Young couple trying to avoid the rent/mortgage game - advice?

[eddiescabin]

Horizon, to be clear, I think you have awesome goals and ideas.  No matter how far out of reach, it is great to strive for something.  As I stated, having your gf work a few years will help generate much more cash flow and you will not find yourself behind the 8 ball as far as having bought a place, being committed to it, yet unable to develop it due to cash flow or employment responsibilities. You are a step ahead of your contemporaries simply by thinking of such an endeavor and it's ramifications.  Once you and the gf are both working I think you may find the idea of a mortgage is not so horrid. As the housing market turns around (it will, it always has been cyclical) you may find a mortgage opens up opportunities in terms of places you can buy and even properties you can MAKE money on. You may see it more as a forced savings plan, you are paying yourself, earning equity etc.  By building a good credit rating you will enjoy lower cost mortgage terms.  One thing...even with a high credit score you will find it quite difficult, if even possible, to get lender financing on raw land.  Assuming you could find a lender, you will need 25%+ down payment on raw land. The lender may require reserves of 6-12 months.  By getting a loan on an existing home, the lenders mitigate their exposure as they see a home they could resell if need be. There are few home/property owners that did not start out with a mortgage. If you did decide to take on a home loan be sure to get one without a prepayment penalty if you think you will come into some money (as in your gf working) which you can throw at the mortgage.  Another thing to understand is those housing costs you see as unreasonable are at their lowest in many years AND the cost of money (interest rates) are at historic lows, just 15-20 years ago 15 to 20% interest was commonplace.  Given the foreclosures and low interest, there really is no place for them to go but up. As far as relationships/kids etc.  women (and men) who have been with their partners since teen years finally grow into adults at around 27 and realize they have had very limited experience with others/dating others and just break out.  They get bored and feel short changed that they have only been seriously involved  with one person. A woman with a kid that finds herself at this juncture knows she has you by the short hairs With a simple legal action that is 100% predictable, you will have your paycheck cut by a good percentage to pay for her and her new boyfriend to go on vacation under the guise of "child support".  I wasn't saying that you have a low paying job, esp. at 25 years old. But from your numbers it sounds like you make $50k/year. Not bad, but be diligent, dont make commitments that will keep you tied to a job/mortgage/kids...in a few years with the ability to make changes you will be making over $100k.

As for Leoin SA:
"Really?  Over the edge with cynicism aren't you Eddie?  Perhaps our young friend and his lady are more mature than some of us that spew unenlightened opinions on this here forum."

"spew unenlightened opinions"...maybe you have a money tree or the secret recipe of life and you are rollin'...but anytime you want to compare cars/boats/homes that you have paid off, just send verifiable pics...but if your car and your boat weren't $150k+ each, just save your pics because you aren't even in the same realm. I did it by myself by not saddling myself with a wife/kids before I had all my ducks in a row.

[MushCreek]

We did it this way:

We determined a geographic area in which we wanted to live, specifically, withing 20 miles of Greenville, SC. We compared the various counties which this encompassed. We downloaded about 2 dozen properties within in our geographic and monetary range. Drove around all day, and narrowed it down to 2 properties- the only 2 we would have even considered.  We made an offer, and bought the 7 acres we plan to build on. A visit to the county building dept. answered all of our questions pretty quickly. We should have done that before we bought the land, but it all turned out OK. If I had to do it again, I'd have met with them first. SC is very easy; they don't even have plans review. Permits are cheap- $200-$300. Many states follow IBC 2006 or 2009. Some of the codes are available for free on line, some you have to buy/borrow/steal. The first step, then, would be to pick a county and town, visit their building dept., and ask questions. You'll probably find out pretty quickly whether they will be easy to work with. The reason most follow a standard code is because it's about 600 pages, and it's cheaper to adopt an existing one rather than write your own. They will edit it a bit for local conditions- hurricanes, earthquakes, or whatever.

[h0rizon]

$22k for about 500sf cabin would be perfect.  I would love to do solar/water collection eventually, but it would be easier to hook into utility to start.  If done right, I could build solar later on and maybe even sell back the electricity.  And I must say, very nice job, Don!  I'll be sure to read your thread thoroughly and take notes :-)

Eddie, thanks for the words of encouragement.  I completely understand where you are coming from, and I do need to proceed cautiously in my relationship.  I would get married before having kids, and she's already agreed to some sort of prenuptial.  I'll do what I can to protect myself from that situation.  And the job/mortgage/kids commitment - that's sort of what I'm looking to avoid.  Having a job is a given, but without a rent/mortgage over my head, I would have more freedom there.  I do want to live life to the fullest, not grind my way through it because I have to.

I suppose that if worse came to worse, I could buy the land outright.  That would certainly put me behind schedule a couple years though.  I have to approach this purchase with caution.

As for the kids timeline - personally I would wait until 30.  We'll have to have a serious discussion about that.  I know I don't want to wait too long though.  My parents had me waaay to late - my father is in his late 60's and is wheelchair-bound in a nursing home.  He will not be able to attend my wedding, help me build my house, and my not even get to know his grandchildren.  The GF's grandparents are the same age as my father and have great-grandchilden.  Her family is the start-em-young type:  I don't think anyone in her family had their first kids when they were older than 23, other than her and her sister.  I'm sure there is middle ground here.

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So here is my revised gameplan: we'll call this rev 1.1 

        1.  Downsize apartments.  Live in a hole-in-the-wall if I have to.  Pocket the savings. 
            1.1 Cut unnecessary services.  Time warner is sucking $160/mo out of my pocket.  I can find alternatives here.  Gym is $35/mo, i'll just do jumping jacks in the parking lot instead.  Ramen noodles, here I come.
       
        2.  Find a good buyer agent.  Let him/her know that I'm looking for either land or dirt-cheap, fix-it-up housing options.  Aim for something with septic/water/electric utilities already on site.  Take my time and see what's available.  Don't buy until I complete step 3.

        3.  Get in touch with local building officials in my target areas.  Get a feel for them and ask about owner-builder options.  Find out what codes they are really strict about.  Browse through the IBC 2006/2009.  Understand what permits are required and what they cost.

        4.  Contact my FHC (First home club) rep.  I'm enrolled in a FHC that provides a $7500 grant (0% loan forgivable after 5 years) for a first home purchase.  They frown on new construction, but maybe I can find a loophole here (I sort of discounted this because I doubt they would provide the grant for this, but who knows).  The FHC might help with getting that land loan - banks tend to look favorably on FHC members.

        5.  Browse local scrapyards/salvage yards to see what might be available.  Maybe pick stuff up if I find a real bargain and store it in my parent's garage.  Let the salvage materials help drive the floor plan.

        6.  Find/make a really good, pay-as-you-go floor plan.  One that I can add rooms on one at a time without rebuilding/hassle.  Pick a foundation type (she wants a basement - I'm fighting this)

        7.  My parents have a pop-up trailer.  It's been sitting for 5 years and might be rotted out.  But it might be worth putting money into to live in during the summer if it saves rent. 
 
        8. Get a beater pickup truck.  I'll need one.

How does this look?

[MushCreek]

About used building materials- they may not be code, either, so find that out first before amassing a pile of old windows you can't use. I think structural materials may be iffy, and non-insulated windows. You don't find much energy efficient stuff in junkyards yet. I hate to keep sounding negative about building codes, but they are a fact of life in most places, and it's not like you have a choice. They are good in general, but have a lot of fussy stuff that's not necessarily practical.

If your area has it, GIS is a strong tool for property shopping. Greenville County SC has a great GIS site, and you can look at a number of different things about any property you think you might want to buy. Topography, flood zones, soil types, zoning, crime statistics, all sorts of stuff. You enter in the parcel number, and it goes to an aerial photo, with all of the above info. You can also zoom out to see what's around your area. I would google your county plus GIS to see if they have one. If you want a sample, go to gcgis.org to see what the Greenville one has to offer.

I like your game plan. Expect to change it as time goes on. If the land you buy is sloping, a walk-out basement is cheap square footage. Current building practices have made dry basements a reality under normal conditions. If you build in a swamp, well, expect trouble. Our property is ideal for a walk-out basement, which is fine by me. Basements are (relatively) warm in the winter, and cool in the summer. My current thought is to go with a partial basement, under the main house, with wings on either side on crawl space or piers. Neither wing has plumbing, so access isn't a deal-breaker.

Okay- I'll shut up for a few minutes and let you digest all this. Can you tell I've done a LOT of research in the last 3 years?

[MountainDon]

More on... used building materials and codes....

As mushcreek stated codes are a fact of life and difficult to get away from. The more dense the population the more difficult to get around the code minefield.

Mushcreek mentioned and possible problems with meeting code...  Assuming you are to build in a code enforced area, windows and skylights must meet U-Factor and, where applicable, Solar Heat Gain Coefficient (SHGC) requirements based on climate zone. U-factor measures heat transfer. SHGC measures heat gain entering the space through the window to the incident solar radiation.

There is a handy little program called RESchek available for download HERE. Wall dimensions, floor type, types of building materials (even logs) is entered. The insulation types, the values for the windows, all that stuff is entered. The program checks to see if your combinations will meet the energy codes for your state. It allows trading more or larger windows for more insulation somewhere else. My state not only accepts the print out from RESchek to verify that the proposed building will pass, it is mandatory (at least in my county).

I'd venture to guess that any window being sold as used will not meet current regulations. One can find new, never installed, windows that came in the wrong size or whatever on Craigslist and even at your local home center. Those can be bargains if the size, style, etc. suits your plan.

Each new window comes with a factory label that states the U-factor and the SHGC numbers for that particular window. Most building codes are likely similar to the NM in that those factory labels must be left on the installed windows until the inspector passes that part of the inspection. That's where a used window can get you in trouble.

[cbc58]

geesh... even i didn't know that about windows.  what's next?? they going to dictate what type of toilet seats we can use??   while i'm sure it has to do with energy efficiency... does that include what you put into your camp/rural cabin? 

[MountainDon]

Here in NM, even if it is a seasonal use cabin, if there are permits, etc. involved, the building has to pass the RESchek.

I imagine if a local area has no inspections, then one might be free to do whatever they want. But it would be best to ask ahead of time. More than likely if building under a 200 or 120 sq ft special rule one might be exempt.

[NM_Shooter]

Start a spreadsheet and monitor your costs. 

Consider a trailer instead of a pickup truck.  No insurance / low maintenance. 

Hey... for #4, does a mobile home qualify?   If you find the right property, buy the smallest, oldest mobile home you can find.  Build your house while living in the mobile.  Once the house is livable, sell off the mobile. 

[OkieJohn2]

Sounds like a well thought out plan. 
In addition to banks, have you checked out credit unions?
Here in Oklahoma, it is usually pretty easy to find a small acerage with either an older home or a well used mobile home with either Rural water or a well and septic already in place.  At times a property with an old, as-is house sells for less then raw land.  Most people will consider the cost of removing old structures as a negative factor when considering price.
You might also want to research wood basements.  Lots of plusses for the owner builder. I believe the Southern Yellow Pine council has a very good PDF guide available online.

[h0rizon]

Shoot, I was hoping to save $$ on those windows.  But considering how drafty they can get, I suppose a REScheck would save me in the long run anyway.

I'm very anal about money, so I would definitely track every penny I spent on housing construction in my accounting software.  But if I tracked it in excel, I could post it here for everyone to view - I'm sure information like that would come in handy for someone!

Great suggestion with the trailer!  My car is rated for a 1 1/4 hitch and 1500 lbs towing, so If i keep the trailer+materials down to 1000lbs I should be good.  That would def. help save some money and should be good enough for the majority of the hauling i would need.

My CC/Car loan is through a federal credit union.  My FHC is through a local but good bank.  I'm hoping one of the two would provide the loan, but who knows in this market?  And i'm sure the FHC would cover a mobile home - but I have to repay a portion of the loan if I moved/sold the place.  But I might find a loophole there too.  Or I could rent it out 

I don't think I could squeeze my butt into a 120 sqft cabin :-)  But they have some really nice ones at http://tinyhouseblog.com/.  Some are on trailers - I wonder if I could build one under 1500lbs and haul it with a 4-banger :-)

I've never heard of a wood basement before... i'll add that to my list of things to look into :-)  And a walk-out basement is on my list too, I'll need to find out more about cost.  I heard it can run upwards of $60/ft finished. 

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Thank you, thank you, thank you to all of you for your ideas, suggestions and support!  I'm going to spend some time digging around the forums here for more ideas, and I will also be spending time the next few weeks apartment hunting.  I'll probably then dig around for a really good buyer agent around middle of June and also start formulating some floor plans for different constructions types.

I'll definitely keep you guys posted on progress, and I'll keep checking back for new postings (feel free to keep adding!).  For now, I think I have a lot to think about/look into/do in the next 2 months.  I'll post back (maybe new threads) when I have more specific questions.

[umtallguy]

Well one thing you need to consider is moving while you are young and only one of you is employeed.

NY is one of the more expensive areas to live, especially for taxes

[Onkeludo2]

Horizon:

ANY accounting software will export to Excel or at least a .csv file that can be opened in Excel.  Track your cost in what makes you comfortable.  Of course, you can also use free .pdf  making software (pdf995 is my favorite) to print to .pdf and post those.

I second the Craigslist/Lowes/HD/Local building center mis-orders for doors and windows.  Custom ordered windows that are non-standard sizes will not go back to the manufacturer for restock so they have to sold by the ordering company for whatever they can get for them.

Mike

[PFunk_Spock]

Horizon,

You and I are very alike. I turn 25 in a couple weeks, and Ive been saving for a house myself, albeit only starting recently. Its amazing how quickly the money can really add up once you set your mind to something. Just this year Ive been able to put away 6k in four months.

I even have a girlfriend of 6 years myself. We both want to buy a piece of property and build for ourselves. However, were both avid skiers/boarders and have been looking in mountain towns. That means higher costs up front, but nothing will beat living mortgage free 5 minutes from a ski lift in my mind. Were pretty dead set on an a-frame. Check em out. By far the cheapest to build of any stick built structure, and it could be a decent option to get as much square footage as possible without squeezing into a square box. We like different. You can actually have multiple floors this way allowing you some space to yourself when you need it. There are some great low cost plans out there on a couple university sites. A simple google search should bring them right up.

That being said, Id worry about the marriage thing and get the whole kids part out of the picture for the time being. Your 25, shit changes in 5 years. What if you lose your job? What if you need to move for some odd reason? What if the house takes longer to build? Youre not even married yet, relax a bit before you have to much on your plate.

Were looking in the Bethel Maine to Franconia NH region of the northern White Mountains. Originally planning on North Conway, but in reality its much to expensive.

Going back to the a-frame. While its a funky design, and you do lose some square footage, your costs are much lower than traditional stick built structures. Windows are minimal, the roof acts as the sides of the building. You can save alot of money towards running water, flushing toilets, and an electric hookup compared to other designs.

[PFunk_Spock]

Heres a couple plans I found in about 30 seconds.

http://www.houseplansfree.net/a-frame-house-plans.html