place, and spent a little longer paying it off. Property prices are now low, they might go lower, but they are a lot lower than they were, if you put a good down payment in, you pay interest on your borrowings but you have the property now, and any price increases (if any) are locked in.
I'm too long in the tooth now to have a big mortgage hanging over me, just wish I'd bitten the bullet when I was fit and able. Some folks fall into good paying work and can save lots in a few years, if thats you I'd say pay of the mortgage that much quicker, you might save for a few years and miss the boat on property prices rising. ~Good luck with what ever you decide.
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Old 02-07-2012, 09:36 AM
NotARoleModel NotARoleModel is offline
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Quote:
Originally Posted by survivor-alex View Post
Hello,

I had been planning to move out of this tiny little place and get a "moderate" house that would be a little more comfortable, while saving for land and a long-term house to raise a family in. (I'm still young.....)

Then someone suggested a different idea. If I do the above, I'll be paying mostly interest on that 'moderate' house while saving all extra cash for 5 years. So most of that money would be thrown away.

So, does it make economic sense to stay in this small place with a small mortgage, save a large downpayment say over the course of a year, and then buy acreage when the right property comes up. I would then try to pay off this land as fast as humanly (or at least comfortably) possible. Once the land is paid off, then build a house on it.

What implications arise out of building a house (with a loan) on land that is paid off (or at least largely paid off).

I like this option because in addition to getting a "BOL" it gives me the land I desperately want when I feel cooped up here. Plus, if I spend 5 years paying off the land before I can contemplate building, I can still grow a garden, get trees, going, etc. etc. etc.

Is this a good idea, or am I missing something?
From what I'm seeing you will be hard pressed to get a loan on favorable terms for raw land. Seems to be kryptonite to the lenders these days ....

You have an interesting conundrum. IF captial I capital F for emphasis you are in the camp of "we're nearer to the bottom of the RE market than the top" then purchasing your "moderate" house now (at historically low fixed mortgage rates) might make sense. Yes, you are paying mostly interest up front but it IS deductible, and at sub 4% is far less a burden than in years past. IF RE turns and heads back up you could also be in a position in a few years to actually turn a buck or two on the house. Don't forget, it IS a buyer's market there's no arguing that and "deals" are everywhere. The trouble for you is can you get out of your present home without owing?

Don't discount quality of life into your equation. If you are "cooped up" and unhappy in your present home, that DOES play into your overall outlook, productivity, etc.

One thing I've learned is you can't get back TIME.

Why don't you get some hard numbers (as subjective as that may be these days) on selling your present home and at the same time start shopping for a "moderate" home? You might be surprised at what you can get.

Or as you suggest stay in the house, save up some bucks but start beating the bushes for your land. Don't discount the possibility of someone financing you privately for land they want to sell. Throw some ads on Craigslist, talk to some local bankers in your desired area, etc. to see if you can ferret out a deal.
Old 02-07-2012, 09:48 AM
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stay put and save, buy as much land as you can with cash then check with zoning for lot size, split you parcel so you'll only have part of the land under mortgage, sell your old place use profit to start construction.
Old 02-07-2012, 10:03 AM
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When we bought land, we could not find small parcels, so we ended up buying more than planned.

Perhaps several like-minded friends could go in with you and buy a larger parcel of land and split it up?

I would pay it off, live on it in a trailer, while building something more in line with your dreams. Garden, plant, fish, hunt, while building.

JMO
Old 02-07-2012, 10:36 AM
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My experience was to buy anything for land in the early nineties as I researched the CHEAP land there ALWAYS a underlying reason...
Agriculture, Open space,- the land was only to be used for farming/crop grazing
Native Growth area/Protective, Wet lands,- was not build able land
Timber land,- Same as Agriculture however someone else own the timber an can cut it at any time
Mineral rights,- you own the ground however someone can mine, build necessary structures, for mineral removal and access the land to destroy it while you own it.
Indian Reservations,-Tribes have separate building rules, county govt taxes land and controls building codes of land off of Bureau of Indian Affairs roles ,tribe controls water, extra Excise tax to Tribe for sale of land on top of what state does get (WA state 1.78 percent to State and Tulalip tribe get a extra 1.0 percent), Lease not renewed, would be some of the issues to be educated on,

Other rip off schemes included CCR's limiting or restricting use (No Mobiles livestock no homes under XXX square feet, etc), Land locked (no legal access to Ingress/egress land), boundary disputes over fences to take land through "Adverse procession",

So looking back and moving forward with buy and build or stay and save I would take some time to research what your area of interest has for prices and research sales over last 12 months, see what the Septic requirements are for that area, How much wells cost for the area, an if Electrical Power hookup is a goal how much money is that going to cost. Also is the land surveyed would be a must along with guaranteed access from the title company.

Looking at the current Housing market it is a great time to buy. However you will need to invest the time and thoroughly research what you are looking for. I would not hesitate to buy land and build at a later date..However I would not jeopardize the roof over my head to do it. So I would save and start looking, A person can always put money down or borrow against their current home to secure some land while they wait for their home to sale. Best of luck to whatever path you chose.
Old 02-07-2012, 11:04 AM
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NotARoleModel,

I agree with you about the time aspect. It's not so much being "cooped up here", as it is a lack of space to escape too. It more that I want somewhere with enough room to build a bonfire, chop my own firewood, grow my own trees, etc. So having land, even if I didn't live on it for a handul of years, would be OK I think.

The main reason I was looking at this route is I could get a middle-ground house with enough room to start a garden, plant some trees, etc., there.... but then if I saved up for the real house I wanted, I'd give all that property away (figuratively speaking).
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Old 02-07-2012, 11:26 AM
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NotARoleModel,

I agree with you about the time aspect. It's not so much being "cooped up here", as it is a lack of space to escape too. It more that I want somewhere with enough room to build a bonfire, chop my own firewood, grow my own trees, etc. So having land, even if I didn't live on it for a handul of years, would be OK I think.

The main reason I was looking at this route is I could get a middle-ground house with enough room to start a garden, plant some trees, etc., there.... but then if I saved up for the real house I wanted, I'd give all that property away (figuratively speaking).
You might be able to find a compromise ... enough land to do what you describe along with the moderate house. Again, IF (capitals again) we are bottoming you might be hitting it just right and in five years be able to roll up to your dream property.

It's amazing the "values" that are out there and everyone is offering 15 to 20% below listing price.

Doesn't cost you a dime to look .....
Old 02-07-2012, 11:44 AM
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As someone else mentioned, you'll have a very hard time obtaining financing on land. Unless you are willing to find a seller financed parcel. Banks just won't do it. I was pre-qual'd recently for a decent amount (for my area).. when we couldn't find a place we liked, we asked the bank if we could basically get a loan for about 1/5th of what we were originally qualified (and I offered 30-40% down) for to get land instead and then build later. Haha they said. No. They said *maybe* if I had an approved set of blue prints and had a contractor ready to break ground for a build package.
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Old 02-07-2012, 11:52 AM
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Quote:
Originally Posted by Akita View Post
if I was young, knew then what I do now...famous last words..

I'd buy the property, get me a motor home, or some type of study structure if I had a family with me, move onto the property, and build as I go along, incorporating my families help and support, so they'd appreciate it more.

In my opinion, notice I said MY, not yours, there is no sense, other than political correctness, and level of familiar habits and comfortability, to justify paying huge mortgages, or high rent, when you can put your money into something that is yours, your dream, your design, not someone elses.
I like your plan Akita, with one exception. A camper trailer instead of a motor home. Whatever motorhome you are talking about, a larger more comfortable trailer can probably gotten for the same price.

If you don't have a tow vehicle
Who ever you buy the camper from can probably be talked into delivering it to your property. Or most any RV sales place can connect you to people who will tow it for a pretty reasonable price.
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Old 02-07-2012, 12:11 PM
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To all those who are saying it's impossible to get a mortgage on bare land....

There are other ways to finance land besides a traditional mortgage.

One is owner financing.

Or find a bank that specializes in working with farmers and ranchers.

You may also be able to take out a simple signature loan.

Or maybe you have something else you can use as collateral, like a car.

It may not be easy, but if one keeps trying you can find a way. At least it's worth a try
Old 02-07-2012, 12:19 PM
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I saved every penny I could for quite a while, then I got the land, and had enough cash to build the basement and put the house under roof. Finished the basement and lived in it the 5 years it took me to finish the house paying cash as I built. I done all the work myself in the eveing after work and on weekends. So I ever had a loan. In that 5 years at one time I lost my job, if I would had a loan, I would have lost the house. So I had a free place to live with no job and the house construction stopped until I got another job. After 20 years I sold that house and made some good profit and used that money to build the house that I live in today. 2 new homes and no loans. Pops
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Old 02-07-2012, 12:46 PM
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I like your plan Akita, with one exception. A camper trailer instead of a motor home. Whatever motorhome you are talking about, a larger more comfortable trailer can probably gotten for the same price.

If you don't have a tow vehicle
Who ever you buy the camper from can probably be talked into delivering it to your property. Or most any RV sales place can connect you to people who will tow it for a pretty reasonable price.
Nephew bought 20 acres, private contract. He was married had 3 kids.
He moved a camp trailer onto the property, set him u[p a generator, put in an outhouse, and dropped a well with hand pump, and a septic.

Used his income tax return the next spring and had power brought in, and phone.
While working, he cut timber, milled his own lumber, paid to have it dried.
During this time, they gardened, had chickens, goats, which he also used to clear his land. Wife stayed home with the kids and worked at home, who were pre-school.

In five years, his home, that he built mostly by himself with his wife's help, was paid for. 100%. As well as his land.

Was it hard? sometimes.
But, he now has 20 acres, and a 4 bedroom home, with 2 baths, and has no debt.

He got laid off from his job with hundreds of other people when the local mill shut down.

He didn't have to worry about eviction, didn't have to worry about food for his family.
He installed wood/gas power to power his generator and disconnected from the power grid to save money.
He turned off his land line phone.

For 2 whole years, he and his wife survived by selling vegetable and flower starts and seeds, goats milk and cheese, eggs and chicks, and fresh produce at the local farmers market. and kid goats. He also sold fire wood, did odd for people, and mechanical work.

They were happy, never stressed about what they were going to do. Kids were fine too.
So, if a person has land and a home, they can survive. Happily.

The point is that if someone is willing to sacrifice a little convenience, and be patient, have a clear goal, it will pay off.
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Old 02-08-2012, 10:06 PM
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Quote:
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Nephew bought 20 acres, private contract. He was married had 3 kids.
He moved a camp trailer onto the property,
----------
The point is that if someone is willing to sacrifice a little convenience, and be patient, have a clear goal, it will pay off.
Kudos to your nephew.

It is my hope to pull of something like that myself. At 55 I don't own a home and being retired while paying a mortgage just doesn't sound like a smart idea.

I have the camper.

I have most of the tools and skills to build a home from scratch. Would have to call in a couple of contractors to do AC, because I don't have that skill, and roof trusses, because, that's not a one man job. (and at 55 falling of a roof just sounds like a bad idea.)

So It may be doable.


___________

And I know how he feels on that mill shutting down on him. I was working at an IP mill in Pineville LA, when it was shutdown. Destroyed a lot of dreams for the people who worked there. The bad part about working at a place that pays well, people get in debt.
Old 02-09-2012, 06:25 PM
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I have considered buying an acreage and sub-dividing it. This way, if you build a house with a mortgage, the bank may not be able to foreclose the sub-divided portion.
Old 02-09-2012, 07:01 PM
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Buy a piece of land without restrictions and design your land with house placement and septic system.
Place a mobile home on it. save up to build and build a simple house. remove the mobile home.
This will put you on your land asap and let you make your money back on the mobile home.
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