Buying Land for Your New Home, Part I

hi guys michael with the open book build here so purchasing the land to build your dream home on is the first big step in realizing your dreams i'm picturing a beautiful wooded lot on a quiet cul-de-sac or maybe a gorgeous lakefront home with a view whatever your dreams are it's totally possible to achieve an inspiring place to live so one of the things that we talk about here in the course on how to build a home is the very important checks needed before purchasing the land to build on all right guys here we are out the lot for the open book build and i wanted to talk to you about some of the things that you want to look at to make sure that you avoid potential problems uh when you're looking at lots so um for this lot um this was actually a tear down so there are some things that we've avoided automatically with that and i'll talk to you about that here in a little bit but one of the things you want to consider when you're looking at potential lots are the public sidewalks that's the responsibility of the owner building the house and it can get quite expensive depending on how much linear footage you have of your lot up against the roadway most municipalities require the public walk and can be four to five feet wide and if let's say you're a corner lot and you know you have 200 feet of lineal footage that can be anywhere from four to five thousand dollars for just a public sidewalk to be installed which really doesn't add a whole lot of value to your home another important thing to review when you're looking at potential lots to build on would be the utilities to the lot um in this case as i said it's a tear down so we've got all the utilities here the one exception is it's an old it was an older home and they didn't have storm connections at that time so this community requires all the downspouts to be installed and tied into the storm system for the public storm sewer and that's one thing that we'll probably have to tap into here but everything else is on the lot side so we can get to them this is really important for you to look at because if you have to bring utilities to the lot and they're not already there that can get really expensive and may not even be possible in some situations so obviously we want electric for our home here we've got overhead power lines at the street so we're going to bring those down the pole and then underground to the house you might also have a transformer like this on the lot lines another way they bring power in buried cable we want to make sure we have that for tv telecommunications and high-speed internet you want access to those as well as either natural gas service or you're going to need propane underground sanitary sewer or an underground septic tank and then water supply and here's a shut off in the public sidewalk out at the roadway for the water we also want to consider any trees that need to be cleared from properties under consideration tree cutting and stump grinding can cost anywhere from a thousand dollars up to ten thousand dollars if the trees are close to adjacent structures and need to be climbed the other consideration would be the size of the trees and how much work is involved in removal the other thing we want to review is the size of the lot so having more space around the home will allow us to re-spread the spoils coming out of the excavation for the foundation this is a deep basement and a pretty good size footprint for the foundation so we want to make sure we've got plenty of space you know a half acre or larger is probably gonna make it so that you don't have to truck the excess dirt off-site which can get expensive but it's not it's not a deal breaker so one of the things that we talk about here in the course on how to build a home is the very important checks needed before purchasing the land to build on i made a rather large boneheaded mistake when buying the land for the open book build and i'm going to tell you this story even though it bruises my ego just a little bit so that you guys won't make the same mistake and let me tell you the mistake cost me thousands of dollars so we have a detailed lot purchase checklist in the open book build kit but for some reason i chose not to use it you know how airline pilots go through a checklist prior to each and every takeoff and they do this so they won't forget anything even though they've done it a hundred or a thousand times they still go through the preflight checklist and thank goodness right but for some reason i didn't stick to the purchase checklist so one of the checklist items is to review the utilities present on the lot you know the sewer the water the telecommunications and the natural gas those those types of utilities so the lot i was looking at for the open book build was an empty lot that previously had a home on it so the home was torn down a couple years prior to me purchasing it so my assumption was because there used to be a home on the lot it must have all the utilities right i did get confirmation on the location and depth of the sanitary sewer service this is very important because the home if it doesn't have a service connection on the lot it can get very expensive to tie into why because the sanitary sewer is typically under the road so getting to it can be very expensive and the house was located on or the lot was located on very busy roads so we didn't want to do that but there wasn't a problem with that the connection for the sanitary sewer was on the lot so what i later found was the storm sewer connection was missing so you might be saying to yourself why is there a storm sewer connection well this particular community in northern ohio has a lot of clay soil which is a very poor draining soil so if you put roof downspouts out onto the lawn it can really add to flooding in the neighborhood when heavy storms come through and let me tell you cleveland gets a whole lot of rain right so i assumed the house that was previously on the lot had connected to the storm sewer like every other house in the city unfortunately this wasn't the case because the home was built prior to that requirement being implemented to connect the downspouts to the city storm sewer they were grandfathered in to the old way of doing things so you might be saying to yourself so what just connect it and be done with it well the big issue is the lot was located on a state road that has quite a bit of traffic so no sewer contractor wanted to touch the job because they're required to do traffic control and have special insurance to cover work in the high traffic zones so needless to say the small affordable contractors wanted nothing to do with this job so i had to find a sewer contractor that does large subdivision work to handle the project okay so you might be saying great you're all set not so fast remember how much it cost to install those city sidewalks these are the responsibility of the new homeowner if the lot doesn't have them well lot that we looked at here had the public walks which saved us about 2 000 and this was part of our purchase decision unfortunately to install the new storm sewer connection at the street we needed to remove a large section of the city sidewalk put in traffic control and then core into a 24 inch storm sewer pipe so here's a picture of the piece we removed from the storm sewer pipe after tapping in the service lateral this was the other reason most small contractors didn't want to touch this project if the pipe cracked the big 24 inch storm sore pipe cracked when they core drilled into it we would have had to have replaced that pipe a section of that pipe 24 inches in diameter which would have been a really ugly piece of work so the good news is everything went well and the storm sewer got installed without a problem no cracks in the pipe so how much did this little oversight of mine cost the fact that we had to tap the storms to remain at the street and replace that piece of sidewalk cost us about five thousand dollars ouch right if we had known the storm sewer tying wasn't on the lot we could have negotiated this out of the purchase price with the seller so that would have saved us some money from the from the get go that we could have applied toward this little project so the moral of this story is stick to the lot purchase checklist without skipping any items even though it seems like an easy answer or an obvious answer always stick to it and always ask are the utility connections on the lot not just to the lot or near the lot but on the lot so i know most of you will be looking at building lots for your dream home soon if you haven't purchased one already and of course you can pay whatever you want since we live in such a great free country but if you're concerned about resale and most of you probably should be it's kind of important to think about how much the lot should cost before you start looking so i thought i would give you some insight as to what the typical lot cost is per total market value for new homes being built today i've looked up the most recent cost data from the national association of home builders called the nhb to give you a look at current lot pricing before i get into the details i need to say that this cost analysis was put together from surveys of 49 different builders across the country and the average lot size was 22 094 square feet which is about half of an acre so if you're thinking of building on a larger piece of land with multiple acres these percentages most likely won't apply to your circumstances also the average house built by these builders was 2594 square feet of finished floor space with a final market value of 485 000 and all of this data was based on homes built in 2019 so if we look at the cost of the lot as a percentage of the market value of the home built it came in at 18 and a half percent so if you're building a home in a neighborhood with resale homes selling for 300 000 you may want your lot cost to be approximately 55 000. this would line up with the national association of home builders average lock costs and this would leave you with 245 000 to build your new dream home so let's look at another example let's say you paid a hundred thousand dollars for your lot in a neighborhood of three hundred thousand dollar homes this would leave you with two hundred thousand to build your new home in order to keep your home at a similar value to the rest of the neighborhood remember appraisals are performed by looking at neighboring properties that have recently sold so your home's value will be affected by this so if you paid a hundred thousand dollars for your lot and the house cost two hundred thousand to build based on building costs of a hundred and fourteen dollars per square foot you would have a home that's 754 square feet now you might want to compare this square footage to the neighbors to see how it stacks up for resale if the neighboring homes are selling for 300 000 and have 2500 square feet you probably are overpaying for the lot at a hundred thousand dollars so does your particular house lot combination need to meet these percentages not necessarily it's just good to have a rule of thumb to be able to review lots against so you don't price yourself and your home out of the market i can tell you when we built the open book build home this year the lot cost was a higher percentage at 23 of the final market value so you don't always fall within that range 18 and a half percent is a good rule of thumb 20 is a great rule of thumb that's lasted for years so if you keep your lot at a 20 percent somewhere in that neighborhood 20 to 23 25 you should be in good shape again if you're looking at bigger properties that have much more you know maybe you're an oceanfront or lakefront or something very unique about the property then most of these percentages probably won't apply so one last major thing i'll share with you today is zoning each property has a zoning classification that dictates what can be built on it you want the property to be zoned residential or possibly agricultural as long as it'll allow a house to be built on it it's very important to stop by the local building department or zoning department to determine whether a given property can have a house built on it i was recently contacted by an owner builder that bought a very expensive property had plans drawn and then found it was a multi-family zoning with six units or more this mistake cost him tens of thousands of dollars and a massive headache so to learn more about all the details about buying land to build your dream home and how to become the general contractor for your own home check out our owner builder online course at dot ownerbuilderclass.com

Channel: Armchair Builder

Views: 140,773

Keywords:

Id: KrfyP8Iz3xg

Length: 12min 16sec (736 seconds)

Published: Wed Oct 27 2021