Let’s combine the estimated cost to build with the Creative Financing options I have presented, put it through an amortization calculator and see how much it would cost you per month to purchase the land, build your home, then get a permanent loan on your newly built home.

I have researched construction loans, and you either do a construction to permanent loan and they charge you interest only on just the amount of the loan outstanding at any given time, then convert your construction loan to a 30 year fixed, or whatever option you chose for your permanent financing. Or you can get just a construction loan for interest only and the full amount is due after completion, but you must shop for a permanent loan before the construction loan is due, and the project is near completion with an approved appraisal.

One advantage you have purchasing this land and building your own home is, you can sell you home first then either put up a shed structure, a tent, or live in a pop up travel trailer for the three months or so it will require to build. You could even live in a yurt from Blue Ridge Yurts and convert it latter to an office, or in-law quarters. There are many options.

According to my research it’s best to at least contact your financing company before you buy your land, purchase your plans, and contact any contractors. I will post a few links to construction loan articles, but according to them, the financing company will work with your contractor from the start to make sure everyone is on the same page before construction is begun.

Most construction loans consist of three draws, the first of which is paid upon approval of all your plans, specifications, builder contracts and your fixed costs, which is the estimated costs with a contract by the sub-contractors or general contractor to do the work for that amount. If you act as your own general contractor you would get the estimates yourself, get contracts for the work from each sub, then make sure you get all the lien waivers signed and notarized as the job progresses, with your final lien waivers upon completion of their portion of the work, being sure to hold back 10% as a retainage for at least 30-60 days in case they need to be called back.

If your land is not already paid for, free and clear, the first drew will pay for the balance of the loan on the land, as you do not want a lien on the land after you have improved it 200%. (Nor do they!) That is the time I will discount the principal on the loan, within the first five years. Anywhere from $4,000 in the first year to $6,000 at the end of five years. After five years, we can talk again.

Okay, you bought the land, put $20,000 down, and are paying $529.83 a month, and have had it for five months while setting up your camp, and either contracting with a general contractor, or gathering estimates from all the sub-contractors required to build your home, and have signed contracts in your hand, and they come to roughly the estimate of $190,000 which I posted. You have been approved for a $250,000 construction loan. Your first draw would probably be close to $175,000 to pay for the land, permits, insurance, plans and specs, and about $65,000 or so for excavation, foundation, framing, roofing, wiring, and rough in plumbing.

This construction will probably account for two of the three to four months it would take to construct your home, so let’s figure 8% on $175,000 your first draw, which would be $1,167 per month for the first two months. (Don’t forget you no longer have to pay the $529.83.)

With your second draw being about $50,000 to pay for everything except the final finishes, your payment would go to $1,500 per month, for about one month then the final draw and payment would be $1,667 per month till you get your permanent financing.

In case you have not noticed the $250,000 loan would leave you short by about $3,829, which I would be willing to sign a personal loan with an interest rate equal to your permanent loan (cause I would rather you wrap this into your permanent financing), for five years, with payment beginning after you get permanent financing.

Now on to your permanent financing. What will your new home appraise for now? There is a 1,100 SF home on 23 acres selling for $280,000, so I expect your home, 1,500 SF on 25 acres would increase the value by at least 10% since your home is 40% larger and your acreage 10% bigger for a whopping $308,000. So if you take out a permanent loan for $270,000 to recoup your $20,000 down payment, at 30 years and 6.5% your monthly payment will be $1,706.58. Or just finance the construction loan and with the same terms the monthly payment will be $1,580.17. Of course if you can get better terms the cost savings would be substantial.

I am not a professional and all my numbers are estimates, but they are best guesses based on everything I have studied so far. Please consult a financial or real estate expert before venturing into any investment so large as this.

Here are some links of interest I encountered on my Google quest:

Amortization Schedule: Download this then save it separately, as it is read only unless saved with a different name.

Amortization Schedule: Use this right on line for a quick determination.

Bankrate.com: There is a plethora of information regarding loans of all sorts here.

How Construction Loans Work: Informative but links to other information.

Construction Loans FAQ: This is information specific to this company but applies to most construction loans.

Construction Loans, how they work: This is an entire Google page on Construction Loans.

If you did not catch the link I gave on the estimated cost to construct a home in Charlotte County VA this one is great! P.S. The zip code for this land is 23962 it shows Farmington, but that is just a nearby town.

Building-cost.net: In about 5 minutes you can develop a home construction or replacement cost that considers all the important variables: materials used, design features, quality, size, shape, heating, cooling and geographic area. Your printed estimate shows detailed labor and material costs for each of 34 construction cost categories. Plus, it’s FREE!

And if you want to finance land only for up to 20 years go here:

Dumont Land Finance Corporation: 10% down, but they only work in Colorado, Georgia, Missouri, New Mexico, Oklahoma, Texas and Virginia.

I hope this liturgy has been helpful to you in making your decision.

I found this website while doing my daily Google and you will find it fascinating too, even if you don’t care about purchasing my land and building your dream home: http://www.building-cost.net/ Which is where I calculated the cost to build a normal 1,500 square foot home on this property.

I know you can pay more and you can even cut down on the price I calculated, either way, this calculator is great fun.

Home Construction Costs – 1,500 Square Foot Home, with 500 Square Foot Porch with finished ceiling and shed roof. Forced air central heating, Freestanding wood-burning heat-circulating prefab metal fireplace with interior flue, base and cap. No attic, no basement, no garage.

• Foundation: Reinforced Concrete

• Exterior Walls: Wood or Steel, some offsets

• Exterior Finish: Stucco or Wood Siding, some trim or veneer

• Windows and Doors: Average Doors and Windows

• Roofing, Soffit, Fascia: Wood Trusses, Tile or good shingles, closed soffit

• Interior Finish: 1/2″ gypsum wallboard with textured finish, several irregular walls and wall openings, some decorative details. 8′ or 9′ ceiling throughout, walk-in closet in master bedroom, separate dining area, some decorative wood trim

• Flooring: Simulated marble tile entry, good carpet, hardwood or vinyl elsewhere.

• Bathrooms: Less bathrooms than bedrooms. Good plastic tub and shower in at least one bathroom, one small window in each bath.

• Kitchen: Top grade stock cabinets, tile or acrylic counter top, many good grade appliances, task lighting

• Plumbing: Three standard fixtures per bathroom

This is an estimate for a single-family residence built under competitive conditions in Zip area 239 Farmville, Virginia in November, 2008. This estimate includes a foundation as required for normal soil conditions, excavation for foundation and piers on a prepared building pad, floor, wall, interior and exterior finishes, roof cover, interior partitions, doors, windows, trim, electric wiring and fixtures, rough and finish plumbing, built-in appliances, supervision, design fees, permits, utility hook-ups, the contractors’ contingency, overhead and profit. Highly decorative, starkly original or exceptionally well-appointed residences will cost more. (had to post as a picture as I don’t know how to do tables)

Estimated cost to build a home in Charlotte County VA

Be Creative! That is what all the people involved in selling real estate are crying. Well I have put together a creative way for you to own for investment, or own and build now, or own and hold to build in the future, whichever you like.

First Option: With a down payment of $20,000 I will take back $67,000 at 5% for 15 years. Your monthly payment would be $529.83 per month.

Second Option: If you take out a loan to pay cash for the property and pay all the appraisal fees and title searches (which will be required to finance the land), the price will be reduced to $82,000. Dumont Land Finance Corporation advertises:

Dumont Land will consider financing rural, unimproved, non-speculative land to be used for future vacation or retirement home, hunting or recreational usage. There is a 5-acre minimum and a $5,000 per acre cap.

1. 10% Minimum Down Payment

2. Points Ranging from 1%-3%

3. Terms Available Up to 20 Years as Determined by Amount Financed

4. Interest Rates Ranging From 9.5%-13.0% (Fixed and Variable)

5. Interest Rate & Points to be Determined by Credit History, Down Payment, Stability, and Deal Structure

Using Dumont, with 10% down your principal would be $73,800, so at 10% for 20 years your monthly payment would be $712.19, not including the points. Here is a link to their web: http://www.dumontland.com/index.html

There are other hard money lenders who specialize in land loans. I found this one to be very specific and does business in Virginia. You can Google ‘hard money lenders’ and see what you come up with.

Third Option: You put $20,000 down, and all the terms in the First Option are the same. Your monthly payment would still be $529.83 per month. You get a construction loan within the first year of this loan which pays the land off with the first draw. I will reduce your principal to $63,000, or if you get a loan at a latter date I will reduce the principal by $100 per month for the first five years. After that full payoff would accrue.

]]> http://landfsbo.wordpress.com/2008/11/28/creative-financing/feed/ 0 angstless http://landfsbo.wordpress.com/2008/11/19/and-we-cant-get-a-few-hundred-thousand-measley-dollars/ http://landfsbo.wordpress.com/2008/11/19/and-we-cant-get-a-few-hundred-thousand-measley-dollars/#comments Wed, 19 Nov 2008 22:33:04 +0000 angstless http://landfsbo.wordpress.com/?p=78 ]]>

Kimball sells Kentucky land for $24.6 million

By Dan Shaw (link to Dan)

A single buyer on Friday bought nearly 12,000 acres in Kentucky put up for auction by Kimball International, Inc.

The buyer paid about $24.6 million for the land, which is in Union and Crittenden counties in Western Kentucky and is known as the “Sturgis” property. Rex Schrader, the president of Schrader Real Estate and Auction Co., declined to give the buyer’s name.

Schrader, whose company helped to conduct the auction, said the land, through which both the Ohio and Tradewater rivers run, will prove valuable over the long term.

“With the location on the two rivers and the long-term timber value and the long-term possibility of mineral values, that makes a good solid investment in today’s environment,” he said.

(end snip)

See there, land is a GOOD INVESTMENT in today’s environment!

I have a .com web page set up to sell my property, I have a blog to sell my property, I have listed my property on all the free sites that offer that opportunity, I have listed it on craigslist, I have done everything that costs me no money, cause if I had the money I would not be selling my land, except contract with an agent. I have no problem contracting with an agent, I wish I could, but my husband is allergic to real estate agents, for no good reason. We have purchased two homes and one plat of land, the homes involved a real estate agent and the property seller was a land agent, so his fear is beyond my understanding, and no amount of begging, cajoling, and pleading will get him to change his mind. So I have to blog, and post, and write, and plan, and google, and wordle, and tag surf, and do everything I can think of to GET IT OUT THERE!

I have received more responses from craigslist than anything else, but none were serious. I am not sure why they even bothered?

But by far the best site for free I have found is http://www.discountlandforsale.com/. This gentleman, Greg who owns the site is very dedicated to his website and has updated it since I first listed my property there. P.S. click on VA and you can see my property! Though it has not generated any interest, he does have a list of interested buyers, but none that match the particulars of my listing.

E-mail me your link:  angstlessk@peoplepc.com

Okay, besides trying to sell my own land.  It is difficult for any one person trying to sell their own real estate to get the word out to as many people as possible and connect with whoever is looking for exactly what they are selling.  If we exchange links we could together reach more people than any one of us could alone.  I doubt very seriously if we are competing with each other, since each buyer has different requirements.  Some are looking for a building site in Texas, while other are looking to build a hunting lodge in West Virginia.

Though my blog is about selling land and I will focus on that, anyone who is trying to sell their own real estate is welcome here and encouraged to comment on their unique experiences.

The most important page here is the link to your site, “FOR SALE”.  You have to e-mail me your site so I can post your link and a brief description of your property.

I have on another page, a list of places you can list your land for sale for free.  I spent weeks searching for these sites when I discovered my husband REALLY would not list with an agent.  I will update it whenever I discover new sites, so check back from time to time to see if there are any new links.