Three years ago, we decided to sell our beautiful house. At the time, it felt like it was too much house for us. We also thought the housing market was high and we wanted to capitalize on it while we had time. We had lived in this house for a little over two years, so we wouldn’t have to pay any capital gains taxes when we sold for a profit. We sold the house for approximately 30% more than we bought it for.
We intended to buy land and build, but were open to the idea of buying an existing house if we thought we could find one for a good deal. The buyer we went with didn’t was moving in from out of state, and didn’t need to move in until several months after we closed. They let us stay in the house rent free until that time.
The First Attempt
During this window of time, I found a lot that I thought we could afford and had all the amenities we were looking for. It was a small rural development, a single cul-de-sac with 6 lots. All of the other lots were built. The lot were wanted to buy was 5 acres with water rights. The lot had electric and natural gas available at the street. An additional bonus was that houses in that area of town are able to have basements (ground water in and around the town I live in varies widely; many of the currently available developments have extremely high ground water, so basements are not possible).
I had some good negotiation with the owner of the lot. I was pretty confident we could close the deal. But at the last minute, it fell through. In the short-term, this was concerning. We had short-term housing arrangements lined up, but we were intending to build a house to move into as quick as possible. In the long-term, we were able to buy a townhouse for a good price. This gave us a good place to live, while still having enough money to buy a lot or make a down payment on a house (if the right deal was to be found).
Our first attempt to build a house had fizzled out before we could even get going.
The Wait
For the next two years, we would waffle between buying an existing house and building our own. We hoped that there would be a shift in the housing market, creating more opportunities to buy an existing house. But from 2018 through 2020 (even with a pandemic going on), the housing market continued to climb. According to Zillow, the house we sold in 2018 has increased another 50% in value. Other experiences also made us shy away from buying an existing house.
The first experience was touring a house on the outskirts of town. The house was around 40 years old. It had been remodeled a couple times expanding the floor plan. We walked away from touring the house with two thoughts. First, the price for this old run-down house was outrageous. Second, we felt like any house that might be a “good deal” is going to be riddled with issues from shortcuts taken during construction and remodels throughout the life-span of the building.
The second experience was helping my sister-in-law move into a house she was renting. It was a quaint old farmhouse, but it had many of the same issues as the house we had looked at. Wires had been shoddily ran underground to outbuildings. Doors were not installed properly and either didn’t open, or were permanently shut. And that was just the stuff we could see. Who knows what else might rear its head in an old house like that.
The Path Forward
With these experiences in hand, we decided to start looking for lots more earnestly. While driving on the south side of town, we saw some excavators and decided to take a detour to see what they were working on. What we found was a recently developed subdivision. It had 14 lots. Most lots were one acre with a few larger lots in the back.
We found the details for the subdivision. After quickly doing our due diligence, we made an offer and purchased a lot. Making the decision was fairly easy. We had been passively looking for a lot or house to buy for nearly two years. In that time, we had made a list of attributes we were looking for. This lot did not have every attribute on our list. But we knew the “perfect” lot we were looking for didn’t exist. At least it wasn’t on the market. We had cold called a couple of owners of undeveloped lots. But they weren’t willing to sell.
When we found this lot, we knew it had enough of the things that we were looking for that we were willing to compromise on the attributes it lacked.
Planning
I find it hard to design a custom house if you don’t have a lot. There is so many factors in the design of a house that could be affected by the lot, that I just don’t think it is worth trying until you have a lot in hand.
Two years prior, when we thought we had a lot secured, we had spent a significant amount of time working on planning our floor plan for that lot. As it turns out, we felt that floor plan could be modified to work for this lot. This saved us a lot of time and gave us a base layout to work from.
Since we purchased the lot, we have have been refining our floor plan vigorously. The floor plan had been set for a little over a month now. I hired an engineer to review the plans, calculate a few beams, design the shear walls, and the foundations.
With this blog, we’ll take you along for our journey as we build our first custom home. We’ll try to be as transparent as possible documenting our lessons learned throughout the build. We look forward to sharing this experience with you, and hope that maybe we’ll help a few of you in deciding if a similar journey is right for you.