Building a House with Cash (documents, mortgage, mortgage, price)
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Has anyone here ever built their own home with cash without any kind of loan whatsoever? I think it should be possible to say, buy a piece of land somewhere and over time build a house from the ground up. Though it may take longer as compared to those that do construction-based loans, at least when the home was finally finished it will be paid for.
I've known some people that have done that and it has paid off for them. Rather than being in bondage by a lender they saved up cash to do it a phase at a time. I have always had a vision for something like this, but I know it can take alot of time and patience to achieve the desired result.
If you had said that you want to save up all the money you need before you start construction I would say "good luck" and wish you well, but since instead you say you want to BUILD PIECEMEAL I have to tell you that this is a recipe for DISASTER on mny levels.
First there is the fact that modern building materials are designed to be in the "construction phase" for a relatively SHORT period of time. The various wood products and especially insulate materials / infiltration barriers will be RUINED in they are not properly sealed in a timely manner.
Second is the fact that partially finished homes are dangerous -- while you are away thieves, kids, wildlife can get in and make a mess or worse. Every year I see a few partially finished homes BURN DOWN when someone tries ro get some improper heating going.
Third the COSTS will skyrocket. Instead of a set period of time being "imposed" upon the various phases any one "subproject" could go on forever, I have seen homes built by people that ought have known better (because they were in the trades or an architect) go completely over budget as various "reworks" are done ro tweak things to perfection. Yes, having csite ut stone is beautiful but every ruined cut means another piece of rubble and on more block closer to a whole new load of VERY costly stone delivered. Masonary is just one example. I have seen guys rewire over and over as they dream up various non- standard plans. I saw a guy that was a builder re-do the piping layout THREE TIMES in his own home. All that wasted copper and labor still had to be paid for. Also had to get RE-INSPECTED which further adds to delays and costs which brings up:
TAXES -- the various "step wise" improvements will get noticed by the assessor who will be sending a tax bill every year, even if the place is NOT HABITABLE, and you MUST PAY the taxes or risk losing the place in a tax sale. Very easy for the assessor to seriously over shoot value for each "sub project" leading to a grossly over assessed complete project that will see you paying enormous taxes...
And don't forget: it may not be LEGAL to have a building permit that is "indefinite" -- I recall MANY towns that have forced DIY builders to wrap things up in a timely manner or stare down the bulldozers -- literally they tear down projects that are not done in a time window that is approved.
Even "ongoing renovations" can be very risky to do. Neighbors will tire of the noise and mess and eventaually you spend more time fighting with them then working to finsih the project.
Please consider the benefits of either saving the whole amount BEFORE getting started OR get enough saved to qualify for a construction loaned to convert to a mortgage but DO NOT get trapped by some neve- ending- project that will suck you dry....
Man
I did it and it worked out fine.Pay for materials and then pay for labor as you go along you will not get stuck.If you are happy with one contractor you may use people he has worked with.I put in foundation waited one month for it to cure moved in 4 months later.
We built several speculative homes and our own home with a small construction loan to insure we had enough to finish the home, then paid off the loans right away. You can do it, but make sure you get the proper inspections and permits. We had clients that got trapped by taking too long to do the construction and had the building codes change on them forcing them to get all new engineered documents and start over to bring the structure up to the new code. Can be very messy and can cost you far more money than a construction loan.
If stevej64 is saying he moved into a poured concrete foundation after four months of curing I would like to know how he got a certificate of occupancy, because where I live the building dept would want to inspect the water, sewer, electric...
Now if instead he is saying that he had all MONEY saved up and ALL his contractors LINED UP so that he moved into a COMPLETED HOUSE in four months from foundation to occupancy then , yeah, that is the WAY TO DO IT, not trying to scratch together one "baby step toward completion" every six months or so for the next three plus years...
Can it be done? Sure. It's done everyday.
But, how it's done is key. The best scenario is an approved plan, a general contractor that sees eye-to-eye with you and, an agreed upon price.
Phase building requires a lot of management skills, and more importantly forward thinking skills- the kind of skills that seasoned general contractors have. Each phase has to have a beginning and ending; but that ending has to be the beginning of the next phase. And some phases may require a total build out, even if there are other phases to follow (like foundations, plumbing waste systems, etc.).
Overall, for the general DIY'er who's thinking of tackling this type of endeavour on there own- don't!
You'll only be throwing good money after bad.
I like Motley's "plan". If you have the cash- great! Make it earn the most possible in the allotted time frame with regular withdrawal capability. Obtain a construction loan- this will "guarantee" a completion. Pay the carry on the monthly installment- Close the loan when you have a C/O in hand.
It's still a "cash" build- but at least you have some "protection" like, if something were to happen to you personally.
Chad
I live on LI I paid cash and moved in 4 months after the foundation had cured for 1 month.You seem to have the problem of not knowing the ins and outs of building.Of course I have every Co from the town from foundation ,framing, water, electric, septic system, etc .I was the GC on my house I have helped 4 other friends do the same thing. No one had a problem.
We did it, build most of it ourselves. We contracted the foundation, sheet rock, roofing, heating and cooling, septic tank, and a few minor other stuff, did the rest of it over the course of a year. The only permit we had to have was for the septic tank (a perk test). The house was there for almost two years before the county found out to add us to the tax rolls.
I have a coworker that purchased a 10 acre lot in Ojai maybe 25 years ago. He built a home on that land by himself and with the help of his wife. It took him 15 years to complete and they lived on a trailor while they built it. That is one amazing home. It is all paid for including the land. Then again he built it as they could afford to build it. So still they bought it on time, just not with any debt. LOL
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