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| Better to buy a lot up front or finance with home? Posted by JonTheTigerFan I'm looking to buy a lot later this year for $50k then build a house on it next spring. Would it be better to buy the lot outright with cash or buy the lot and house together from the builder and put the $50k as a down payment? I am sure the lot would be cheaper for me to buy from the owner rather than the builder but are there any other pros and cons? on 5/10 at 12:28 amReply • Back to Top |
| If you get the lot now, you are going to be paying a higher interest rate on the lot as oppsed to a turnkey deal. You will also be paying a higher interest rate while you're building. On the flip side, the builder will just figure in those higher rates when determining what to charge you for the house. I, personally, bought my lot about 3 yrs ago and just reached the half way point of my build. Hasnt been nearly as bad as I thought it would be. Reply • Back to Top |
| I'm goIng to try to buy the lot without financing it. I am trying to figure out whether to buy the lot with cash or use that cash as down payment on the house and lot together. If that makes any sense? Reply • Back to Top |
| will your lot appraise for 50k a year from now? Reply • Back to Top |
| The two get combined during the construction loan and the mortgage. 50K equity is 50K equity. As was asked, will the lot still be worth $50K in a year? If it isn't then you've lost equity in the deal. Reply • Back to Top |
| If you are paying for the lot with cash buy the lot. The only other costs you will have is property taxes for a year. If you buy the lot from the builder he is going to add interest to the lot. Costing you more. Plus it is nice to go to the bank with the lot paid for and ask for a loan. That way you pay the builder with a construction loan giving him draws as he completes the work. thus decreasing your interest paid even more. Reply • Back to Top |
| buy the lot know. when you own the lot for at least 6 months before you build your house you can refinance your construction loan instead of having to put a down payment down. in other words the lot cost you 50k you take out a construction loan for 200k and build a house. the house appraises for 300k with lot and house your are refinancing the balance instead of bringing money to closing. Insider information being distributed by the hawkeye. if you do not own the lot for at least 6 months before house is built then the value of the house is the construction cost plus the lot not the true appraised value. Reply • Back to Top |
| I'm going to hijack this thread a little. My wife and I are trying to decide if we want to build. Is there an average cost to figure for builders or is there a big difference in the prices? We are talking about building approximately 3200 sq feet. Reply • Back to Top |
| Depends on the type of contract you have with the builder. We r building now and we have a flat $$ that the builder is charging us. This post was edited on 5/14 at 10:36 am Reply • Back to Top |
| so we just need to meet with some builders and choose? Do you mind saying who you are using? Reply • Back to Top |
quote: We have been looking around a lot. It depends on who you use and where you build. It depends on whether you want a custom home or spec home. D.R. Horton will probably do it for less than $100 per square foot. A local builder will vary. I live in Central and have researched some of the guys there. The going rate seems to be about $115 per square foot for some of the local guys. I'm leaning toward Steve Rabalais. Went in some of his houses this weekend at the Parade of Homes and he does nice work from what I see. Reply • Back to Top |
quote: Look at the option for the builder to "black in" the house. Which means he basically builds the structure of the house. Then you can subcontract others (roofing, flooring, plumbing) etc. This is where most builders will use someone that know that might not be the best priced. After all, the builder really don't care about how much some of the services will cost because its your money. Typically you can find better prices yourself. Reply • Back to Top |
| I'll have to disagree. If you get any reputable builder, they are not going to want to have crappy subs. Additionally, subs are going to want to do better work for a builder who might give them more work, than a one time deal working for an individual. Reply • Back to Top |
| I would contract it out myself but I'm literally working everyday right now. Plus, the builders have bought all the lots in the neighborhoods we like and are only selling them with building packages. The guy I'm leaning toward isn't the cheapest, square footage wise, but is selling lake lots for $50,000 and non-lake lots for $38,000 while the other builders are selling the same lots for $65k and $50k respectively. Reply • Back to Top |
quote: Exactly. They will bust their asses to make a guy happy who builds 30 homes a year as opposed to a guy who will never use them again. Plus, the builder will know better than I do if someone is trying to take shortcuts or screw my eyeballs out. Reply • Back to Top |
| I considered subing it out myself, but after a week realized I definitely made the right choice by paying a builder to take care of everything. In my opinion, unless you have alot of free time on your hands, I would pay someone else to build it. Reply • Back to Top |
| Many times the builder can get the lot at a discount or has tap and landscaping budget (or all) when builder buys lot from developer. Factoring in this and carrying the construction loan. I'll agree with majority subbing out should only be done by experienced individuals. Make sure you are aware of specs for your particular house, as builders in "parade of homes" tend to show finest upgrades to lure you in. If you know you want steel Kohler tubs in biscuit, oil rubbed bronze moen faucets, soft close cabinets, etc... Detail it in contract. Leave no wiggle room for builder on your must haves. Reply • Back to Top |
quote: This is a misconception. If you have the time to work the bid with several contractors you will get a better price than the builder. Most builders choose a certain contractor for a reason, and its not always because they are the best bang for the buck. We have had success with this method 2 times in this economy. Yes it is not for everyone, if you are not comfortable dealing with people just pay the builder lock and key. Reply • Back to Top |
quote: Not really, in this economy builders are taking shortcuts because they know how much per sq foot they can sell a house. They have adjusted over the years in order to sell a house and stay profitable. Reply • Back to Top |
| I'm paying my builder a flat fee. I can use which ever subs I want. He got better bids than I did on pretty much every phase of the build. Reply • Back to Top • Refresh |
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