Adventures in Home Buying

The Hidden Costs and Benefits of Building on Your Own Land vs. Developer Communities

• Jim Troth

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Deciding whether to build your dream home on your own land or buy into a developer's community represents one of the biggest choices in the homeownership journey. After navigating this process ourselves, we're pulling back the curtain on the surprising realities that most people discover too late.

Financial considerations extend far beyond the obvious purchase price. While building on your own land typically proves more economical long-term, we were shocked to learn that undeveloped land purchases typically come with 10-year financing terms rather than the standard 30-year mortgages most homebuyers expect. This dramatic difference transformed our monthly payment calculations overnight! Meanwhile, developer communities bundle land costs into your purchase but maximize their profit by minimizing lot sizes—trading your dream of spacious outdoor living for convenience.

The true freedom of building on private land comes through customization and control. Developer communities restrict you to selecting from limited floor plans with minor cosmetic choices, while private land construction puts every decision in your hands. We selected everything from paint colors to appliances, with our builder providing valuable guidance without dictating our choices. This independence extends to lifestyle considerations as well—no homeowners association dictating what you can plant or where, no community fees for amenities you may never use, and the privacy many homebuyers increasingly prioritize.

Rural building brings challenges worth preparing for, from coordinating utilities (discovering that water installation required electricity first) to budgeting for unexpected expenses like our $15,000 driveway. Yet working with an experienced local builder transformed potential headaches into manageable steps. Your decision ultimately depends on your priorities: convenience versus control, community versus privacy, standardization versus personalization. Whatever path you choose, understanding these realities before breaking ground will help ensure your home truly becomes the sanctuary you envision.

Adventures in Home Buying, the ultimate podcast for anyone navigating the exciting, sometimes daunting world of purchasing a home! Whether you're a first-time buyer, a seasoned investor, or dreaming of your forever home, our engaging stories and expert insights will guide you through every step of the homebuying journey. From decoding mortgages and mastering bidding wars to uncovering hidden costs and spotting sustainable home features, we deliver practical tips and real-world advice to empower you with confidence.

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Speaker 1:

All right, on this one, we're going to talk about building. I think, obviously, it was a better choice to build your own house If you have that extra time that you can spare.

Speaker 2:

I mean, obviously we did it.

Speaker 1:

So building on your own property, your own land that you own already, or having a house built on a developer's land that they're building in the community? We'll compare those two things. So the land cost right up front. It's including your purchase. If you buy it through a developer's community, land is already included. If you own it already, there's no extra cost. You are paying for that no matter what. But if you're buying in a builder's community, you're not going to have a massive yard, typically because they want to build as many houses as they can on that land, that little space.

Speaker 1:

They don't want to put them really right close next to each other, because they want everything to feel like you've got your own space, feel packed in. But they want the maximum number of houses per acre that they can squeeze in, so land cost is built into your community built home. Total cost. Look at this comparison that I see online. It was cheaper to build on your own land.

Speaker 2:

Well, that makes sense to me. Oh, one thing we did learn. So if you are purchasing land only and you have never done that before they will only give you a 10-year loan on land only yes, yes, when you buy an existing house, it's a 30 you can be like a 30-year loan all right, undeveloped land.

Speaker 1:

no, it's a 10-year, so you have to kind of take that as something. That was our little bit.

Speaker 2:

That was our.

Speaker 1:

Because I saw the price for the land. I'm like, oh, what's that Price?

Speaker 2:

for 30 years Per month for 30 years.

Speaker 1:

Oh dude, yeah, we can totally afford that. Then you go oh yeah, it's a 10 years, 10-year term because I saw the price for a month. I was like, wait this is not what I was thinking it was gonna be. Wow, it's only 10 years.

Speaker 2:

I'm like oh okay, that makes sense. So people save your money.

Speaker 1:

A long it saves your money a long run because I'm paying interest over an extra 20 years which we would have paid it off anyway. I would. It's always good to put a little extra money on things. So anyway, the timeline building on your own land versus the builders, it's about the same, about the same length of time to build. So it doesn't really matter speed wise building, unless you have a developer like, hey, we got this right, there's good, you get less control. We have this house here, we've already it's foundation. Only at this point you can buy this one because they're going to build it, somebody's going to buy it, no matter what.

Speaker 1:

And the developer knows that. So I'm like eh, if you buy it, cool, If not, we'll sell it to somebody else.

Speaker 2:

We'll sell it to somebody else in a couple of hours.

Speaker 1:

So that house may already be somewhat built when you get into the picture.

Speaker 2:

And we have heard stories where houses have sat for a bit because builders haven't been able to get crews, or they haven't been able to buy building materials because they haven't closed on the other house, or whatever the case may be. So when you're looking at a builder, make sure that their finances aren't glaringly obvious as an issue and that your house isn't going to just sit open for a bit before it gets finished yeah, we we do have.

Speaker 1:

we have some story that we have a builder who did not really budget himself. He ran, ran out of cash, yep, which that's an issue there, because without cash he cannot buy supplies to finish your house or work on it or pay for people to finish the house. So that one house that I'm thinking of it sat there for three months roof not completely sealed in ended up having all kinds of mold issues in that house.

Speaker 2:

So do your research. Talk to people. If there's a community that you're interested in go to that community. Talk to people that are living there. What kinds of problems have they had with the house? Did they have any even?

Speaker 1:

Yep. So customization you have full control if you're building your own land.

Speaker 3:

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Speaker 2:

Visit home inspections in ohiocom if you're building in a development, there are specific patterns that they have, like maybe they'll have five designs and you have to pick from those and then you can customize some of those things within it.

Speaker 1:

It's going to be like the countertop, the color. Like the countertop, the colors, the cabinets and things like that.

Speaker 2:

That's going to be pretty much all that. You can customize on that If it's on your own. I mean, we pretty much made every decision. We went and we bought the paint, we bought the appliances, we bought all of this stuff and then they got delivered and he put them in.

Speaker 1:

Yep, and he was really good. He said, hey, it's time for that. I'm going to need this next week.

Speaker 2:

So he gave us time to go look for stuff.

Speaker 1:

I remember we were selecting tile For the bathroom. He was like, yeah, get like this color or something like that, and we bought it. He was like, yeah, I think this will look good. And then we I bought the wrong stuff. I need this type, oh okay. So we traded it in.

Speaker 2:

We traded it in and got it more.

Speaker 1:

So he was helpful in designs and how it would make it look good yet still be functional. So you definitely got more control, building on your own property because you own the land, your own on your own property because you own the land and then, uh, roads, utilities, you, if it's your own land. That's something you need to figure out, because what was it here? The electricity we couldn't get water until we had electricity on the property was that?

Speaker 2:

yeah, there was. There was something on on the sequence of that, because, I think, because they realized that you need electricity to pump the water up and so without that they wouldn't install the water.

Speaker 1:

Something like that. Yeah, so wherever you're at, you got to figure out what little nuances and if you have a local builder, they can definitely help you. I'm like, oh yeah, you need to talk, to go here and talk about getting this set up well in part of our property.

Speaker 2:

When we bought it, they the the previous owner had added the driveway up like he had purchased that from whomever had owned it prior. So we now own our driveway coming up to our property, which we wouldn't have if he hadn't added that. So that would have been a right-of-way and that would have been another issue to deal with. But we didn't have if he hadn't added that. So that would have been a right-of-way and that would have been another issue to deal with.

Speaker 2:

But we didn't have that because of our situation you want as much as possible own as much as possible right-of-ways and if you're out in the country, you're going to also. Mineral rights is another one, yep, but we can talk about that later too yep.

Speaker 1:

So community features you're not going. If you're out in the country building your own land, you're not going to have community features so much, which is fine. I don't care for a clubhouse for the community or the community pool.

Speaker 2:

Or an HOA to tell me what I can plant or where.

Speaker 1:

I don't need a flock of cairns telling me what to do or what you can't do, so I'm definitely pro on building your own property.

Speaker 3:

Yeah, me too.

Speaker 1:

So location. If you're out in the country, it may be a little bit harder finding a builder. Some counties do not have code requirements, so that's something you need. Either you're knowledgeable and you're going to go inspect the place every week, either you're knowledgeable and you're going to go inspect the place every week, or you're going to hire a home inspector to inspect the house on occasion or certain like pre-dry wall to double check things.

Speaker 2:

But it's a good idea to keep an eye on things, just uh and you do want inspections, whether it's a build from, like, a larger type of builder or a smaller one. That just makes sense. Yeah, because not everybody's perfect like we're human. We're not. You need that third set of eyes just to make sure that something hasn't been forgotten or lapsed yeah, now you, you always have delays.

Speaker 1:

You've had delays because of weather. That was an issue for a little while. Uh, sometimes you build a community. They're going to have well, the HOA or the village or whatever is going to have rules on what you can and can't do, because sometimes you have a developer, he goes hey, he goes to a city. I want to build 200 houses here. Here's how I want to do that. And sometimes a community will go yeah, all right, you don't have to. You don't have to worry about that. If you're building that many houses, you don't need to worry about doing this, this rule or that.

Speaker 2:

I guess they give a little more leeway because they want more houses built to the area which may not necessarily be good for the owner in the long run, but that's how it was built.

Speaker 1:

That's yep, yep and then zoning issues. You can still have that in rural areas or on your own land. You okay for building on their uh utility access. You gotta try to get electricity, natural gas septic system tests propane yes, so you have all that planned out, and then you're the, you're the contractor management to make sure all that gets done, which your builder, if it's a good, experienced builder, will help you coordinate. That.

Speaker 2:

Yeah, ours gave us names and numbers of people for, like the septic system. We got that from the county and he helped. Yeah, these two are good, or this is the one I usually work with. Yeah, because he had experience with those, because he had experience with everyone. This guy.

Speaker 1:

I've worked with him before. He's good and so he knew the first guy. He knew which first guy to contact to come take care of that. We weren't here when they put the trusses up, so they had to hire a company that had a crane to lift those things up.

Speaker 1:

So they took care of all that stuff, which is we wouldn't have time in the first place. So your builder can help you coordinate the contractors and he'll just take care of it. And for our guy, he just handed us the bill from the contractor. We just paid that directly then.

Speaker 2:

Yep, which is nice. Nice, that was very nice.

Speaker 1:

So it's going to depend on your lifestyle. Do you want to live in a developed community or build your own land and have a little bit more privacy and control? I want privacy and control.

Speaker 1:

You, yes, I want privacy and control, so I want privacy and control you. Yes, I want privacy and control. So, laura, can you think of anything else with this? Once again, building your own land makes it cheaper, but it's going to depend on how much land you have. Sometimes you can buy three acres, just a small plot of land, or 100 acres. It depends on how much land you're going to get.

Speaker 2:

Or how much you want to Like. Do you want to do something where you've got trails through and everybody goes and they ride the trails with a four-wheeler or a bike? Or do you want a garden, or do you want fruit trees, or what are you looking to do? What is your end goal? Do you want to retire here? Do you want to just make life easy and just have a small plot of land?

Speaker 1:

well, some communities and cities go hey, you can build houses, but they have they. They have to be within this size range. You can't build anything smaller than 2 000 square feet. That's how some of these man, if you're, it's your own land, you're not controlled by a municipality you do whatever you want, as much you. Yeah, 600 square foot house, as long as it's safe. They're not. Most counties are not going to care. It's your place.

Speaker 2:

Right.

Speaker 1:

And we saw recently. It looks like somebody was living on their land in a trailer. Okay, it looks like a camper, Maybe it was. I think it was a mobile home.

Speaker 2:

Yeah.

Speaker 1:

And there's an old mobile home.

Speaker 2:

And they've been there for a while.

Speaker 1:

They've been there for a while, but they're building a new house in front, like maybe 100 yards away from them.

Speaker 2:

That's less than that, actually, but anyway they're building a new house, so what we figured they were doing was they were spending the time in the trailer saving up money to start the building process, which makes perfect sense.

Speaker 1:

Good for them.

Speaker 2:

Yeah.

Speaker 1:

They're not paying rent somewhere.

Speaker 1:

Which can get jacked up they probably owe that thing outright, so they have no monthly bills, other than maybe the tax amount, which is not going to be much, not compared to rent. If you're a home buyer, this is the choice you need to make, and if you're a real estate agent, this is the choice you need to help your client make Existing home versus building. And then, if you're going to build, where are you going to do that? At A developer's place, which may be faster depending on what stage you're in, or your own land, where you have a lot more control, probably cheaper in the long run. But there's a little bit more work you have to do because you have to figure out what needs to go in. First, I'm going to have me driveway. How much was our driveway?

Speaker 2:

That was a massive amount.

Speaker 1:

I mean we probably spent like $12,000, $15,000 on the driveway.

Speaker 2:

Just right up front because, it was impassable.

Speaker 1:

Yeah Well, the gravel is expensive. There will be unknown issues and costs that will come up that you never thought about, but overall, building your own land ends up being a little bit cheaper and you have more control. So you can build yourself a tiny house if you wanted.

Speaker 2:

Well, and not only that, but if you've got someone that's got some type of sensitivity whether it's to mold or chemicals or this or that, if you're doing your own build, your builder can treat the wood that he gets to keep mold from growing.

Speaker 1:

You can treat it We'll talk about that on another one, and we can add that in.

Speaker 2:

So there's a lot of reasons to do your own.

Speaker 1:

Yeah, we'll do a whole episode, and I don't know what we'll name it, but something about building a healthy home. We'll do something like that. So all right, Thank you everybody.

Speaker 2:

Bye.

Contributor

Jim Troth

Host
Contributor

Laura Troth

Host