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How to Buy Land and Build on Your Lot: the BuildFBG Guide

March 27, 2020

If you’ve ever wanted to build your dream home, it’s because you probably drove past the perfect plot of land that sparked your imagination. For some people, it’s the secluded alcove nestled in a treasured neighborhood. For others, it means ample acreage far outside the city limits. Whatever the case, you need that location if you’re going to create the perfect custom home for your family.

In this article, we’ll help you understand the essential details you must consider if you want to build on your own lot. These include:

  • How to examine land on your own
  • How you can pay for the land you want to purchase
  • How to choose a home builder
  • The possible costs of the home construction process

The Basics of Buying Your Own Land

As the old saying goes, if something seems too good to be true, it probably is. Most home builders agree that you shouldn’t just buy any ol’ piece of land you come across, no matter how perfect you think it might be. 

This definitely includes land speculation, as there’s usually a really good reason that a seemingly excellent plot of land has sat unoccupied for a long stretch of time. To take it a step further, what you think makes for a good property — flat terrain, moving water, foliage, etc. — might work against you once the land is purchased and you try to build on it.

Think of this entire home building process as an investment, even if you plan to live out the rest of your days in this house. When it comes to buying your own land, the process can be boiled down into three distinct steps:

  1. Test the geological quality of the land to ensure you can build on it.
  2. Check the surrounding area to confirm you can get the necessary services and utilities in the house.
  3. Confirm you have access to the necessary funds for purchasing the land.

1. Land Analysis

This step requires the hiring of a geologist, architect, or land management expert. This professional will check for factors like:

  • Soil quality
  • Soil density
  • Topography
  • Water quality
  • Environmental issues

Let’s face it: most people only recognize the physical beauty of a given piece of property and how it would display their new home. While that stuff is super important, you’ve got to determine whether that beautiful plot will actually support a home. 

2. Infrastructure Readiness

The same logic applies here. You’ll need to hire a city inspector or someone from the local utility company to confirm that your future property possesses (or could possess) the following:

  • Water/sewer access
  • Electrical connections
  • Gas lines
  • High-speed internet
  • Trash services
  • Related city services

You need to ensure your potential property is physically connected to the world around it.

3. Paying for It

There are two primary methods most people use to purchase a piece of property:

  • Cash – Whether actual bills or a cashier’s check from the bank.
  • Construction Loan – These loans exist, but not every financial institution issues them, and the ones that do offer higher interest rates to protect against risky land speculation.

In both cases, we suggest you hire a real estate agent to do the hard work for you. They’re truly in the best place to negotiate the payment and navigate the terms of the deal on your behalf.

How to Choose Your Home Builder

Selecting the right construction company to build on your lot can be a tricky process. Not only are you investing lots of money into the creation of your custom home, but it’s a major investment of time and emotional energy. Thus, we recommend that you use the following questions to vet the home building companies that most interest you:

  • Design 
    • Who creates the design for the house?
    • How many plans are available?
    • How much can I customize my home?
    • How do I select the decorative colors, surfaces, and fixtures?
    • What features are included in the price?
  • Planning
    • How much transparency is there?
    • How much voice do I have?
    • How many chances do I have to change my mind?
    • Do I contract with multiple companies for home construction, interior design, and exterior features?
  • Construction 
    • How often do I receive updates?
    • Am I charged for any changes I make during construction?
    • How often can I see the site?
    • What agreements do you have between you and your subcontractors?
    • What is the estimated construction timeline?
  • Support 
    • Is there a warranty for my property?
    • Who do I contact if I have questions before, during, and after construction?
    • Will I receive help with any financial, logistical, or administrative concerns I might face with buying land and building a new home?
    • If I have a problem with my home, how do I handle it?

That last question might be the most crucial one for many people interested in purchasing land so they can build their custom home on their own property. Many leading custom home builders will help you find the perfect piece of land that matches the type of house you want to build.

In effect, you will flip the script with a good home builder. Instead of finding a plot of land on your own and then locating a company that can build on it, you should find a builder that takes care of the entire process for you. 

This is often how we work at BuildFBG. Once you meet with our architects and designers to sketch out what you want in your custom home, we will search for the perfect plot of land that fits the needs of your budget and home style. We can even put you in touch with the financing experts who can help you streamline how you pay for your home.

Know What It Takes to Pay for Your Dream Home

Courtesy of 2017 data from the National Association of Home Builders, the national average for building a 2,800 sq. ft. single-family home is $153 / sq. ft. And as you can see from the table on that NAHB link, that average includes data from 44 different homebuilders, 36 different construction factors, and a seven-point high-level price breakdown. 

But those numbers should be a guide. You might need more or less square footage in your home. You could prefer greater or lesser features. You could have simpler or more extravagant tastes. Your new home might be in a fancy part of town or in an underdeveloped location where neither urban gentrification nor suburban sprawl has reached.

And that’s OK. You need to build the home that you and your family want! But we’re still going to use that information as the basis for explaining the underlying costs in your home, especially when you want to build on your own lot.

  • The Lot – buying the land, preparing it for construction, fees, permitting, etc.
  • The Foundation 
  • The Frame
  • The Outsides – the outer walls, roof, doors, and windows
  • The Infrastructure – the plumbing, wiring, HVAC, and more
  • The Insides – literally everything else that makes a house liveable, including fixtures, insulation, drywall, appliances, lights, cabinets, and so much more
  • The Outdoors – the driveway, landscaping, and “outdoor living” areas

If you’re paying attention, you’ll quickly notice the places where corners can be cut to reduce your budget, the areas where the budget can go haywire, and the locations where you should want to invest as much time and energy as possible. The materials you use to build your home definitely matter, but you might not want to fill your home with every possible bell and whistle on the market.

And if there’s anything all those home renovations shows on HGTV have taught us, it’s that you often have to reduce the cutesy perks in your home in order to have a stable and liveable infrastructure.

The Final Word When You Want to Build on Your Lot

Look — we’re custom home builders here at BuildFBG. We specialize in helping people bring their visions to life so they can create their ultimate dream home. So, we know a few things about why people are interested in pursuing their own plot of land for their new house. It usually falls into a few camps:

  • People who want their own home on their terms (not a previously built “spec” home)
  • People who want to build far outside of traditional city limits
  • People who want to build in a growing neighborhood where land is still cheap
  • People who want to build in an established neighborhood with strong property values

Thus, it’s natural that you’ve probably driven around looking for excellent property in the best possible location for your family’s new home. We do the exact same thing for our clients — the only difference is that we have the experience and training to understand which types of land, location, and logistics actually work best for a new home. 

This is why we will always recommend that you speak with an experienced home builder, real estate agent, or land developer before you plunk down your hard-earned money on some property. Whether you have the cold hard cash on hand or you need to take out a high-interest construction loan to finance your purchase, paying to build on your own lot can be fraught with danger if you aren’t prepared.

We want you to love where you live, so you should seek out the best possible lot for your future home.