This month we're talking about the book Be Your Own House Contractor. And this week, we're looking at some pieces from the book's companion website at http://www.byoh.com/. Today, we'll discuss buying land before you decide on a house plan:
Q: Do I buy the land first, or do I decide on a house plan first?
A: The land comes first. Where you live is more important to most people than what you live in. Where you live is more important for resale than the house itself. Remember that three things determine real estate value: location, location, and location. Resale is important to you because it will determine the value of your home for not only your peace of mind, but also for your lender. Lenders base their loan decisions on the resale value of your home. They want to know that if you fail them financially, they can sell your house and recover part, if not all, of your debt. Makes sense. The price of land will vary more than anything else in construction. It will also consume more of your budget than any single item in most cases, therefore, in order to know how much of your budget will be left over for the house, you have to find out how much the land where you want to live will cost. You may have to make some adjustments very early in the game.
For example, if your total budget (cash and borrowing power) is $200,000, and you find a piece of property for $150,000, that only leaves $50,000 for the construction of the house. This is not good. This is why people keep moving further and further from prime costly land areas (big cities, lakes, rivers, mountains, and resort areas). The further out (or away from these areas) you go, the cheaper land becomes. It's a numbers game where you have to shop, sacrifice, and compromise until you feel that you can afford both the property and a decent sized house that falls somewhere close to your original dream.
Like the last post in this series, I included this question and answer because some past commenters wondered about land and the role it played in the building process.
Want to know more? You can win a free copy of Be Your Own House Contractor. Here's how it works:
1. Leave a comment below -- any comment.
2. Sometime tomorrow, I'll stop by the post, stop the submissions, and name the winner.
3. It will be that person's responsibility to check back to see if they are a winner and then email me their contact information.
4. I'll send all the winners their books in one mass mailing going out the second week in September.
A few rules for these giveaways:
1. You can not win more than one prize.
2. I will be the complete and final judge.
3. Legal disclaimer: I can not guarantee safe delivery of the items. I'll send them via US Mail, so it's likely they'll be fine, but I can't control it and won't be held accountable if the mail system messes up.
4. If you win something and do not contact me within a week of winning, I reserve the right to give your prize away to another winner. Note again: I won't track down the winners -- it's your responsibility to come back and see if you won.
Good luck! Post a comment below for a chance to win this book!
Entering drawing for book.
Posted by: Scott Moonen | August 21, 2007 at 07:22 AM
Please enter me in the drawing again.
Thanks.
Posted by: Richard M. | August 21, 2007 at 07:44 AM
Going to win this time. Going to win this time.
Posted by: Scott Kustes | August 21, 2007 at 08:19 AM
I'll try again.
Posted by: Thad | August 21, 2007 at 08:20 AM
This time I will win yeh...!!!
Posted by: Meliruppu | August 21, 2007 at 08:25 AM
My husband and I have discussed purchasing land first. We're struggling with whether or not to buy an RV to place on that land as we do a lot of traveling. (we have one child, and grandparents are a three hour drive - and have no place for us to stay while we are there.)
Would buying a used RV before a house be a wise move or just postpone the house further? Thanks. :)
Posted by: Christina | August 21, 2007 at 08:44 AM
Christina, what a great idea! This would lock in your land cost, give you a place to stay while visiting, and a place to stay while building.That's the kind of ingenuity that makes for a great owner/builder.
Carl Heldmann
Posted by: Carl Heldmann | August 21, 2007 at 08:51 AM
I'm considering buy land in a foreign country on the cheap. Now I just need to learn a new language.
Posted by: Easy E | August 21, 2007 at 08:52 AM
Land is good... Book is good... I'm back!
Posted by: Armel | August 21, 2007 at 08:56 AM
Another reason to buy the land first is that the lay of the land will determine your house plan. Which way is South? Is there a slope to the land? Anything you don't want to look at every day? Is there a view you DO want to look at?
Love your site!
Enter me in the contest.
Posted by: Lynne | August 21, 2007 at 08:57 AM
I am back...
Posted by: Cherly | August 21, 2007 at 09:07 AM
One of these days I'm going to win!
Posted by: Matt G. | August 21, 2007 at 09:17 AM
Throw my name in again please.
Posted by: Cam | August 21, 2007 at 09:21 AM
Book, book, book.
Posted by: Nathan | August 21, 2007 at 10:32 AM
Trying again!
Posted by: Seth H | August 21, 2007 at 10:35 AM
Top of the list hasn't worked, neither has the bottom, so lets try the middle!
Posted by: Chad d | August 21, 2007 at 10:37 AM
Last year, I went to view some lots of land. They were absolutely beautiful, and the location was good. It's just unfortunate that I didn't have the capital at the time. I guess I'll try again soon since things are a little better with me now.
Posted by: Mira | August 21, 2007 at 10:39 AM
I playing it (so I don't have to) buy the book.
Posted by: Dave | August 21, 2007 at 11:10 AM
This time it shall be mine.
Posted by: GeekMan | August 21, 2007 at 11:30 AM
Mira, there are lenders who will loan $ on just the land (yes, even in today's "tightened mortgage market). As Will Rogers said, "Buy land, they ain't making anymore of it". (for those of you too young or adverse to history, you can google Will Rogers)
Carl Heldmann, Author of the "give away" book from FMF "Be Your Own House Contractor"
Posted by: Carl Heldmann | August 21, 2007 at 11:35 AM
Looking to be a winner today
Posted by: Richard | August 21, 2007 at 12:14 PM
Keep trying.
Posted by: Reto | August 21, 2007 at 12:24 PM
Trying to get the book!
Posted by: Rusty K | August 21, 2007 at 12:26 PM
one more time
Posted by: Eric G. | August 21, 2007 at 12:35 PM
Very good post, would love to read the book!
Posted by: Dee Whit | August 21, 2007 at 12:35 PM
Trying again
Posted by: Hemal | August 21, 2007 at 12:49 PM
I would like a shot at the book.
Posted by: James | August 21, 2007 at 12:51 PM
Trying again.
Posted by: Scott | August 21, 2007 at 01:12 PM
I don't think I'm ever going to win a copy of this book...
Posted by: JMS | August 21, 2007 at 01:18 PM
Trying again ...
Posted by: Cory | August 21, 2007 at 01:26 PM
I also like free things!
Posted by: Fred | August 21, 2007 at 01:44 PM
how many copies do you have?!?
Posted by: lily | August 21, 2007 at 01:58 PM
Please don't make me actually buy this book! This is FREE money finance! :-)
Posted by: Familyfinanceguy | August 21, 2007 at 02:58 PM
we bought our land first - it was also useful in securing construction financing
Posted by: GLM | August 21, 2007 at 03:00 PM
Entering for the book. My wife and I are finishing up renovating our first house and will be looking at moving to our "dream home" where we will raise our kids in the next year or 2. This book would help us out greatly.
Posted by: Kevin | August 21, 2007 at 04:21 PM
Here is my free entry.
Posted by: Rick | August 21, 2007 at 04:46 PM
Enter me
Posted by: Brad | August 21, 2007 at 05:20 PM
would just be a joy to be a winner ,,really need and want this book
Posted by: littlerick | August 21, 2007 at 09:08 PM
.
Posted by: JH | August 21, 2007 at 09:29 PM
trying again.....
Posted by: mm | August 21, 2007 at 09:45 PM
trying again
Posted by: esther | August 22, 2007 at 12:44 AM
giving it a go
Posted by: Big Cheese | August 22, 2007 at 07:40 AM
This giveaway is now closed. The winner is Scott who posted at 7:22 am yesterday. Congrats!
Scott, please email me (see: http://www.freemoneyfinance.com/2005/04/free_money_fina_4.html ) and we'll arrange to get you your book.
To the rest of you, stay tuned. I still have plenty of copies to give away!
Posted by: FMF | August 22, 2007 at 08:00 AM
and Again
Posted by: Hemal | August 22, 2007 at 11:36 AM
I am searching for ways to purchase property in PA for the purpose of personal wildlife management.
Posted by: chris | October 01, 2007 at 05:42 AM