Buying Land

[qooldude]

Hello all, I'm new to this site and have found some very useful articles and threads on home building. :D

I'm considering purchasing a lot to have a custom home built and wanted to know what are some important things to think about prior to buying.

If you were going to buy a lot, what are some important things to keep in mind before buying?

Thanks!

[giddonah]

Well, since it's been raining for two days here, first off I'll say drainage.

[VALENT]

utilities, deed restrictions, school situations, traffic

[giddonah]

Stay away from lake communities or homeowners' associations, historical districts (mainly just for existing buildings)...

[qooldude]

Stay away from lake communities or homeowners' associations, historical districts (mainly just for existing buildings)...

Thanks for the feedback. Why would you stay away from a lake community? Would you consider a golf course view lot?

There's a couple of lots at a golf course community with either (man made) views or golf views. Of course, those are premium lots.

[giddonah]

No, I'd stay away from golf course too. Those places all usually have groups dictating what you can and can't do with the property. I've heard horrible things about lake communities. They'll ok your plans to do something, then after you're done, they'll tell you they don't like it and to take it down. Don't get into a situation where you'll have anyone in control of what you can and can't do. The building inspector will be bad enough.

[Pokey]

Some important issues to consider are the actual site. The company i work for has put in a lot of foundations in areas that are hard to access. This not only caused our prices to raise, but i'm every other trade as well. If it is you dream land with your dream house, the increased costs might be worth it, but if you plan to move again you need to consider anything that will raise construction costs to recoup you investment on resale. I would look to see if there is city water, city sewer and restrictions that suit the type of home you intend to build.

[qooldude]

These are all very good factors to consider. The (golf course and lake) lots require a HOA fee of about $100/month plus an added tax, called Mello Roos for schools, etc. another $150. Some counties charge a water use tax too.

Anyone know how much it costs to have a water meter installed and site clearing costs like trees and leveling???

[Cole]

Depends on what they have to do, site clearing.

[qooldude]

Sorry for the vague question, I'm curious how much it would cost to pull trees, and possibly level the land.

[handyman923]

I looked into buying a lot about a year back... I'm in the SF Bay area (suburbs). The city wanted between $20,000 to $32,000 to hookup a meter for water service that was already at the street. The price was $20k for a 5/8" meter and $32k for a 1" meter. However, I am sure the price varies city by city and area by area.

[Cole]

Well, how big of a lot are you talking about.

An acre would possibly be about $1200- 3000.

[qooldude]

I looked into buying a lot about a year back... I'm in the SF Bay area (suburbs). The city wanted between $20,000 to $32,000 to hookup a meter for water service that was already at the street. The price was $20k for a 5/8" meter and $32k for a 1" meter. However, I am sure the price varies city by city and area by area.

I'm in the Sacramento area. What's the difference between the 5/8" and 1", is that the throughput of the water into the house?

[handyman923]

This was in the city of Martinez, CA. You will get a more flow with a 1" meter than you will with a 5/8". Most of the fees for the water meter were impact fees; i.e. if you are using city water, you are putting strain on the entire supply and treatment system, so the city makes you pay for that "impact". A lot in this case. But I looked at a few other cities and the fees were less. I would check online at your city's website.

[Cole]

I looked into buying a lot about a year back... I'm in the SF Bay area (suburbs). The city wanted between $20,000 to $32,000 to hookup a meter for water service that was already at the street. The price was $20k for a 5/8" meter and $32k for a 1" meter. However, I am sure the price varies city by city and area by area.

Ok that is just insane.

Then I looked at the location.

[qooldude]

I'm quite familiar with the East Bay area including Martinez, Antioch, and Pittsburg. The City of Brentwood is really growing too, bad traffic though on Highway 4.

Another question about land lots: How do banks finance land? Can I get a mortgage loan on land (30 year fixed) and then combine it with my construction loan when the house is finished?

I heard someone say a 5 year loan requiring 10% down. If that were the case, a $450k lot will be unaffordable.

[What the?]

Most banks will require 10-25% down on land. It's easier to find 5 year balloon loans based on 30 years (it won't be called a mortgage, if there's no house). But the best advice is to call around and see what they say. They may have other restrictions (such as a max acreage).

When you get your construction loan, they will want to wrap up the land in with the construction. So that loan will pay off your land loan. Any equity you have in the land, will be considered part of the down payment in the construction loan.

Or, if you are ready to go right now with plans for a house and everything, just get a construction loan, and use the first draw to buy the land. But again, banks usually want 10-25% down for construction loans.

One last bit of advice. If you can't afford 10% down, you may want to rethink what you can actually afford.