Thoughts on buying a lot to build on years later?

[BRU]

Thinking about buying a lot in Austin, TX to build a home on 5 - 10 years from now. It's in a part of town that's already heavily developed. Almost an acre, which is plenty for our needs. I would expect to have the lot paid off by the time we're ready to build.

I've read that it's generally not the best investment, considering property taxes and potential maintenance expenses, but with this being one of the worst housing markets that we've seen in a long time, there are some good deals out there. Also, interest rates are still ridiculously low.

Anyone gone this route? Advice? Things to watch out for? I don't have too many details on the lot or neighborhood. One big concern I have is whether HOA dues would be due during the period there is no structure on the home. That seems like a deal breaker to me.

[oahuyahoo]

Land loans are interest only loans and are usually for short periods, three years usually. The only way to pay it off is to throw large sums of cash at it. So expect to refi at least once in this 5 year period. If you are ready for this by all means go for it, as they say location, location, location. I can't answer the HOA question but I'm sure they will want it maintained.

[Bill]

You ready to mow that acre lot once a week for most of the year, for years and years to come? Ready to haul off the trash people will inevitably dump on your lot? Are there trees on the perimeter of the lot? If those trees die, you are responsible for cutting them down, lest they damage property on an adjoining lot, which you would then personally be responsible for.


You might be able to fence it off to keep people from dumping, but then again, maybe not considering there is a HOA. Fencing the entire perimeter is most probably against HOA rules, since that wouldn't be aesthetically pleasing.

Taxes, grass cutting and cleaning up illegal dumping are going to be your big cost items, although you might also consider a liability insurance policy, in case someone trespasses on your (probably non-fenced) land and hurts themselves, maybe by stepping in a hole and breaking their ankle or something.

[Punk Boy]

when my parents bought there lot in a neighborhood there was a stipulation in the contract that they had to build within a certain period of time or the builder would then force the sale back to the builder.....and i'm pretty sure it was 6-12 months from the sale of the lot that you had to start construction.

[Kerrmudgeon]

I bought my lake front cabin on a big lot 25 years ago with the intention of building my retirement home there, for 50K! And I'll be doing just that in the next year or so! It makes sense.
:thumbs:

[bangbgc6]

Just an analogous story about my brothers friend who had the same idea outside of Albequerque, NM. About 15 years before he retired he bought a lot off of Int 40 on the way up to Sandia Peak.

He worked and saved, built himself a nice house, drilled a well. When he finally started living there full time he found that many, many others had the same idea. The well he had wouldn't produce at a regular rate anymore because of all of the others who had moved into the area subsequent to his purchase and construction the water table was not sufficient for so many households.

He had tried for a deeper well but it didn't improve the situation. He has now had to install a large storage tank and now has to buy his water and have it trucked in.

Austin is a fantastic area! Good luck.:yesnod:

[Petew1971]

Buy some property in Detroit..then put a strip club on it

[LATB]

Thinking about buying a lot in Austin, TX to build a home on 5 - 10 years from now. It's in a part of town that's already heavily developed. Almost an acre, which is plenty for our needs. I would expect to have the lot paid off by the time we're ready to build.

I've read that it's generally not the best investment, considering property taxes and potential maintenance expenses, but with this being one of the worst housing markets that we've seen in a long time, there are some good deals out there. Also, interest rates are still ridiculously low.

Anyone gone this route? Advice? Things to watch out for? I don't have too many details on the lot or neighborhood. One big concern I have is whether HOA dues would be due during the period there is no structure on the home. That seems like a deal breaker to me.

In most cases you will be required to pay HOA assessment dues even with a vacant lot.

When a developer subdivides property, the HOA is established and fees are assessed. HOA fees are based on each lot not the improved property.

I have owned literally dozens of vacant residential lots. Most in subdivisions with HOA costs. It's always been a good investment for me, only once I did not see positive equity.

I built on many of the lots for myself and others.

You also will be required to pay property taxes on the vacant lot.

I LOVE land. It is easy to buy and easy to own. However, it rarely throws off income. And you need to be prepared to carry the costs each year.

Also, on occasion...I have got hit with a big assessment from the city/county...like the property I still hold on Marco Island...the city came through with new water & sewer lines at a cost over 20K for my lot.

If you have to finance the lot purchase...it may not be the best investment for you. And in todays mortgage market...you will probably need 30-50% down to get a lot loan.

If you are paying interest...and HOA fees...and property taxes...you could get upside down quickly on the investment vs value in the current market. Unless you outright steal the lot on the front end.

What is the asking price of the lot? Are the roads private or county/city owned? Utilities? Cost of water & sewer taps? Build out time?

[BRU]

We drove out and looked at the lot in question last night. While it was decent, it wasn't our ideal location (not the best views, etc.). Definitely not worth all the hassle involved, so we decided to skip it for now. Thanks for all the information! :cheers: