Financing for land improvements??

Started by deertracks(Guest), May 18, 2006, 12:42:57 AM

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We are looking for a financial lending outlet for help with our land/cabin project. We have approx. 2/3 of the capital for our $120,000. project. Plenty of money for land and cabin, but need help with septic and well drilling, which are both unknown amounts at this time. We are hitting road blocks with the owner-builder thing. Sad when you can buy an SUV easiesr than building yourself a nice cabin that will last a lifetime and more!!
Any help would be appreciated.


You could consider any of the following strategies.

a) look for a piece of land that used to have a trailer--with water source, sewer arrangements, electricity--already on it.  Or still has a trailer, at least a place for a travel trailer or motor home.

b) buy land, get water, septic put in, build slowly as you can afford it, preferably while you live there--although that may not be feasible.

c) buy a place from someone who had started getting a homestead in order and now just wanted OUT.

I know people who have done all of the above, both in person and from here.  The person who did c) ended up with a place with a clunky but usually workable micro-hydro system and because the stream has never failed, she also has plenty of good water.  So she has, at least potentially, more off-grid electricty than she could ever use.

I'm in a variation on b)

But seems like there are a few lenders around, might have to go with a very local bank (friend did that to finance his land within the last three years).    

I haven't seen this book, which might be an update of a small book from the late seventies or possibly early eighties which was an inspiration to me.


Thanks for the reply. Those are all good ideas. We actually looked for a place with septic in, water in and maybe a small trailer with the idea of building as you can afford. Unfortunately, where we were looking there were only properties 30 miles or more from jobs. With gas going the way it is this seemed foolish. We'll keep looking for that lender that doesn't despise owner-builders!! Maybe I can use this site as a reference. Most owner-builders really want to do it right... it's just that there have been too many screw ups come before us!!


If I understand you correctly, you can pay for the land and build the cabin but need $ for the well and septic (clearing, grubbing, etc too?).  Can you switch what you can pay for?  Buy the land and pay for septic and/or well and/or site work, and get a construction loan for the actual cabin?  I know on our construction loan there are site costs in the loan, you may have to spread the loan out over all things, and remember, just because they give you a value for items doesn't mean you have to spend it.  You may need to get a larger loan than you need, then spend only what you need and that is what will get turned into a mortgage in the end which could be reduced further by paying down the construction loan prior to conversion to a mortgage.  You may need a licensed contractor to sign off on the project which could cost you some money, even if they do nothing but sign off on it.  Does that make any sense?  If I misunderstood, sorry.


You're right. We should have almost enough to take care of the land and the septic/well, but as you know the septic/well items are a real gamble!!! Not sure how deep the well will have to be. Some in the area are 500 ft. but that's higher up the hill than us. The well alone could vary from $5,000 to $10,000. And the septic could run anywhere from $8,000 to $20,000. Not knowing these things for sure leaves us in an unsure state of what we will have left for the cabin. As you know, every thousand goes a long way in an owner-builder project.
We have looked into construction loans, but they all want a contractor involved. Knowing now what we know, my husband should have invested about a $1,000. and gotten his contractors lic. just to solve the problem.
Any hints on how you went about getting your constr. loan or any info about it.


No contractor for our loan.  We went with a local bank.  Mommymem found them and could answer details better than me.  I know they wanted to give us more than we needed because they didn't think a house could be built for so little in this area.  $20,000 is pretty normal around here for septic (well not this town, but in most of the towns I design them for), it can even go as high as $40,000 and up sometimes.  Get all your ducks in a row with budget numbers, floor plans, site plans, sketches, pictures, whatever you can get, all wrapped up in a nice package..then go see the banks.  If you look like you know what you are doing they are more likely to help.  We knocked the socks off ours, they asked questions, we had answers at our fingertips...they liked that.  FirstDay Cottages helped a lot too.  It felt more like a kit house to the bank; they didn't know it was literally piles of materials just like a stick built home but because another company was involved it made the bank comfortable.  Might be worth looking into, they have a nice 16/18x30 and the 24x32 new cape like ours is a comfortable small family size.


This might be an Idea find a peice of land you can get owner to finance. Give the downpayment make payments on land to owner (just have a lawyer lok at the land contract) > Build your dream home and then get an Equity loan to pay of land and a little extra for the oops we would have lkiked this or that. Loans for construction are had to get and loanss for land are near impossible. Just a thought


Deertracks...when we recently found our land in Colorado, we had good luck with the small local bank.  When you deal with someone in the area, they are familiar with the land and sometimes small banks have more flexibility in the choices they make.  We did not finance a large amount (well less than $50,000) and it was supposed to be for land, utilities and building a cabin.  We got a good interest rate on this building loan.  Like someone said, only paying interests on what we use as we go.  If you have never built before, it is sometimes difficult to get a loaner to go with you. It probably does help to get your "stuff" together and talk knowledgable, or at least fake it.  On one house, we actually did get a friend to sign off as a contractor. He was licensed as a carpenter.  One idea that  was passed along to us, the man we met in Co., is using the building instructor ( we would call him a shop teacher) from the local Jr. College as a consultant.  Only paying him about $250.  The professor is very knowledgable, particularly about the local codes, etc. and is respected. You might explore the possibility of satisfying the loan institution's contractor hang-ups with a "consultant".  Just slinging some possibilities out there.  Nanda


That would work, and I think it's some of what a man I know did when he borrowed money from the local bank for (too much, and it still doesn't stop all the highway noise a mile or so away) his land.

His brother had been a framing contractor, planning on building two little houses.  And he had been living and working in the area for some years.


Thanks for all the ideas. We have tried quite a few of the local banks and they all seem to frown on the owner-builder (without a hired contractor). Our problem is we are not locals there yet. We will be moving to the area and building. We plan to check with our current local area banks, where they know us. The only problem there is that they don't want to finance land on the other side of the state!! It would be simple if the well and septic weren't sooo expensive. Those two items could easily cost more than the 20x36 1.5 story cabin. Where there's a will there's a way!! (And probably a high interest rate that goes with it)


This may help the costs...a little...check out these guys: and their Enviro-Septic leaching system.  You don't have to add aggregate, just a thin layer of sand around the pipes.  They can go on very steep slopes and stack on top of each other depending on your local septic regulations.  I imagine lugging these and the sand into a remote site would be easier and cheaper than the gravel and pipe method and the installation of these is very basic.  The company is out of New Hamsphire where the soils are less than ideal typically so tough sites are their specialty.