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There are plenty of decisions to make when planning your dream home – chief among those is where to start. As the old adage goes, there are three things that matter in property: location, location, location. So, one of your first tasks will be to acquire the land for your new home.
Purchasing a vacant lot means investing in a blank slate with countless possibilities. It’s a great way to secure your future with all the bells and whistles attached, so it’s important to understand what the process entails. Here are some details to consider when acquiring a lot to build your high-performance home.
Partnering with a builder early on in the property acquisition process can save you a lot of time and effort. Builders can often see the potential in a vacant lot and identify what needs to happen in order to make the property ready to build. If a builder is familiar with your local area, you may be able to tap into their knowledge of the local property market.
Working with a builder up front can also prevent any delays during the permitting process, which varies in complexity depending on the size and scope of your new home build. An added benefit is that you’ll be able to develop a great working relationship with your builder long before construction starts.
Location is paramount, whether you’re buying a developed property or scouting your area for a vacant lot to build your dream home. You’ll first want to make a list of what’s important to you: Are you interested in living the city life, or would you prefer a more rural environment? Maybe you’d like to be close to a school district or amenities like grocery stores and shopping centers. Another detail to factor in is your daily commute – are you OK trading on location for a potentially longer drive to work?
There are a few paths you can take to find your dream lot. Websites like Zillow, LandCentral, or LandWatch are great for starting your search online. Then, scout around in person by driving around your desired area to take stock of what parcels are available. We recommend working with a local realtor who is familiar with the area.
Once you’ve found the right location to build your custom home, construction will be subject to restrictions based on whichever municipality oversees it. So, it’s important to conduct due diligence when purchasing a vacant lot. But what does this process look like? It primarily involves a trip to City Hall where to check the zoning for the property in question, as well as any covenants or easements that may exist. It’s also a great opportunity to find out what long-term land use plans are in store for the area including any upcoming construction or road projects.
If you’re considering building a custom home in one of Silicon Valley’s thriving communities, be sure to touch base with the appropriate permitting authority to understand the nuances of home construction in your area. Here are a few helpful links:
Fortunately, this is where working with a builder early during this process will come in handy, as they’ll likely already have contacts who can get you the information you need. The right builder can also help you evaluate your options and make recommendations.
Once you’ve located the right lot for your dream home, you’ll need to factor that expense into your home construction budget. These costs include purchasing the property and covering any fees associated with getting it to a ‘developed’ state.
This usually includes surveying the property, conducting soil tests, clearing the land, and (in some cases) adding road access and bringing in utilities. It’s advised to spend no more than 20-30% of the total construction cost on the lot itself, so make sure to budget in advance to avoid headaches later.
There are a few different options to choose from when securing financing for an undeveloped property. If you decide to pursue financing through a land loan, know that it may require a larger down payment (up to 50 percent) and come with a higher interest rate as it’s considered ‘riskier’ for the lender. But if you pay for the property in cash, it can give you greater leverage when securing additional financing for home construction.
While purchasing a vacant lot can be an involved process, it’s highly beneficial for homeowners who have a clear vision not only for their dream home, but their dream property. It’s also a smart investment that will stand the test of time. Above all else, you’ll want to ensure that the lot you purchase is a good value and will work for all your needs.
Clarum Homes is dedicated to helping you navigate the process of building your high-performance home. We’re here to answer any questions you may have – just give us a call at (650) 322-7069.