Money wise, in the current market, it would probably be more advantageous to buy an existing.
Save your sanity, Jodi. Do not, do not, attempt to be your own GC. It’s not a question of your not being able to figure things out. You couldn’t do a decent job of it while working full time.
Besides a zillion issues guaranteed to crop up, usually at the most inconvenient and expensive time possible, the trickiest part of construction is to make sure everything falls into place in the proper order. Translation: riding herd on subcontractors can be a full time job in itself. Most of them juggle jobs and schedules so your project would just be one job of many. Step G can’t even start until Steps C through F are finished but a delay gives the sub for Step H an opening to squeeze in another project in the meantime and oops! not quite finished but they’ll be back on your house next week, without fail. Maybe the week after, max. But you can’t get reach on the phone…
Herding cats is slightly more rewarding and productive.
You’d have an enormous and steep learning curve on building codes and techniques. And have to be there, or at least likely to pop in frequently, to make sure work is done correctly. The GC on my construction-project-before-last (for work) purely rocked. I was frequently on site but he instantly spotted things done badly that I saw but didn’t register at all. Looked fine to me but he sure as hell knew better–and gave them hell too. They bitched but each time they redid it right, fast and at their expense, probably because construction is a fairly small, tight-knit world. So a sub does shoddy work; you may catch it, you may not but even if you do, it’s just one job. They move on. I believe they’re less likely to pull crap on folks they have to work with again and again.
Good luck with it, no matter what you choose.
Put me down for a “has she lost her mind?” 
The money issue is interesting–the housing market is down (so cheaper existing house) but lots of contractors are out of work too (so cheaper labor). I would imagine that places that supply materials to build houses are also trying to move inventory.
We did a renovation on a place and it was a pain in the ass, so I couldn’t imagine all the pain with building from dirt up.
Oh, another thing, your bank would have a good idea of what the ratio of the house to land price is locally. Banks are very sensitive to making sure this is a good investment for their money.
Some good comments and advice here, since we just got done rennovating/building our house a few years ago I have a few comments.
The first question I’d ask myself is why is there an empty lot in a neighborhood? Why hasn’t it already been built on? You can run into some potential easement issues that may bring things to a crashing hault. So find out what sort of room between your structure and the property line has to be left. That could radically alter the floorplan of your house, and thus it’s price.
You mention that there are utilities available, but you’ll have to pay to have a temporary pole put up for electricity and do something to get water. For us, the pole had to be in place and inspected by the someone from the city before we could even schedule the power company to come out and run a line to it.
How long are you planning on living in this house? If you’re planning on staying a good amount of time, but you’re not sure if this will be your ‘final’ house, then I’d second what other posters said about trying to use a builders existing plans but modifying them slightly. If you’re sure that this will be your last house that you’ll live in until they wheel you off to plant in the ground, then an architect can help you customize it to be exactly the way you want it. But while you think it may be nifty to have a window in your bathroom that looks into the living room so you can watch the news while you brush your teeth in the morning, that might damper the resale value.
Financing. Keep in mind that you’ll not only have to get a loan for the property (assuming that you don’t just pay cash for it), but that you’ll also have to get a construction loan while you’re building. That was a lot of fun for us 2 years ago before the housing and financial markets went to pot, I’d hate to think what it would be like now. For ours, it was an interest only loan until construction was done and we rolled it over into a conventional loan. So every time the builder made a draw, our monthly payment went up. So keep that in mind.
Permits. Boy these are fun. Your city may require a set of plans before they’ll even issue a permit, which means you have to have things ironed out with the architect before you can even get a permit. Which your contractors will need before they can get started. Trying to juggle all these things is a huge pain. If it wasn’t for the fact that the majority of this stuff occured during the summer when my wife was off, I don’t know how we would have gotten it all done. While your GC should handle all the periodic inspections during construction, they may or may not do the initial building permit legwork. Ours said that he’d do it, but he’d charge an extra $10K because it was a pain in the ass. Oh, and your bank will probably have at least one or two times they’ll want to stop by to see how things are going.
I’ll again agree with the poster that recommended going to home shows. Go to a lot of open houses, model homes, home shows, builders shows…anything you can. And take lots of pictures and notes about what features you want in your house. Learn what can wait until during construction (like light or plumging fixtures) to be decided, and what you have to iron our before you begin (things like wall texture, bathroom and kitchen counters and counter tops). Not because they couldn’t be changed after you started, but because it will have a huge impact on the bid you were given when you first started. You’re better off trying to get as much ironed out in detail with your builder before hand so that you know exactlly how much you’re looking at. You’ll still go over, but it might not be for as much.
The poster that mentioned the details being overwhelming is also correct. When we built this house, we wanted everything the way we wanted, not builder grade lighting and plumging fixtures. But this means we had to pick out ever single fixture…every faucet…every place we wanted a light. Do you want ceiling fans? Which rooms? Recessed lights? Sconces? Where do you want the switches? Do you want night time stair tread lights? What about your shower? One piece fiberglass kit? Tile? Tub? Shower only? Where do you want the toilet? In a separate ‘powder room’? Sinks? Double vanity? Pedistal? Hookups for a washer/dryer? What about cable or internet? Phone jacks? Where do you want them? How many? Do you need a phone line by your cable or DirectTV box? What about a CAT5 drop there? Hell, even what kind of doorbell chime and button do you want?
And then there are bigger decisions. What type of heat/air conditioning are you going to get? Heat Pump? Electric? Natural Gas? Propane? Where do you want the registers? Depending on the layout of the room, you may not want a register that blows down straight onto your bed, or favorite chair in the living room. How much electric service will you get? Do you want a hook up for a generator? Outside faucet for a garden hose? Where do you want it? How many do you want? Outside lights? What about the doors and windows? Storm doors? Any type of porches you’re thinking of putting up? Where will the cut-off to the water for the house be located?
All those things plus a hundred more have to be decided, by you.
Just a few more details. Our original estimate for the rennovation/construction was $217K. Including septic. At the end we owed the builder an additional $45K for things we added on/changed. During the process, we spent an additional $40K for items that we purchased towards the house. And it was a month behind. I was at the house at least once a day to check on things. Sometimes twice. There are dozens of issues that I caught that I made the builder change/fix. There are several more things I didn’t that we have to deal with now. It’s a huge time sink and effort to keep an eye on things.
As far as the price of your lot? We paid $210K for the house and lot we have. We completly gutted the house to bare studs and took off about a third of it as unusable. We then built an addition to what was left and finished off the inside. Renovating like we did was actually more expensive than just building new. But we really wanted to live in this neighborhood, and loved the lot. So what it boils down to is what is it worth to you to live in that place? While I don’t know specifics on where you live, around here most empty lots were between $30k and $90K. Look at how much houses are going for in that area. If a house on a similar sized lot just sold for $190K, then an asking price of $60K for the lot is unreasonably high (in my opinion).
Either way, good luck and invest in aspirin!
Thank you, everyone, but especially you, Atrael. That was hugely helpful, and eye-opening.
Glad to help. All complaints aside, it was well worth it. I love our house and I’m glad that I took the time to get everything the way I wanted it. But baring some life altering disaster, this is our last house. The sheer weight of all the details can be overwhelming, especially when you’re also working your regular job.
To give a timeline, we put the bid in for our house in late March. Contract was written in April. So we found a builder then and started the architect working. We closed on the house in June. Architect took forever to finish his drawings. So the builder was unhappy because he was waiting to start our job (which was fairly large) and not do another job. Finally got the drawings from the architect in late July. Then had to take those to the bank and the city. The city then told us that we need to have a septic engineer draw up plans for the septic system. That took another week. About 2 weeks later they approved the building permit, then the bank could finally approve the construction loan and the guys could start. It was 3rd week in August before they actually started construction on the house. They finished at the end of February, and I use that term loosely as we had to move in then because the other house had sold. There were more than a few items that didn’t get finished because we had to move in. Even though they had said they’d be done by late December at first. So timing everything is really hard. Even though you’re in an apartment, you’ll still have to give them a move out day. Usually at least 30 days in advance. Then pray that the builders actually get finished by that time. Because you’ll have to have the final inspections by the bank and the city before you can move it. The city has to issue a certificat of occupancy before your insurance company will issue a policy. Which you’ll need in place before you can re-fi into a conventional mortgate.
grin…the more I type, the more I realize just how much I’ve suppressed about the whole thing. It was well worth it in the end, but a lot of pain getting there. If you do decide to go through with this, let me know. I’ll be happy to try and think of all the little ‘gotchas’ that sprung up during our construction.