Land buying & Build

[Esther Kamga]

Hi - I’m interested in purchasing land and then build and use for rental. What are the pros and con? How do I approach it in a financially smart way?

I’m currently in a new home myself but I’m delinquent with my mortgage due to the huge layoff impact last year. Will this affect my chances of finding lenders? If I’m able to get a source of income (🤞🏾) will I still need to have 2yr minimum work history to get money to buy both land and build?

I’m fine with buying land first if approved for a land loan. My spouse is the only one with an income and he’s military. But I also know it might be a risk throwing something like this on him. Any thoughts?

[Deborah Pyburn]

Hi Esther! My in-laws live in Hope Mills and college bestie lived down the street from Bragg. There’s nothing wrong with your plan even with the delinquencies, it may just take you a little longer than you would like. The land purchase you could acquire out of pocket. Look into “land banks” and tax deed auctions for the areas you’re considering. You’ll spend more on surveys, permits, and building which is where you’ll need the financing or to pay directly over time. I’d be happy to discuss more with you whenever you’d like. 

[James Mc Ree]

Focus on bringing your current debt current. Being delinquent on your mortgage tells lenders you can't handle the debt you have now.

Next, get an income and build savings. Buying land and building anything can be a great thing, but it is expensive and you aren't going to get 100% financing. This approach is probably your most expensive path.

Consider buying existing homes and possibly renovating them if you want to be a landlord. Your investment can be a lot less and you will be much closer to rental income.

[Esther Kamga]

Quote from @Deborah Pyburn:

Hi Esther! My in-laws live in Hope Mills and college bestie lived down the street from Bragg. There’s nothing wrong with your plan even with the delinquencies, it may just take you a little longer than you would like. The land purchase you could acquire out of pocket. Look into “land banks” and tax deed auctions for the areas you’re considering. You’ll spend more on surveys, permits, and building which is where you’ll need the financing or to pay directly over time. I’d be happy to discuss more with you whenever you’d like. 

Hi Deborah! Just read your suggestion and it sounds interesting. Your suggestion if I understand correctly after googling the terms, is too look into county owned properties or lots? Tax Deed auctions look like the homes that belong to the the county. How much are the bids for those types of home? As for the land banks I can see the the bid amount on the county website. But I think im worried about whether or not I can get my deposit money back if someone else bids more than I have.

I know a little about permit expedition, if that can help me save money. 

My Main question is - How can I acquire land out of pocket. 

Right now our case is under review with the underwriters and we’re waiting to hear back on how much we can pay monthly to help us get back on track. 

[Esther Kamga]

Quote from @James Mc Ree:

Focus on bringing your current debt current. Being delinquent on your mortgage tells lenders you can't handle the debt you have now.

Next, get an income and build savings. Buying land and building anything can be a great thing, but it is expensive and you aren't going to get 100% financing. This approach is probably your most expensive path.

Consider buying existing homes and possibly renovating them if you want to be a landlord. Your investment can be a lot less and you will be much closer to rental income.

Hi James! Thank you for your feedback. I’ve looked into home purchasing but most of them are expensive (the ones that can be fixed with under 10k). Homes under a 100k need a lot more fixing.

That’s what had me look into buying land and building. I do know that if I get approved for a land loan and am not able to build I won’t be getting any income. I will just be adding an extra loan which is what worries me a bit.

I’m looking for away we can start small and grow as we continue. I worry about the interest rates and the price of homes increasing by the time I’ve built income. We’re young home owners and with the way the market is looking we might not be able to afford another home if we wait. 

Or maybe I’m over thinking…

[Deborah Pyburn]

Quote from @Esther Kamga:

Quote from @Deborah Pyburn:

Hi Esther! My in-laws live in Hope Mills and college bestie lived down the street from Bragg. There’s nothing wrong with your plan even with the delinquencies, it may just take you a little longer than you would like. The land purchase you could acquire out of pocket. Look into “land banks” and tax deed auctions for the areas you’re considering. You’ll spend more on surveys, permits, and building which is where you’ll need the financing or to pay directly over time. I’d be happy to discuss more with you whenever you’d like. 

Hi Deborah! Just read your suggestion and it sounds interesting. Your suggestion if I understand correctly after googling the terms, is too look into county owned properties or lots? Tax Deed auctions look like the homes that belong to the the county. How much are the bids for those types of home? As for the land banks I can see the the bid amount on the county website. But I think im worried about whether or not I can get my deposit money back if someone else bids more than I have.

I know a little about permit expedition, if that can help me save money. 

My Main question is - How can I acquire land out of pocket. 

Right now our case is under review with the underwriters and we’re waiting to hear back on how much we can pay monthly to help us get back on track. 

I haven’t researched the local NC land banks but I know the ones in GA are more of an “application” process. They don’t have a multiple bid system. They want to know your plans on how to develop and revitalize the property. Sometimes they’ll ask for contractor info and proposed construction plans. You buy the dirt outright and develop on your own dime (direct financing, construction loans, HML, etc).  Vacant lots can go for as little as $5000 - $7500 and are usually between other houses so you at least know utilities should be on or near your site. 

And to be clear tax deeds is COMPLETELY different than land banks. Land banks, the city actually owns the property and can transfer it to you after the application process I mentioned above. Direct dealing with the Landbank Authority for that jurisdiction. Anything related to tax deeds deals with paying back taxes, potentially involves bidding against other investors, and had some delays in acquiring clear title to the property. 

[Esther Kamga]

Quote from @Deborah Pyburn:

Quote from @Esther Kamga:

Quote from @Deborah Pyburn:

Hi Esther! My in-laws live in Hope Mills and college bestie lived down the street from Bragg. There’s nothing wrong with your plan even with the delinquencies, it may just take you a little longer than you would like. The land purchase you could acquire out of pocket. Look into “land banks” and tax deed auctions for the areas you’re considering. You’ll spend more on surveys, permits, and building which is where you’ll need the financing or to pay directly over time. I’d be happy to discuss more with you whenever you’d like. 

Hi Deborah! Just read your suggestion and it sounds interesting. Your suggestion if I understand correctly after googling the terms, is too look into county owned properties or lots? Tax Deed auctions look like the homes that belong to the the county. How much are the bids for those types of home? As for the land banks I can see the the bid amount on the county website. But I think im worried about whether or not I can get my deposit money back if someone else bids more than I have.

I know a little about permit expedition, if that can help me save money. 

My Main question is - How can I acquire land out of pocket. 

Right now our case is under review with the underwriters and we’re waiting to hear back on how much we can pay monthly to help us get back on track. 

I haven’t researched the local NC land banks but I know the ones in GA are more of an “application” process. They don’t have a multiple bid system. They want to know your plans on how to develop and revitalize the property. Sometimes they’ll ask for contractor info and proposed construction plans. You buy the dirt outright and develop on your own dime (direct financing, construction loans, HML, etc).  Vacant lots can go for as little as $5000 - $7500 and are usually between other houses so you at least know utilities should be on or near your site. 

And to be clear tax deeds is COMPLETELY different than land banks. Land banks, the city actually owns the property and can transfer it to you after the application process I mentioned above. Direct dealing with the Landbank Authority for that jurisdiction. Anything related to tax deeds deals with paying back taxes, potentially involves bidding against other investors, and had some delays in acquiring clear title to the property. 

Hi- Land banks through the city seem safer. I’ll reach out to my city and see how they go about selling the lands. 

[Mike H.]

If you have a 30 day late on your mortgage, it will take some time for that to clear up a bit. Some lenders won't touch you for a year even. If it becomes a 90 day, I think you'll be stuck.

But here's the thing.  If you're late on your mortgage, why do you want to invest in new construction for a rental? You don't have the money to even consider something like that right now.  If you can't pay your mortgage payments then you must not have anything in savings. And nobody is going to lend on a new construction loan to someone thats never done it before and doesn't have at least 20 to 25% to put down. 

Once you get your new job, fix your mortgage issue and then work on saving some money. As an investor, your credit is  absolutely the most important tool you have.  You can't let your mortgage payments be late no matter what it takes.  If you get dinged with being 90 days late, you might not be able to invest at all.

[Esther Kamga]

Quote from @Mike H.:

If you have a 30 day late on your mortgage, it will take some time for that to clear up a bit. Some lenders won't touch you for a year even. If it becomes a 90 day, I think you'll be stuck.

But here's the thing.  If you're late on your mortgage, why do you want to invest in new construction for a rental? You don't have the money to even consider something like that right now.  If you can't pay your mortgage payments then you must not have anything in savings. And nobody is going to lend on a new construction loan to someone thats never done it before and doesn't have at least 20 to 25% to put down. 

Once you get your new job, fix your mortgage issue and then work on saving some money. As an investor, your credit is  absolutely the most important tool you have.  You can't let your mortgage payments be late no matter what it takes.  If you get dinged with being 90 days late, you might not be able to invest at all.

Hi Mike - thank you for the advice. I don’t believe my lenders have touched my credit yet. It doesn’t show whenever I check my credit score. 

When I’m able to get back on track with my mortgage payment, will it be safer for me to invest in buying a home and renting or land and build? 

Does the 20 - 25% deposit needed if we’re a military family? 

If I’m unable to recover from the delinquency even after getting current with my mortgage, is there a way I can invest in real estate? Or will I need to but 20% deposit before getting a chance to get money from a bank to finance the home I might have interest in purchasing to rent.