Buying Land To Build A Vacation Home
The best way to turn your vacation home plans into reality is to get off on the right foot. The key lies in identifying advantages and disadvantages of a particular piece of land right from the start. There are literally hundreds of factors that can affect the value of any given lot, but what's most important is what is valuable to you.
There are many things to look for to weed out the poor choices from the practical. Site considerations, material availability, accessibility, cost, frontage, septic designs or sewer connections, private or public water supplies, access to electricity, wetlands, building codes, deed restrictions, zoning requirements, lot size and shape, obtaining clear title, market values vs. actual values. All of these have to be taken into consideration to avoid problems later on in the building process.
Working with a Realtor can remove a lot of the burden. They know property values in specific areas. They often know of potential or existing problems. They'll have a copy of the deed, property disclosures, plot plans, any available septic information, or wetland laws and regulations. They can usually provide you with zoning information and laws. And they know first when the type of property you're looking for comes onto the market.
Before you begin your search
The first thing to do before you start looking for the right property for your vacation home is to look into the financing. Most banks do not like to provide loans strictly on land purchases, so you have 4 basic options:
- Buy the land with cash
- Refinance your first home with a "cash-out refi"
- Obtain a construction loan when purchasing the land
- Work with a builder who provides a building package
If you buy the land with cash you've saved, you can usually use the land as a downpayment on a construction loan. This is a great option if you plan to hold onto the property, perhaps camping on it, or preparing the home site, and allowing the property to gain equity while you save to get started. A vacation home can be a small cabin or a luxurious getaway with all the amenities of your primary home.
Refinancing your primary home with a "cash-out" option also provides another option to purchase the land you want that falls within your budget. If you have a lot of equity in your primary home, this is a quick way to get cash for your vacation land. This is an excellent option if you know you can afford a higher mortgage, and the area where you'd like to buy is "hot". Trying to save the cash first is pointless if it takes 5 years and the land value doubles during that time. The second home market is appreciating at a much higher rate than residential properties. CNN and Money Magazine's article, Have you bought your second home? illustrates this phenomenon quite clearly. It may be a short term fad, or it may be just the beginning of a long-term trend. No one can tell for certain.
You can usually get a mortgage for land if you obtain a construction loan. This means you'll either have to hire a contractor, or be a licensed contractor (or have a close friend or relative who's a licensed contractor in the state you plan to build). These loans generally come with a variable rate that can be converted to a fixed rate once the project is completed. But there are many options available in the highly competitive mortgage market as of this writing. And banks are now beginning to cater to the second home market due to its booming expansion.
Many developers work specifically within the second home market. In these instances, they'll often provide the financing directly or through a local bank. All you have to do is pick out the lot you want and can afford, customize to your tastes within the building restrictions, and be able to qualify for and make the payments.
Finding vacation lots
Again, here's another chore that's accomplished much easier when working with a Realtor. Pick one agent, and as long as you're satisfied with the work their doing and the advice they're giving you, stick with that agent. Going to several agents at the same time will get you marginal results. They only earn income if they make the sale, and they'll work hardest for buyers that are working exclusively with them. Real estate agents in a given area usually know each other very well, and when they learn that "their" buyer is also working with other agents, they'll generally put you at the bottom of their list—you'll be the last to know when a great property comes to market. Since most second homes are a 1-2 hour drive or more from the primary residence, it's most helpful to be at the top of the list.
The first thing to determine is your greatest interest. Love the ocean? Lakes? Mountains? Swimming? Skiing? Hiking? Hunting? Fishing? Resort lifestyle? The primary reason for buying a vacation home for the vast majority of owners is for personal use and enjoyment. While many do rent their homes out for additional income or to help pay the mortgage, and some buy strictly as an investment, buying with your own interests at the forefront makes your second home more valuable to you, and to your family and friends.
Features of the land
Here are the basic things to look for when buying a piece of land for a vacation home. Although you may not be able to find property with all of the most desirable elements, the more you meet, the less costly it will be to build, and you'll run into less problems.
- Look for an area that has fun and attractions during your favorite seasons. Many vacation hotspots are 4-season destination areas. Swimming, boating, hiking, golf and more during the summer. Skiing and snowmobiling in winter. Scenic foliage, festivals and hikes in the fall. Fishing, hiking and sales during the spring.
- Make sure the land is not in a flood plain. You can usually find this information at the local town hall or office. They'll have maps that will show potential flood areas by "50 year storm" or "100 year storm" that delineate the areas that flooded during the worst storms during a given period. You'll want to build outside of that area, and perhaps 20 feet higher in elevation to avoid loss or substantial damage, and to avoid the cost of flood insurance. If it's not possible, there are other options such as stilt or pedestal homes.
- One thing to look for is the presence of hummocks. These are small mounds at the base of trees, and often, the roots will be exposed, or even lifting the base of the tree out of the ground. In many regions, this is an indication of a wetland area.
- Make sure you have enough road frontage to insure the privacy you need.
- Look for property that's higher in elevation than the road to access it. This will avoid runoff problems that are increased by channeling water, particularly on paved roads. Most roads are designed to be as level as practicable. The top of a hill may have a road cut, where the road is considerably lower than the surrounding land. Further down, the road may be built up with that excess material to avoid flooding. However, this channels more water than normal, and absorbs none of it. The result will be greater runoff than normal where the road is higher than the surrounding land.
- Land that's at the lowest point between two hills will often be wet, and difficult to provide a proper septic system.
- Generally, land with a south-facing slope is more desirable than land facing north, (unless you're in the southern hemisphere). In the US, the further north, the more important this becomes. In winter months, the northern side of the mountain will receive less sunlight, raising both heating and lighting costs. It'll also take longer for the ground to warm up, shortening the most popular vacation seasons. During summer months, prevailing winds for much of the country change from the northwest to the southwest providing a cool breeze during the hottest times of the summer.
- Ledge and large boulders can add to initial excavation costs, prevent you from having a basement, and make it more difficult to install a septic system (most rural areas don't have public water and sewer facilities).
- Does it have a view? Many land parcels and building lots are wooded. You may only see potential views when the leaves are off the trees. One of the best times to search for land is during the spring. This is when water levels are at their highest, the leaves are off the trees, and the roads are at their worst—the perfect time to identify advantages and potential problems firsthand.
Surrounding homes
When you build a vacation home, you usually expect to sell it as one. If you buy property in a residential subdivision, once it's built up, you'll lose that atmosphere. Check on zoning laws to make sure that you'll still have your privacy. You'll want to be some distance away from commercial or industrial zoned areas. Look at the surrounding homes that are already in place. If they're similar to the type of home you'd like to build, you're probably in the right place. If there's hiking, streams, a river, beaches, or mountains nearby, that will add to the value of your home as a vacation home. The more amenities, the better.
Vacation home developments usually help raise the value of your home. Most will have a common beach or pool. They may have tennis courts, golf, hiking trails, cross-country or downhill ski trails, or even snowmobile and ATV trails. Depending on your idyllic setting, these may be amenities or nuisances. But you'll want to know about them so you can either plan your home around or away from them.
Many vacation homes are on larger parcels-a private retreat, off the beaten path. But usually they're within a short drive of local attractions, dining, shopping and fun. Or, they're meant to be out in the wilderness for hunting, fishing or just that feeling of adventure.
Whatever your plans are, we hope you'll bookmark this site and return often to find articles, information, furniture, sporting goods and more to make your vacations memorable and your investments worthwhile. Every day this site will be adding something new. Visit our growing directory and find an agent that will work well for you.
US Vacation Real Estate Directory
Buying
Many states now have real estate agents that will represent you, while the selling agent represents the seller. You can have your own agent working in your interest.
A full time real estate agent in a vacation area knows what's on the market and what's new every day. If you've always wanted your own getaway in your favorite destination, click on the state of your choice and find a Realtor who'll work for you.
Selling
When selling your vacation property, one of the most important features in this market is the Real Estate agency's web presence. Most vacation properties nowadays are first located on the internet.
We hand pick most of the companies and invite them to list on our site. Through the links below, you'll generally find real estate companies with extensive internet marketing networks.
