Land and construction financing question

[Page Huyette]

This is a follow up to my post How to finance a rental guest unit but since the parameters have changed, I'm starting a fresh post.

We are looking at purchasing raw land adjacent to our primary residence, building a house on it and renting out our current residence. I have been speaking with lenders about wrapping the land purchase, county and infrastructure fees and house construction into one loan.

One lender has a product that would require the contractor to purchase the land, build the house and then sell it to us.

Another option is to purchase the land for the land and infrastructure costs, then pay those fees at closing. In other words, if the land value was $100k less $30k in fees and costs, the seller would net $70k at closing. We would then get a construction loan for the home to be built.

Anyone have experience in this type of transaction or care to weigh in with your opinion?