Buying Land and Building Your Own Home
Lots of folks I talk to, when faced with the limited inventory of available houses that meet their needs, want to explore the option of buying land and building. While I generally don't handle raw land sales I decided to post a page on the ins and outs of "buying land and building."
Land Costs. Land here isn't dirt cheap (pardon the pun)! And, given the miles and miles of farmland and forest we have, there is surprisingly little land available for sale. While you can find a 2 to 3 acre parcel for less than $20,000, most people looking to build a second home are probably looking at about $6,000 to $8,000 an acre for a nice buildable 5 acre piece ($30,000 to $40,000) with privacy. With a view, pond or nice stream, that 5 acre piece jumps, starting at about $75,000. A nice 15 to 25 acre piece, with a view and a pond or stream, can easily run $125,000 to $200,000. For large parcels of 100 acres+, you're probably looking at $3,000 to $4,000 an acre, with the wide variation due to location, quality of the land, views, streams, etc. Steep parcels, known as "Billy Goat Land", are generally cheaper, but are best suited for hunting.
Good lakefront lots start about $200,000 to $250,000, with lakefront parcels in an upper end lake community like the Chapin Estate much higher. There are some less expensive lakefront parcels available that don't have particularly good lakefront (e.g. some wetlands that may restrict clearing or building closer to the lake.) Occasionally a buildable parcel on a nice smaller lake (lake size under 25 acres) is available in the low to mid $100's.
Of course, there are huge numbers of variables, like location and setting, that affect these prices. Land around South Fallsburg will be less than land around Callicoon, for example.
Building Costs. The era of throwing up a little seasonal cabin is long gone. New York State has one of the most stringent building codes in the nation, particularly for energy efficiency. To get a building permit, your plans must adhere to the building code, and that rules out those little seasonal hunting cabins.
Contractors I know here in Sullivan County have have been saying that the houses they've built recently have been coming in between $150 and $200 a square foot. The lower "per square foot" cost is for larger, 2 story houses without expensive finishes like granite countertops. The higher cost is for smaller houses, houses with grander spaces (a cathedral ceiling living room, for example, costs more per square foot than a standard 8 or 9 ft. ceiling) or better finishes and detailing. Costs, of course, can go much higher, for more opulent houses like those being built at the Chapin Estate where costs can reach $350 a square foot. (Note: these prices include infrastructure costs, see below.) Smaller houses with higher design details, like those built by Catskill Farms, can run in the $225 to $250/square foot range. (Those dormers, porches, cedar shake accents and tiled baths add up.) "Developer" houses can come in less, about $110 to $130 a square foot, because of production building techniques, but that's for a 2 story vinyl sided "builder's colonial" in a development. If you're looking at a dramatic post and beam house with large expanses of glass, a soaring fieldstone fireplace, a designer kitchen and marble bath, get out your checkbook costs can quickly climb above $200 a square foot. Modernists take note: finely detailed modern homes with large expanses of glass, custom fireplaces, steel staircases and stone bathtubs can run over $400 per square foot.
Infrastructure Costs. The cost of building in the country can be higher than building in a village or a development, where you can connect to community or town water and sewer systems. In the country, you don't have municipal services, and need to install a well and septic system. A well and septic system can cost anywhere from $15,000 to over $30,000, depending on how deep the well is and the type of septic system required. You also have costs for bringing in power and phone from the road, and cutting in and finishing a driveway. Be aware that if you talk to "kit home" or "log home" builders, these infrastructure costs are often not included in their estimate.
Finding Land. First, determine the type of land you'd like and a rough price range. By 'type of land', some people prefer a very private wooded setting, others prefer more open fields or rolling farmland. Amount of privacy you desire will be a significant factor, in terms of the acreage relative to the type of land. For example, in a more open meadow or rolling farmland setting, it may take 20 acres or more to get reasonable privacy, whereas on a wooded lot you can feel secluded on as little as 4 or 5 acres. Be realistic about price. Nice land with some interesting features is likely to start around $75,000 not $25,000, and land that could justify a house that might make the cover of Dwell can easily run $150,000 or more.
Balance the Land and House. Probably the biggest mistake many people make is 'overbuilding' for the land they buy. You want to keep the value of the land in line with the value of the house you're planning to build. If you're planning to build a more dramatic, upper-end architect designed house, you need land that will support its value. If you're planning a modest 2BR cabin-in-the-woods style, then a modestly priced wooded $35,000 parcel without a view or pond is fine. But if you're planning an architect-designed modern house, or a larger 'Beaver Mountain' cedar or log home, you should look for a better piece of land with more features, even if it's substantially more expensive.
Determining "buildability" of the land. Some land is very buildable, other land isn't buildable at all, and then there's land that's buildable, but only with a significant investment to make it so. You often can't tell just by looking at land whether its buildable. Key factors to consider are:
"Wetness" and drainage. Pay close attention to ground wetness in the area around your proposed building site. If it's been raining, the ground may be wet from rainwater or run off, and if there's heavy run off, it can often be channeled away from the building site. (On hilly building sites, you almost always have to do some water diversion.) But if it hasn't been raining and the ground is soggy, it likely indicates the presence of springs close to the surface or wetlands. Springs on a property are a mixed blessing. If they're away from your building site, you may be able to build a lovely pond. But if they're smack dab where you want to put your house, they can be an excavator's nightmare. If there's any indication of springs in the area of the building site, bring in an experienced excavator or engineer to give you their opinion.
A related issue is "wetlands" areas specifically designated by the New York State DEC or U.S. Army Corps of Engineers that require special treatment. Wetlands on your property can affect buildability. There are published maps showing designated wetlands areas. Prior to purchasing a property, review these maps to see if part of your property is a designated wetlands. The Code Enforcement Officer (e.g. Building Inspector) for the township has them.
Septic "perc". You'll hear Realtors and others state that the land "percs" or a perc test has been done. Basically, a perc test is a test done to determine whether the soil is sufficiently porous to enable a septic system leach field to function properly. An engineer digs a few test holes, pours in water and then times how long it takes for the water to drain out. If the soil is too "sandy" for proper leach field operation, the water will drain out too quickly, and if they soil is too dense with too much clay, the water will drain too slowly or not at all. You want to buy land that has had a successful perc test in the past few years. Note that this will typically be a shallow perc test providing a general indication. When you go to get a building permit, an enginner will have to do a "deep perc" test to design the actual septic system.
If the land you absolutely love just won't 'perc', all is not lost. There are other options for engineered or "mound" septic systems for areas that won't perc. They are, however, signficantly more expensive than conventional, gravity-fed systems. If the land doesn't perc, hire an engineer to give you an expert opinion about what is possible on the land you're considering.
Access. That mountaintop aerie sure has a great view. But it can be hell, or at least expensive, to build a road to get there. And that dirt track for your little Subaru might not be good enough to get the construction equipment up particularly the big well drilling rig that has to come in. I've heard more than one story about somebody who bought a 'cheap' piece of land, only to find out after the fact that it will cost $50,000 or more to cut a road into that magical building site. And remember, those long, curving driveways can be costly to keep plowed in the winter!
Special considerations for lakefront or riverfront. Septic systems near water (lakes or rivers) need to be set back a certain distance from the shoreline. In any septic and well installation on any property, there also needs to be a certain distance between the well and septic leach field system. So, if you're considering a lakefront or riverfront parcel, make sure that you can fit the well, septic and house on the land with the necessary setbacks and separations.
Talk to the Code Enforcement Officer. Take the time to talk to the Code Enforcement Officer (building inspector) in the township where the land is located. They should be able to tell you if there are any special considerations or limitations to building on the land. Don't rely on the word of the seller. Rules and regulations regarding building change, and the Code Enforcement Officer is the best source for the latest information.
Financing land. Most people are surprised that you can't finance raw land with a "conventional" mortgage at the lowest rates. Most banks won't lend on raw land, although some of the local banks like First National Bank of Jeffersonville and Ulster Savings Bank will. Expect to put 25% to as much as 50% down for a raw land loan, with rates 2% to 3% higher than a conventional 30 year mortgage. Because of the tougher terms on raw land loans, most people buying land do so with cash. (The land can then act as the 'down payment' on a construction loan that rolls into a conventional mortgage when construction is complete.)
Raw land and IRS mortgage interest deductibility. Under IRS rules, the personal mortgage interest deduction is only available on houses, not raw land.
Finding a builder. There aren't that many builders or contractors in Sullivan County, and apart from a handfull of new developments, we don't have any "production" builders (with specialized crews that move from house to house like an assembly line e.g. framing crew, electrical crew, sheetrocking crew, painting crew.) Most of the builders here only put up a handfull of houses a year. Even with the recession, new houses are still being built. While builders are definitely slower, the schedules for the more in-demand contractors can fill up by late winter for the following summer.
Overall, you should start planning
about a year out to build a house. So if you buy a piece
of land in, say, September of 2014, you likely won't have a house
complete until the late summer or early fall of 2015.
There are a few ways to find a builder here. Talk to the Realtor who helped you find the land, and, if they aren't the managing broker in the office, speak to the broker as well. Stop in at the lumber yards and hardware stores in the area and ask them for recommendations. If they won't give you specific 'recommendations' (because they want to keep in good graces with all of the contractors who patronize them), ask who's building the 'quality' homes in the area. Visit the Code Enforcement Officer of the township. You'll have to finesse your questions a little, but you likely can get an indication of who's good. Also, ask them for a list of the new houses that have gone up in the township that year, and then speak to the owners of those houses. If you're planning to use an architect to design your house, hire one in Sullivan County they have builders they regularly use and recommend.
Going the Pre Fab Route. Pre fab nowadays comes in all shapes and styles. Buyers looking for a rustic mountain look may want to consider something like a Beaver Mountain log or cedar home. Then there are the basic modulars --- you see them all over, those vinyl sided ranches and 2 story builder colonials that, well, look like modulars. Chelsea Modular is a good company that does mostly traditional suburban styles, but has a couple of interesting designs work a look. Douglas Cutler is an architect who works in modular, and has some interesting concepts you might want to check out.
But a lot of folks I work with, when they talk 'pre fab', are speaking of the modern prefabs pioneered by Dwell magazine. In 2002, Dwell Magazine sponsored a contest to design and build a modern modular home, which resulted in the highly acclaimed "Dwell Home". A Dwell home, though, isn't inexpensive, and with foundation and site costs can easily run $300 a square foot. A Chilean architect, now living and working in Missouri, Rocio Romero, has designed and now produces the LV Home, a striking, impressive galvalume-sided home that brings the cost of modern design into the range of traditional stick-built architecture. While substantially less expensive than a Dwell Home a finished LV Home with site and prep costs (but not including land) can run $150 to $200 a square foot. There is an LV Home here in Sullivan County.