Choosing Private Property

Many owners of factory built homes prefer to site their homes on their own land. Home sites range in size from 1/4th Acre up to 10 Acres and more. Most home buyers locate their home on 1 Acre sites. Some home buyers already own their land, some are buying land and still others don’t have land. With the availability of “Home Only” financing, tying up the land to secure the home mortgage is not always necessary or desired. Land may be financed by the seller or third party lender without improvements, or with pre-existing improvements. In some instances, sellers will agree to include improvements like septic systems, drive ways and culverts in the purchase price of the land.

Many families move to the rural areas to escape the hustle and bustle of city noise and traffic. Some desire to own animals like horses or goats, or maybe even have a dog kennel. Most families like the open spaces and pride of ownership that acreage gives them. Still others take pride in expansive vegetable gardens and/or luscious landscaping. In a rural community, your family will be free to customize your property as you see fit unhindered by city snoopers, gossipy neighbors or high handed home owner associations. Rural living is about freedom and independence. If that is what you are looking for, we have it right here at A-1 Homes.

Regardless of the type of ownership of the site, it is recommended that the home buyer have the site inspected to determine how the following considerations will impact the home purchase:

• 1. What improvements exist at the site (water/sewer (septic)/electric/drive way)?
• 2. Is the home site clear of trees, stumps, rocks, shrubs, grass, weeds, etc. and level?
• 3. Are there trees, ditches, rocks, or other obstacles on the property that could impede transportation of the home?
• 4. Does the home site have good drainage?
• 5. How far from electric service is the home site & who provides electric service?
• 6. What is or will be the source of water at the home site? Name of community or public water company? Has or will need water well?
• 7. Is the property located on a private road or a public road (approach road)?
• 8. Is the approach road narrow, hilly, winding, tree shaded, seasonal or all weather?
• 9. What type of surface does the drive way have and does a culvert exist?
• 10. Does the soil at the site have rock on the surface or near the surface?

Private Property Types:

• 1. The home buyer owns the land free and clear – In this situation, the home buyer may choose to finance their home purchase as "home only" with a down payment or they may use their land as collateral for down payment in what is known as a "Land in Lieu" transaction. If costly improvements are required, adding the land to the home’s value increases the amount that can be loaned to finance the improvements.

• 2. The home buyer owns the land and has a mortgage –A home buyer may finance both land and home on one mortgage or keep the existing land mortgage and finance just the home with a home only loan. In the first situation, where a balance is owed on the land, the land/home mortgage company pays off the existing land mortgage and adds the amount to the financing of the home and any necessary improvements. In the second situation, the home buyer finances the home only and no improvements are financed. The home buyer continues to make payments on the land mortgage and makes payments to the home mortgage company for the home.

• 3. The home buyer is buying the land with seller financing – This situation is virtually the same as #2 above.

• 4. The home buyer is leasing the land – If the land may not be purchased or if the home buyer does not wish to purchase the land, then the home must be financed using "home only" financing.

• 5. The home buyer is using land owned by another – If the land may not be purchased or if the home buyer does not wish to purchase the land, then the home must be financed using "home only" financing. In the situation where a family member allows the use of land for a dwelling and there are no improvements, the home buyer likely will not be able to finance the improvements using the "home only" loan. To finance improvements, the land must be deeded to the home buyer so that it may be collateralized in a "Land in Lieu" or land/home transaction.

Financing Large Acreage Tracts:

• 1. Home Buyers that own several acres usually choose to dedicate only 1 Acre to the land/home package. 1 Acre is usually enough to provide the security for the loan that the lender requires.

• 2. When land is being purchased or paid off in a land/home transaction, all of the acreage must be used a security for the loan. 10 Acres is the limit for most land/home loans.

• 3. The smaller the tract, the more it costs in terms of dollars per acre. Conversely, the larger the tract, the less it costs in terms of dollars per acre. For example, an improved 1 Acre tract in the DFW Metro Area can cost anywhere from $21,500 to $70,000 each. The rule of thumb we use is about $30,000 for one acre whether improved or not. 2 Acres might be found for about $46,000 or so. For 10 Acres, it is not unusual to see prices of $100,000 and more.

We at A-1 Homes – Fort Worth make it our business to know where all the best locations are and what is available for our clients. We are confident that we can help each of our clients find the perfect site for their home. The point to remember is that available home sites are like a moving target. Those great sites out there today will probably not be there next week. We work daily with our land sources to identify the best locations on the market at any given time.

Land sellers and developers want to talk to approved home buyers.They are not very interested in spending time with folks that don’t have a mortgage approval. This is why we encourage each of our clients to participate with us to get pre-approved, select a home, arrange mortgage financing, and then start their search for that perfect home site. For an illustration depicting the steps to home ownership, click here.