Whaddya think of this plan? (Long)

In My Humble Opinion
1

I’m intrigued by the possibility of buying a property on which to build in the near future. My wife is less than thrilled. And it probably makes no economic sense. So what do you think?

My youngest (of 3) kid is going to college next year, which has led my wife and me to think about where we wish to be living in the future. We are not in any rush to move, but assume we will eventually because (in no particular order) we are on a somewhat busier street than we wish, pretty soon we won’t need 5 bedrooms, we’re not thrilled with our current neighbors (tho we’ve gotten pretty good at ignoring them) and think we would enjoy a lot wider than our current 50’ by 200’, my wife would like a slightly bigger kitchen, and we REALLY want a front porch.

Having said that, having the extra bedrooms are very convenient for when kids come home, the house is very convenient - walk to train and most conveniences, and the house is paid for (and we carry no other debt).

I’ve been checking on-line listings for a year or so, and my wife and I have recently gone to several open houses and driven through a couple of towns other than ours. Have you ever heard that the more houses you look at the better you will like yours? Well, it is true - at least in our case. I’m increasingly convinced that the only way we will end up in our “dream” home is to have it custom built. Our current home is close enough that we don’t want to go thru the costs and hassles of moving unless it is to someplace far superior in our minds. We know a builder whose product we really like. And in our late 40s after owning 2 houses for 23 years, we have strong ideas about what we like and don’t like (and we are very much on the smae page in most respects).

So now the question of money. We were planning on paying a certain amount towards our kids’ undergrad college. Like an idiot I had most of my college savings in the market, and they are now about 1/2 what they were last fall. So we now face a cash shortfall over then next 4 years that we intended to make up for by saving out of current income. Should be able to come close to covering it, tho may need to carry some amount of debt for a short period - most likely a home equity line which we should be able to pay off in a couple of years.

I recently saw a wreck of a house in town on a 50’x330’ lot. It caught my interest because it backs up to a cemetary and forest preserve, and is on a quiet QUIET streat that dead ends 4 houses down into more forest preserve. Walking my dogs through forest preserves is one of my FAVORITE things. And it is a longer, but doable, walk to train. Tho the lot is no wider than our current lot, I think if we have a bungalow/cottage custom built, it could lessen the feeling of narrowness.

I think the lot is priced pretty reasonably, and am interested in looking into it more. (Hell - I think it is a steal - for anyone with the money to buy it!) My wife, however, is resistent - I think mainly due to anxiety over our worsened financial situation.

I’m thinking we could take out a home equity line for less than 1/3 the equity in our existing house to buy the lot, and it would cost us considerably less than $10K in interest and taxes (probably closer to $7k) to hold on to the lot for a year. Of course, that $7-10K is money we would otherwise have been saving for college. We could put our current house on the market, and when it sells, pay off the line of credit and move into a condo while we have our house built. Then we will end up having to carry a mortgage to cover the new home - and probably some college costs.

Sorry this has gone so long. If anyone has made it to this point, do you have any thoughts? Am I insane for thinking of leaping at this point, or doing anything other than sitting tight?

2

A couple of questions about the lot. Is it currently for sale? When you say the house on it is a wreck, exactly how…er… wreckey is it? What kind of structure? ('cause you’re going to have some expense tearing it down). What is on either side of the lot?

Now on to the finer point. Are you insane? Well I’ve always maintained that everyone has their own brand of crazy. Some people just have bigger advertising budgets :slight_smile:

3

Absolute wreck. Tiny house on a slab. Holes you could crawl through in roof and back wall. Less of a tear down than a “blow” down.

I understand a demo in my area would normally run $7.5-10K. Actually, the house is small and rickety enough I thought my son and I could tear it down ourselves in a couple of days for the cost of a couple of dumpsters. But I’m not sure we’d be able to jump through all of the village’s hoops . . .

The other thing is, if we remove the house, I’m assuming the taxes should go down significantly to reflect vacant land.

The street is residential, all houses, mostly modest-sized. I believe the 2-3 lots on either side of this one are also 50’ wide. Some lots on the street are much wider. The houses on either size are not huge (I’m speaking as a resident of teardown central!) And I was thinking that a custom home would be able to place/direct most windows/views out the front and back.

Crazy, huh? Perhaps. But a part of me is looking at where my extreme conservatism has gotten me - basically treading water, and thinking whether it might be time to take some risk.

4

My SIL and her husband are having this exact discussion, though last I heard, they’re not going to do it. They bought land in Sedona for their custom-built dream house. Then she had a heart attack and they don’t want to be in Sedona because there are no big-time hospitals nearby.

The land appreciated by 200% since they bought it, but with the market in the toilet, they can no longer command that price, so they don’t want to sell the land just yet. Instead, they started looking at a townhome in Florida. A dumber home for retirees I’ve never seen. It’s four stories with a private elevator. Whatevah. Anyway, I think they decided that this just isn’t the time to make a big purchase, regardless of the deal they’re getting (and it was schweet, to be sure).

I’d hold off. But that’s me.

5

Oh yeah, it is for sale. I think the asking price is not excessive, and suspect I could get it considerably cheaper. Think it might be worth at least tossing out a lowball offer.

My understanding is that the prior owner was in chronic pain for some time, and let the place deteriorate before he killed himself in the house. It is now owned by his brother who lives in a different part of the state and is eager to get rid of it.

I’m surprised no developer has snapped it up, but I suspect they are overextended and already carrying large inventories in this market. And the long,narrow lot might make it tougher to build the 4000 sq ft $1 million+ mini-mansions that have been sprouting up. Bt it might suit a 2000 sq ft bungalow just fine.

6

Can you sell/loan the house to to a local fire department for fire practice? They do that around here all the time.

7

Our tax dude suggested we buy property, but I’m not in a position to pay a mortgage now that Mr. K is retired. Even though it would be a rental, there are all kinds of considerations to think of, and we’re not going to want to manage it (or pay someone to manage it) as we get older.

8

I’ve seen that done around here. Don’t know if they sell them, but would suspect at least a tax write off might be possible. Or maybe have them pay for the subsequent demo. Interesting idea.

Not sure if the adjoining houses might not be too close, tho, and I wouldn’t want to start things of by pissing off my future neighbors.

9

Not to get too personal, but how is your job security and general health? In vague terms, of course!

10

I know I am in a tiny minority on this, but my reaction to house/property buying questions is always to ask how much you would enjoy having that property and doing what needs to be done to build your house? Will it be a arduous chore and a headache, or a fun and rewarding activity? If you think it’s something you would really enjoy, I think that has a value right there that should be factored into what it would cost you to do it.

Even if it’s something you would enjoy, how much your wife will enjoy it is probably a big factor. I LOVE messing around with our house and Mr. Del mildly likes it at times, although depending on the project sometimes he is more neutral. If he actively disliked it, or resented the time I spent on it, that would be a problem.

11

Dinsdale, you have posted many times regarding your dissatisfaction with your marriage. Is it wise to venture a big life changing project with that in mind?

12

Job just about as secure as anyone’s. Long term gov’t employee w/ good retirement bennies.

Health, about as good as most 48 year-olds. Not overweight, work out moderately 2-3 times a week. Some arthritis, but no heart or other problems. Don’t smoke or drink.

Very good questions. I think I would very much enjoy having the property, and planning a new house. But I have to acknowledge that my wife would bear the lion’s share of dealing with contractors and such while I’m at work. I think my wife would normally really get into it - and do a fabulous jobs making us a lovely home. She really has an exceptional eye WRT design and such. But right now I think she has a really high level of underlyng anxiety related to our finances and the pending college costs, which makes her resistant to any significant change.

I think at some point we WILL end up building a home, tho perhaps not until after the kids are all out of college. And I fear that at that point we either won’t be able to find a lot as nice as this - or at least it may cost considerably more.

The EASIEST thing to do is stay put. And I DEFINITELY am not going to try to convince her to do something she is not completely on board with. Just trying to see what options are realistic.

13

Yeah, it has had its ups and downs. Definitely a valid question. Believe me, I’ve thought of many different options - including us ending up in different homes. But I keep coming back to as much as she pisses me off at times, on balance my quality of life is better off with her than without. And as much as the rough times suck, they are far outweighed b the good or at least neutral times.

But this is also kinda a reason why I want to discuss this particular lot more. Like I’ve said, I’ve done a bit of looking, and I know what is out there in terms of size, price, and location. There simply are precious few buildable lots available in our area that are walk to train, on quiet streets, AND back up to forest preserve.

I need to suss out the extent to which my wife’s feelings are due to financial anxiety, as opposed to the merits of this lot. Because if she thinks this lot is totally out of the question , it makes me wonder what the likelihood is that we will be able to end up somewhere we agree on.

Bt the last time we left the subject, she was saying that she simply didn’t see where the money would come from out of our budget.

Honestly, I think if this lot were even 5-10’ wider, we’d be all over it. But we’ve had a couple of run-ins with both of our current neighbors, and our last 2 houses have been on 50’ lots. I think we’ve both gotten it pretty well into our heads that we really wanted a tad more elbow room.

14

Disclaimer: While I do have some experience with the things opined below, please take everything I say with the skepticism it so richly deserves. I won’t even abbreviate it. I am not a tax lawyer, or IRS agent. I am not your Realtor, and I have no experience with, or knowledge of, your local laws or codes. Having said all that let the wild speculation begin!
With 50’ wide lots I’m pretty sure your local fire dept won’t be interested in using it for training.

Have you spoken to the listing agent? How long has it been on the market? If I was in your shoes I think I’d consider buying the place and doing the tear down to the slab yourself. You will have to be careful about the utilities (Especially gas) and be aware that you will probably have to cap the septic hook up. Then leave it empty for now. You end up taking care of an empty lot but that shouldn’t de to bad. Now is a good time to buy, and a lousy time to sell. If you can afford to sit on the vacant lot until the market comes back up on your current place then buying might be the way to go.

If you are going to have to borrow to buy the lot, why not go for a straight mortgage on the lot instead of the home equity loan? You might be able to get a better rate that way. Also consider talking to someone about the how the property taxes would change after a tear down. Next thought. Even if you do a tear down you might be able to claim the property as a “Vacation home” by for instance leaving an electric hook up (mobile home style post with the meter on it) and a sewage hookup. Then you get all the tax benefits of a residence.

Definitely low ball the offer, don’t worry about offending anyone, point out the costs you will have associated with the tear down, etc.

Man, Look at me all acting like I know what I’m talking about. After re-reading that I need to go back to the top and post a massive disclaimer. But no I don’t think you’re crazy.

15

This is something you definitely need to check on, because my impression is that most of the value in a piece of property is in the land, not the structure. The house will depreciate, but the land will not.

16

I faced a similar situation to yours two years ago, and my wife and I decided to go ahead and purchase a lot in Montana (we now live in California). We have already designed two houses so we were comfortable with the whole custom house build process, with both its ups and downs. Talk to others you know and trust about the trials and tribulations of building a house, especially working with strict city or town codes. It may be a lot harder than you think.

We purchased 6.5 beautiful acres in the summer of 2007 thinking we would sell our current house in 2011 and move into the new house in 2012 at the earliest. I ended up borrowing most of the money to buy the lot from my father, and then paying him back 6 months later following a lawsuit we won (don’t ask). Everything was going to plan… And then all of a sudden I had the opportunity to move into a job that didn’t require me to work in the office. Ding! The light went on that I could speed up my plans and relocate to Montana much sooner than I had thought. I sold my house in early 2008 (timing is everything) and we started designing the new house as soon as my house closed escrow. Being in California I was able to make enough on the house I had here to pay for the construction of the new house so I will have no mortgage to deal with. I lived in an apartment for a year while the house was being built and will be moving into my new house in two weeks. The contractor was great and the project came in ahead of schedule and on budget.

What does this have to do with you? Well, I took a risk buying the lot I really wanted before I knew when or if I was really going to be able to build my dream house on it. Everything has worked out so far… but I attribute that to luck as much as anything else. My wife and I were on the same page when we decided to look for the lot and each of us had an absolute veto if we didn’t like it for whatever reason.

Whether buying this lot right now, versus waiting a few years, is appropriate is a tough decision only you AND your wife can make. You can’t expect everything to work out exactly as you plan, but if you never take any risks you will never get the big reward you want. The stock market will eventually come back, but nobody can tell you when so don’t make your plans based on your investments getting back up to where they used to be in a year or two.

I say go for it but I’m a huge risk taker who has been lucky more times than not…

17

I have to say that this bolded part is what leaps out at me and (theoretically, since I’m just reading a messageboard and not personally invested in this) would really irritate me.

Basically, it sounds like you want to buy it and build on it now, even though your wife is the one who will have to do all/most of the work to get it done. Wow, that’s, uh, fair.

18

That’s a good point. The process of building a house, the hundreds of different decisions that have to be made, puts an inevitable strain on any relationship, no matter how strong it is. Throw in having to borrow a pile of money and an “unpredictable” real estate market and things can get pretty intense pretty quickly.

While buying a lot may not seem like a big step, doing the work needed to prep the property, dealing with the town or city planning and building departments, will take a lot of someone’s time. If your wife really isn’t into this project, and you don’t have time to do most of the legwork yourself, I don’t see how this will be successful.

19

I don’t have much advice to offer and as you’ll see by this thread, I didn’t have much to offer when someone asked a similar question. But your question has a lot of similarities IMHO to Jodi’s question near the end of 2008. Interestingly, people thought that it was at the bottom of the market at the time, and of course, we now know that wasn’t true.

I’m not sure if you’ve already seen this, but Jodi was asking whether it was a good idea to build a custom home on a vacant lot. The posts describe it better than I can, but if I had to summarize, I’d say that most people cautioned that it will generally cost more than you (general you) think and be a lot more work than most people imagine.

Thinking of Building a House – Am I Nuts?
**
Jodi**, if you’re reading this, did you buy the lot?

20

When TF did a “bungalow” blossom/bloat to 2000 square feet?!

Geez, this house has 2.49 baths, 4 bedrooms, a living room, a family room, and a dining room, and a kitchen, and IT isnt 2000 square feet. Sure, its a bit chopped up, but still.