What do you think about buying a lot and building the home later? (Plano: how much, custom home) - Dallas - Texas (TX) - City-Data Forum

vanilla123 · 08-20-2012, 01:22 PM

We have been advised against it from some family members, but mostly because I don't think any of them have done this before. We would like to build a home in Southlake, however we just started working and will need to save some money for the downpayment/fees the builders need. However, we want to secure our spot in a subdivision. We were thinking of buying and paying for the lot now and then in a few years starting the new build on it. We thought this way we can save our spot and also take our time with the build unlike buying from a builder where they want you to start ASAP. What do you think?

Rakin · 08-20-2012, 01:27 PM

I doubt many builders or developers will sell you just a lot in SL. Those things go for a premium and very hard to come by. Have you shopped for a lot ?

Most builders will save their lots to sell to people who want to build now.

jennifw · 08-20-2012, 01:36 PM

In my experience, you have a short time frame to start building. (6 months or less)

ggolf · 08-20-2012, 01:48 PM

If it's a subdivision, probably no way you can secure a lot. I tried it several times when I saw a lot I liked, but if the builder is able to sell it NOW and make a profit on the lot and the house NOW (and finish the subdivision and get on to their next development) they will prefer to do that. The only places I've seen a developer do what you want is in the country subdivisions, like Possum Kingdom Lake, Lake Texoma, 7R Ranch, and maybe some golf course lots where they are having trouble selling anything. Their ads will say "you can select your lot now with no pressure to build". In SL, doubt you could find that.

Another thing you said is "we just started working". If you need a mortgage, the requirements have tightened considerably and I assume time on job is one of them. My suggestion is to take your time. In a few years, guess what? There will still be lots, new houses, and resales available that you will love.

Good luck! Be patient, you'll find something you'll like.

txtoal · 08-20-2012, 03:15 PM

Where I live currently, alot of people buy lots, build later but I am in a more rural area now. There isn't as much demand for houses so the homeowners have more leeway such as waiting to build, etc. However when I lived in Southlake, my parents had to start building/framing right away, like within 90 days from what I recall. We were "homeless" for about 9 months until the house was finished since our other house sold immediately and had to live with the grandparents. That was loads of fun. Anyway, as the previous poster mentioned, unfortunately no, I highly doubt you would be able to do that in Southlake.

vanilla123 · 08-20-2012, 04:48 PM

But if we were able to find a lot in Southlake that allowed us to buy and wait on the build, do you think it would be worth it in the long run?

We have both been working for 5 years or so, but his income just took a big jump. Most places have asked for 2 months worth of paychecks but we don't have that yet.

As for waiting a few years to start picking the lot and building right away, we are afraid that the prices will increase again. This way we were thinking we could lock in the price. It's usually the land price that goes up not the actual builder's price to build, correct?

TurtleCreek80 · 08-20-2012, 05:19 PM

Quote:

Originally Posted by vanilla123

It's usually the land price that goes up not the actual builder's price to build, correct?

You're thinking along the right lines (land can increase in value while a physical structure depreciates), but not applying it well to your situation.

I just did a quick random search on Tarrant CAD and of the 5 Southlake homes I pulled up (all valued in the $500-700k range), the lot value was assessed at between $90-120k and the physical house made up the rest. How much are the lots in the sub-div you're considering? Even if a $100k lot increases in price/value by 30%, you'd probably still be able to afford the $500k home that in 3 years would be worth $530k. $30k isn't much when you're talking custom homes in SL! The land value is such a small part of the purchase that you can likely afford to wait until you can afford to build.

What will go up between now and a few years from now is the cost to build - raw materials increase in value, labor becomes more expensive, etc. A home that cost $90/SF to build 10 years ago may cost $100-120/SF now, or more. That adds $40-120k to a 4,000 home.

Now, hopefully over time the land values do go up, but FWIW the SL homes I spot-checked have not seen an increase in land value over the last 5 years. There is so much land available in the outer burbs that you won't really see good land value appreciation till its nearly completely built out (like W Plano, Park Cities, Coppell, etc).

MckinneyOwnr · 08-20-2012, 05:32 PM

We are doing this, but not in the DFW area. We bought some beachfront property in Brazil in anticipation of land prices increased dramatically over the next 10 years. The house we want to build would sell for about $400-500k, building it would cost about $250-300k. We can't afford to do either now, but we could buy the land itself, so that's what we did.

I doubt you'd have much luck doing this in the suburbs for the reasons people have stated... No one wants to have a vacant lot next to their house for years on end.

Rakin · 08-20-2012, 05:51 PM

To answer your question.... Southlake is one of the biggest demand areas in DFW. If you can find a lot in the Carroll ISD it would possibly be a great investment. I would think you will probably spend $150-200k for a good lot.

MurphyPl1 · 08-20-2012, 10:13 PM

Quote:

Originally Posted by vanilla123

But if we were able to find a lot in Southlake that allowed us to buy and wait on the build, do you think it would be worth it in the long run?

We have both been working for 5 years or so, but his income just took a big jump. Most places have asked for 2 months worth of paychecks but we don't have that yet.

As for waiting a few years to start picking the lot and building right away, we are afraid that the prices will increase again. This way we were thinking we could lock in the price. It's usually the land price that goes up not the actual builder's price to build, correct?

No, they both go up. The builder will absolutely sell the exact same model for $20K more in a new phase if he can get someone to pay it. Regardless of the land cost.