How to Buy Land and Build a House

Posted on July 1, 2024June 28, 2024 by Jason Somers

Becoming a homeowner allows you to build equity, benefit from tax breaks, and have more control over where you live. However, there’s no guarantee that the properties that are currently listed on the market will be to your liking. To ensure you’re satisfied with your home, consider buying land and building a house from scratch. While this process is time-consuming, it gives you more control over the final product.

Once you buy a parcel of land, you can start designing your home, applying for the necessary permits, and hiring a construction crew. Your project can only start after you obtain the right building permits. These permits signify that your building plans meet local codes and regulations. While the approval process can take months, you can speed it up by hiring a permit expediter. The purpose of this article is to help you learn how to buy land and build a house.

Steps to Buying Land

If you want to build your house from scratch, you must first buy a parcel of land. To ensure you choose the right land to invest in, follow these steps.

1. Determine Your Budget

Before you start searching for the perfect piece of land, determine your budget. Assess your financial capacity by looking at your accounts to identify how much you can afford to spend. Consider the costs for land, construction, permits, and contingencies. The construction process will use up a majority of the budget for your project, which is why it’s important that you don’t overspend on the land itself.

2. Choose the Right Location

Once you figure out your budget, it’s time to find the right location. The location of your home can play a major role in determining its value. When you’re searching for the ideal spot to build a home, some of the factors to consider are:

• Future development opportunities
• Local zoning laws
• Proximity to amenities
• Quality of local school districts
• Condition of the real estate market

Research local market trends to ensure you pick a good location. If property values have been dropping for a long time, it may be best to consider another area.

3. Land Inspection and Evaluation

After finding a location, you need to make sure that it will support the construction process. Obtain a land inspection and evaluation. Hire a professional and experienced land surveyor to perform this process. The land surveyor can tell you if there are any boundary disputes or encroachments that could result in future legal problems.

You’ll also need to check the soil quality and environmental factors to identify potential problems that could arise during construction. Property inspections often include an evaluation of the land for environmental issues like soil contamination, radon, hazardous materials, or groundwater contamination. If you identify these issues before buying the land, you can avoid expensive remediation processes.

Before you attempt to buy the land, verify local zoning and land-use regulations. When a jurisdiction zones land for specific purposes, you can’t develop a building that falls outside these regulations. For example, it’s against the law to build a large industrial facility in an area that’s been zoned solely for residential homes.

4. Financing Your Land Purchase

Before you make an offer, you’ll need to line up financing for the purchase. There are several financing options at your disposal when you’re trying to buy a piece of land, including everything from loans and mortgages to personal savings. If you have enough cash in your personal savings to cover the entire cost of the land, you could avoid a lengthy closing process.

Make sure you obtain pre-approval for a loan from your lender. Many owners will only consider offers from potential buyers who have already been pre-approved. With this letter in hand, the owner can be confident that the transaction will close without issue.

5. Making an Offer and Closing the Deal

Now it’s time to make an offer. Your offer should be high enough to appeal to the owner. However, it shouldn’t be so high that you overpay for the land. There are several strategies you can use when you want to negotiate the purchase price. The owner may be willing to lower their asking price if you cite property issues or comparable sales.

Once the seller has accepted your offer, you’ll be tasked with signing a purchase agreement that includes every detail of the transaction. Before signing this agreement, you must verify the information.

At this point, you can complete the closing process. Before you sign the necessary documents, the underwriting process will occur for any financing you’ve applied for. A title search will also be done to ensure there aren’t any issues that could prevent you from taking ownership of the land.

Designing Your Home

Once the sale closes on the land you bought, you can start designing your home. By hiring the right designer or architect, you can turn your ideas into a viable design.

Hiring an Architect or Designer

If you want your home to match your ideas and specifications, you must obtain professional design services. You’ll need to work alongside architects and designers to create a blueprint.

Before hiring design professionals, ask for their credentials and some examples of previous work. When you’re interviewing candidates for the job, the types of questions you should ask are:

• What services do you offer?
• How many homes have you designed in the past?
• How long will it take for you to design my home?
• Can you do revisions if I don’t like part of the design?
• Can you provide references from past clients?
• What is your fee structure?
• Can you work with my budget?

Creating a Realistic Budget

Before you bought a parcel of land, you were tasked with creating a budget. Use the same strategy to create a realistic budget for the construction project. Most of the costs involve labor and the materials you need to buy.

It’s also highly recommended that you budget for unexpected expenses. Even if you hire the best construction team around, there’s always a possibility that something will go wrong. For example, you may be unable to procure your preferred material for the kitchen flooring. If the start of the project is fast approaching, you may need to pay more to expedite the delivery of similar materials, which will cost more.

Understanding Building Permits

When you’re constructing a home, you’re required by law to obtain building permits. These permits are issued by your local building department.

What Are Building Permits?

If you’re constructing a home in Los Angeles, you’ll need to apply for permits with the Los Angeles Department of Building and Safety (LADBS). They’ll only approve a permit application if your building plans align with local codes and regulations.

Each municipality or jurisdiction maintains comprehensive building codes to make sure every structure is safe and resilient. If you receive a building permit, you can be confident that your plans meet the latest codes. However, the city will perform several inspections throughout the construction process to make sure the structure itself matches the approved plans. Numerous types of permits are required when constructing a home, which include the following:

• Standard building permit
• Mechanical permit
• Plumbing permit
• Electrical permit
• Demolition permit

The Permit Application Process

The building permit application process involves numerous steps. Along with accurately filling out the primary application, you’ll also need to gather the necessary documents, which include the following:

• Building plans
• Maps
• Photographs
• Design load calculations
• Architectural designs
• Energy calculations
• Environmental report

You can submit your application to the local planning department, after which they’ll spend some time reviewing it. During the review, they might ask questions and seek clarification on certain aspects of your building or application.

Common Challenges and How to Overcome Them

While the permit application process can be straightforward, you may encounter delays. There are several reasons why this process can be delayed. The planning department may be sifting through a sizable backlog of permit applications. In this scenario, there’s not much that can be done to speed up the process. However, most delays in approval occur because there’s something wrong with the application.

It’s possible that your building plans aren’t up to code or that you accidentally forgot to include an important piece of information. In most cases, the planning department will inform you of the issue, make suggestions on how to correct it, and give you some time to fix the problem. If the city asks for a revision, make the necessary corrections as quickly as possible.

Consider working with a permit expediter to ensure everything’s in order before you tell the planning department that you’ve handled the revision. If your application is rejected outright, you should be able to fix it or change your building plans, after which you can resubmit your application.

Permit Expediting

The permit approval process can take anywhere from a few weeks to more than a year. If the planning department asks you to revise your application, you may need to delay your project even longer. You can speed up this process by requesting permit expediting services.

What Is Permit Expediting?

When you hire a reputable permit expediter, they’ll help you obtain your building permit quickly, which means that you can get started on your project sooner than anticipated. Permit expediters have a thorough understanding of local zoning and building codes, which makes them invaluable during the permit application process. They’ll review your application and make sure your building plans are up to code.

The expediter you hire should identify and fix any errors in your application. Most permit expediters have relationships with jurisdiction professionals, which allows them to hasten the approval process. If the city asks for a revision, a permit expediter can help you successfully navigate the situation and avoid a lengthy delay.

When to Consider Using a Permit Expediter

You should always consider hiring a permit expediter when you’re building a house. You never know how long the permit approval process is going to take. If your application is perfect and your building plans are up to code, you may be able to gain approval in a few weeks. However, avoiding delays is more difficult if you don’t have a permit expediter by your side.

If you hire a permit expediter early on in the project, you can anticipate and avoid potential problems. Perform a cost vs. benefits analysis before you hire a permit expediter. While expediters can help you save a large sum of money, it may be difficult for you to hire one if your budget is already stretched thin.

How to Choose a Permit Expediter

When you’re hiring a permit expediter, there are numerous factors you should consider, which include the following:

• Their experience in gaining approval for residential building permits
• Reputation
• How long they’ve been opened
• Knowledge of local real estate market, building codes, and zoning laws
• Fee structure

Before you make a hire, ask potential expediters questions like:

• How much experience do you have?
• What building permits will I need for my project?
• What will you do if the planning department asks for a revision?
• What are the most common mistakes on permit applications?
• What is the normal cost of a building permit?
• How will you communicate during the application approval process?
• Do you have connections with anyone in the planning department?
• How much can you expedite the approval process?

The expediter you’re thinking of hiring should be able to answer all of these questions with ease.

Building Your Home

Once all the building permits are in hand, you can start construction. This process involves selecting a builder and scheduling inspections.

Selecting a Builder or Contractor

Make sure you choose a reputable builder or contractor who has ample experience with constructing residential homes. You need someone who knows how to respond to setbacks, manage subcontractors, and communicate with you throughout the project. You can vet potential contractors the same way that you did when hiring a permit expediter.

Look up online reviews from previous customers to learn more about a contractor’s reputation and skills. The contractor should be able to provide you with references of past work and information about how your project will be managed. They must also show you proof of licensing and insurance.

Managing the Construction Process

There are numerous stages that contractors adhere to when building a home, which involve:

• Procuring the necessary materials
• Preparing the land and foundation
• Putting up the home’s skeleton or frame
• Installing mechanical, electrical, and plumbing (MEP) systems
• Waterproofing and insulating the home
• Adding the final flourishes, which include everything from carpeting and tiling to appliances

As mentioned before, the planning department will perform inspections throughout the construction process to ensure everything’s in order. Make sure your contractor maintains quality control at every stage of the process to avoid issues during the inspections.

Final Inspections and Occupancy Permits

Once the construction process has come to an end, a final inspection will be scheduled. You must pass this inspection to receive an occupancy permit, which certifies that the completed work meets local code requirements. Once you obtain an occupancy permit, you can move in.

Conclusion

If you want to build your dream home from scratch, you can do so by purchasing land, hiring an architect, and selecting a construction crew to turn your building plans into a house. Any mistake that’s made during this process can be costly. You must acquire the land at a reasonable price and properly budget the construction project to ensure you don’t overspend.

You’ll also need to apply for building permits before your contractor starts working on the project. While this is a lengthy and complex process, it’s also highly rewarding. Building your own home allows you to have complete control over its value, appearance, and comfort level.