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Looking for land

Mortgage and Lending with Cranbrook Loans NMLS #134090

So you have your floor plan, you have your builder, you know what city/township you want to live in, all that's left is to find that perfect lot to build on.

First, you need to be realistic about what you can afford and what's going to fit your program and down payment. If you are paying cash for everything or at least putting a big chunk down (30% or more) then knock yourself out, buy whatever you want. 

If, however, you are putting 20% down on a conventional construction loan, or you are using the FHA/VA program, you need to think about getting the biggest bang for your buck. You can't buy a bigger lot than what is standard for the area, it won't appraise. A good rule of thumb is that you land purchase should be about 20-30% of the cost of the total project. Less if you live in an area where land is cheap.

Ideally you would find a lot in a subdivision that is clear and flat with nice sandy soil that's easy to work with. The city water and sewer lines would run right in front of the home and would be easy and cheap to tap into. 

On the other end of the spectrum would be a lot out in the country with no city services. You will need to dig a well and put in a septic system. If the soil contains a lots of clay you may need what is referred to as an "engineered" septic system. I won't get into details but an engineered septic system can be expensive. But before you can get to digging the hole for the system you first have to clear this lot, it has a lot of trees. You also have to bring in a lot of dirt since it sits low. If the best place to put the home on this lot is way off the main road, running your utilities to the home will add to your budget. Not to mention the long driveway you need to build.

In short, a cheap lot is expensive to build on. A more expensive lot will be cheaper to build on. If you would like to know more, check out my website, https://www.bestfhaconstructionloan.com/


Jeff Masich-Scottsdale AZ Associate Broker,MBA,GRI
HomeSmart Real Estate - Scottsdale, AZ
Arizona Homes and Land Group/ Buy or Sell

Excellent points about the true cost of land in terms of the construction loan and services needed if in rural areas without city services. We have the same issues here in Arizona. Well presented Jerry Thomas-Construction Loans 

Apr 11, 2018 10:41 AM