How much did you spend?
Soon to be first time home buyer, what are some tips? Coworker says it cheaper to buy the land and then build house on it is it true?
- Thread starter Mystic
- Start date
My house here was 600k but after doing the math we figured that yea we would have a bigger house in GA but I'd have to pay for water/electricity/internet to be brought for the area. Which was like an extra 20k plus. But we also figured living in GA we would have made 15k less. We are pulling in about 24k a month in MD just because of the job market
feelosofer
#ninergang
It's way cheaper to buy an older home and remodel. An inspector can go over what you need to do to make sure the house is stable and complies with state regulations and then give you a list of what needs to be fixed and maybe some contractors that will work with you.
But yes building a house from scratch is quite expensive and time consuming. More so if you live in the middle of nowhere.
But yes building a house from scratch is quite expensive and time consuming. More so if you live in the middle of nowhere.
I just bought a house in East point. There’s no way that I could have bought the land in my area and had the house built for the price I paid.
Also take into account that our house was built in the 60’s and was tastefully remodeled by the last owner…. It’s virtually impossible to replicate that charm.
Also take into account that our house was built in the 60’s and was tastefully remodeled by the last owner…. It’s virtually impossible to replicate that charm.
There are a few things you want to take into consideration.
1. Purchasing the land - Most lenders do not offer loans for purchasing land. The reason for this is that land, in most cases, is harder to flip if they have to foreclose on it than an actual residential property. So this would mean that you would have to purchase the land in cash.
Not necessarily something I would recommend to a first time buyer.
2. Lenders that do offer lot loans will require that you bring 20% to the table. So, for example, the lot costs $150k, your 20% would be $30k.
3. Interest rate - You should also expect your interest rate on the financed portion to be at least 1-1.5% higher than the market interest rate at the time. So, if market rate is 6.5 on a single family residence, your interest on the lot (if financed) would be anywhere between 7.5-8%. And that is assuming you have good credit.
4. Cash for construction - the typical builder is going to look to you to provide the cash to provide the various materials during the course of construction. This is broken down into “draws” or phases.
Let’s assume the cost of construction is $250k, you may have 5 draws at $50k each. Again, doing a custom build requires you to have a good bit of expendable cash on hand. Not typical for first time buyers.
5. Best advice I could give you as a first time buyer - go the new construction route, as in, find a community that is being developed by a reputable builder and purchase a home from them (for example, D.R. Horton, Meritage Homes, Pulte, etc).
These large builders are able to build at a lower cost than smaller builders due to the fact that they are building a large number of spec homes at a time. When they hire a concrete sub contractor, they have them out in a community pouring the slab for a number of properties, not just one. So it becomes more cost effective.
Most of these big builders will also offer incentives like money towards your closing costs, lower interest rates, and potential upgrades. Much easier process. And much more cost effective for a first time buyer.
Hope that helps.
1. Purchasing the land - Most lenders do not offer loans for purchasing land. The reason for this is that land, in most cases, is harder to flip if they have to foreclose on it than an actual residential property. So this would mean that you would have to purchase the land in cash.
Not necessarily something I would recommend to a first time buyer.
2. Lenders that do offer lot loans will require that you bring 20% to the table. So, for example, the lot costs $150k, your 20% would be $30k.
3. Interest rate - You should also expect your interest rate on the financed portion to be at least 1-1.5% higher than the market interest rate at the time. So, if market rate is 6.5 on a single family residence, your interest on the lot (if financed) would be anywhere between 7.5-8%. And that is assuming you have good credit.
4. Cash for construction - the typical builder is going to look to you to provide the cash to provide the various materials during the course of construction. This is broken down into “draws” or phases.
Let’s assume the cost of construction is $250k, you may have 5 draws at $50k each. Again, doing a custom build requires you to have a good bit of expendable cash on hand. Not typical for first time buyers.
5. Best advice I could give you as a first time buyer - go the new construction route, as in, find a community that is being developed by a reputable builder and purchase a home from them (for example, D.R. Horton, Meritage Homes, Pulte, etc).
These large builders are able to build at a lower cost than smaller builders due to the fact that they are building a large number of spec homes at a time. When they hire a concrete sub contractor, they have them out in a community pouring the slab for a number of properties, not just one. So it becomes more cost effective.
Most of these big builders will also offer incentives like money towards your closing costs, lower interest rates, and potential upgrades. Much easier process. And much more cost effective for a first time buyer.
Hope that helps.
the bossman
Superstar
Thorough detailed advice . What's your line of work breh?
Appreciate it bro. I am a Realtor. So just sharing insight based on experience.
Contractors ain't shyt!
Op you best have your legal paperwork air tight if you do something like this
STFU and stop hatingOP ain't buying shyt
90% of first time homebuyers have no business building a house. just find some shyt you like, and get a thorough inspection
