Country Property and Acreage Homesites
If you are like many of my customers you are doing two things. You are looking through books and books of house plans and you are trying to find that perfect small acreage to build that dream home.
Depending on where you want to live, I suggest finding the land first. You can modify house plans, but cannot do that much to change the land.
Many of my customers have an idea on the type of setting they want and buy the land. Then they get a builder to work with them and go from there. A few get an architect.
The question is; do you need an architect? My answer is maybe. Without an architect you will need to buy a set of floor plans from someone. At the minimum you will need a highly qualified draftsman to produce a set of plans for both the builder and for government regulators.
What does an architect actually do for you?
I have personally worked with two different architects on 3 different projects. The first two projects were an addition and a remodel on a home built in about 1880. It was money well spent. Putting a pool, porch and patio on a farmhouse well over 100 years old and having it look good is no easy task. Building a master bedroom suite in the same house wasn’t easy either. Those were my first experiences. I had a very young architect, just out of college, with an upcoming reputation for working with century old homes in Lafayette Square in St. Louis. I got him before he got famous so could afford him. This was 25 years ago. You can check out his work by visiting www.priceacreage.com. Look for the 1880's farmhouse for sale and you will see pictures of his work.
When I built my new home a couple of years ago, I hired an architect. He took our concepts, pictures, desires, etc. and turned them into a set of house plans.
I still have not answered the question of what does an architect do? It’s a little like answering the question of what does a doctor do. It is anywhere from saying "It’s ok. Take two aspirin" to saying "You need serious tests immediately."
It can be looking over your shoulder to make sure you make no serious mistakes. It can be conceptualizing the entire project. It can be not much more than the job of an expert draftsman which is to produce a set of legal and useable house plans.
They charge depending on the services contracted for. The charge might be an hourly rate, in which case you should be careful in how attentive you are and how much homework you do, so as to not run up the charges. Sometimes they charge as a percent of estimated construction, in which case they will not let you be inattentive as it costs them more. And I learned that some charge based on the size of the home. They might or might not supervise construction. It is important that you clearly define the relationship up front.
I have had many happy customers who never ever even talked to an architect and they built beautiful homes. But I often hear, "I wish we had known to do this differently."
As I said before, I had an architect on my new home. Lots of meetings and lots of frustration, but I personally feel he kept us from making some mistakes and I personally feel he added some really nice touches my wife and I would have never thought of. We had only a vague idea of what we wanted the house to look like, but we knew what kind of general feel and what kind of living space we wanted. He helped us take those somewhat vague ideas and turn them into a plan.
I cannot think of all the nice touches, but we have a window that gives natural light on the landing going to our finished basement. I would have never thought of that. My home office which is in the finished basement area has four features I love. It has a wood burning stove. It has a very large and open entry door so I can see outside and watch wildlife while I work. (I'm in a basement.) It has an exhaust fan so I can indulge in my nasty smoking habit without smelling up the house. And it has really cheap and durable flooring so a contractor can walk into my office with muddy boots and I can relax knowing all I need is a mop. And I forgot one. The office can be locked totally separately from the house so I could give a contractor or book keeper a key to my office and know our home was still private.
My wife can tell you about touches she loves. But there is one more issue. The house is a series of rectangles and was easy to build. That drove the cost per square foot of construction down.
Even though I paid the architect plenty, I think he cost me little to nothing and may have actually saved me money.
So do you need an architect? I'm back to my firm MAYBE. It depends on how much you are spending, how well you have previously defined the house you want and how much help you need.
I felt this issue was enough out of my technical range of expertise that I ran the first draft by three architects I trusted. They came back with various responses; one actually writing his own article. I respect all three gentlemen and want to include their comments in a Part II to come later.
A good one will only try to sell you a range of services that he thinks you need. It could be anywhere from total design and construction supervision to just looking over your shoulder for a cost of a few thousand or maybe even a few hundred dollars for a couple of consultations.
You will pay for the time you use. The architect has to make a living. But a good one will add enough value that your total extra cost may be next to nothing.
Be sure to check out my properties for custom homes at www.priceacreage.com and www.cannonhouseproperties.com. You can find this article and others relating to creating your dream home at http://www.priceacreage.com/info-blog.html.
Thanks for taking the time to read this. Email me with any follow up questions at firstname.lastname@example.org.
All About Septic Systems
Septic systems are private individual sewage disposal systems and they work great given proper design and proper soil conditions. Costs can vary greatly depending on soils and regulations.
One regulatory layer is the State of Missouri. They regulate and approve subdivisions where the planned sewage disposal system is individual septic systems. They have three main thresholds. They do not regulate parcels of over 5 acres. They do not regulate less than 7 lots. They want no systems (within their regulatory powers) on lots of less than about an acre.
Years ago, I was on a work group being run by the Missouri Department of Natural Resources. Individual septic systems were the issue and I was an industry representative helping the Department of Natural Resources come up with the rules.
The Department of Natural Resources is not concerned about one homeowner with one system that fails. They are concerned about public pollution impacting neighbors and the quality of water in the State of Missouri. It was their determination that a failure on 5 acres or over was taken care of by nature and was an individual problem, not a public problem. And it was their determination that a system will work, even in poor soils on 5 acres or more. It was their determination that 6 failures in a rural area were a private problem and not a public pollution problem. And it was their judgment that on less than an acre, systems were not likely to work properly. I was at all of those meetings and the group; consisting of health department people, Department of Natural Resources people and a few industry representatives; really studied the issues. I personally think the current State of Missouri rules make sense.
From there you go to local jurisdictions. Local jurisdictions vary greatly in their rules.
For new subdivisions in Jefferson County, you must have 2 acres or more for an individual septic system.
In St. Francois County a typical septic system costs about $2,500 to $3,000. In Jefferson County, the cost is more like $10,000 to $12,000. The difference is purely regulatory as Jefferson County has a long history of poorly installed systems. In my opinion, the regulators over reacted to previous bad industry practices.
Figure $10,000 and no sewer bill in Jefferson County. Figure up to $2000 for a sewer hookup or an $8000 difference, paid only when you need it. That makes the availability of central sewers add about $4000 or $5000 to the value of your land when sewer bills and hookups are calculated.
Before you buy a small acreage in Jefferson County, be aware of soils. If the subdivision is an approved subdivision through planning and zoning, the soils have been checked and the presumption is that a septic system will work. Beware of individual lots in older subdivisions that are less than 2 acres. You might have trouble getting approval for a septic system. This is especially true if the older subdivision pre dated planning and zoning.
The bias by regulators is that central sewers should be used when possible. They feel the environment is better protected with that regulatory bias. I do not agree with them.
A few years ago I had a 500 acre project in Stratford, Missouri which is in Greene County and near Springfield. We had a little fewer than 60 lots. A good friend of mine is an avid environmentalist and invested in the project. His one big hang up on investing was that we would be using septic tanks. Over dinner at his house in Springfield, I gave him the best education I could on how they worked and how regulations protected the environment. He decided to invest. Shortly afterwards, the City of Springfield had a major sewer plant failure and dumped raw sewage into the James River for days. I saw it in the news and called my friend. I asked him which did more damage to the environment, one septic system failure or the major plant failure that Springfield had just experienced. He told me I had made my point, and he became an advocate of well designed projects that use individual sewage disposal systems.
The EPA says "Onsite/decentralized wastewater treatment systems (they are really saying septic systems in government talk.) serve approximately 25 percent of the U.S. population and 40 percent of new development." They also say "EPA determined that with the technology now available, adequately managed decentralized systems can protect public health and the environment as well as provide long-term solutions for the nation's wastewater needs."
In a way it is similar to private wells versus public water. Both work. Central sewer systems work and so do individual septic systems if properly designed and installed. Both can fail and both can cause problems.
There are three lessons to be drawn from this short article. Septic systems work. They do not damage the environment any more than central sewage systems. Check out the regulations to be sure you can legally build on the land after you buy it.
Check out my properties on this web site. All either have central sewers or soils tests that presume individual septic systems will work. I follow the regulations and try to protect the environment.
Thanks for taking the time to read this.
All About Financing the Construction of Your New Custom Home!
This is a difficult and complicated subject. My first advice is to ignore the big banks and go to a community bank or a savings and loan that knows your community. They will have more freedom in decision making than a big bank.
Again, I cannot name names. If I mention a bank by name, it has to go through their legal department and there will be so many caveats to what I want to say that it will make no sense when the lawyers are done.
These are the general rules, but a local bank can break any of them.
1. Get pre approved for your permanent loan. A bank does not want to make a construction loan unless they feel confident you can get permanent financing when your home is completed. Construction loans are meant to be temporary and the bank wants out in a reasonable time period.
2. This is new, but in today’s environment, they generally want 20% down. (I’ll explain possible significant exceptions later.)
3. The bank cares who builds your home. The bank will want to see bids from a builder the bank trusts. They are not trying to tell you who to get, rather they want to be sure it is a qualified contractor who has the ability to complete the job as promised.
4. In Jefferson County many buyers serve as their own general contractor to save money. Many local banks allow this as the savings are real. But if you are to be your own general, the bank wants to know you; not just you credit score and amount down. They want to feel confident you can complete the project.
It starts with a set of plans and a bid. You go to the bank and find out how much you can borrow. The bank will have the completed package appraised. Appraisal does not always equal or exceed costs. If you are building a dream home and choose granite counter tops, the best kitchen ever, a pool, expensive woodwork, etc., your legitimate cost could well exceed a good appraisal. It does not necessarily mean the contractor is puffing costs. It could mean you are over building for the market. That can easily happen on a custom home and many people say the heck with it. This is what I want and I’m going to build it. It means more down payment. Or you might scale back on some items and get it bid again. It really depends on individual circumstances.
During construction, most banks will want the money disbursed through a title company. The title company makes payments to your contractor on your behalf in return for proper paper work showing all the sub contractors have been paid by the contractor. A very few banks might let you make your own disbursements, but I would recommend you go through a title company.
I’m going back to the 20% down issue on a construction loan. The permanent loan might take much less down and you wonder why the gap. It is a cushion for the bank. One builder has told me he has a bank that totally ignores the 20% down rule if the permanent loan is in place. I do not know that bank, but it makes sense. They specialize in construction loans and do not make permanent loans.
I know of one institution that makes a combination construction/permanent loan. They keep the permanent loan. If they approve you, they approve you and you save closing costs by only having one closing. I had one customer who went to a big bank and his construction loan did not appraise. They had a bad appraiser who was not local and the lot appraised at about ½ value even though recent sales supported a much higher value. My customer could not get through the bank bureaucracy to get it corrected. I directed him to the local savings and loan and his construction loan was approved and closed in about 2 weeks. If he is not moved in, he is about to move in. He has a beautiful home and a good banker.
The bankers I deal with want you as a customer, but they also want to help you. My banks have referred many of my customers to competitors of theirs just to help that customer. You might talk to bank A, but it is not a fit. Bank A might refer you to bank B. Listen to bank A and go talk to bank B. A good community banker tries to help the customer even if he sends that customer to a competitor. Bank B might send somebody else to bank A, because it is a better fit. The small town community bankers all know each other and really do try to help the customer go to the best place for the customer.
There is more to it than just down and interest rate. How will the bank work with you if you have a cost over run? Local community banks have the ability to make local decisions and work with you. The big boys do not. If you get a cost overrun on a kitchen with one of the big banks, be prepared to dig into your pocket. If you get a cost overrun with a local bank, there is a good chance they will modify your loan or move money around from a different construction category.
You may have seen in the news that some regulatory reform is coming in the banking world. I do not yet know how this might impact what I have just written.
In this published article, I cannot name names but I will give you suggestions on the phone or with a personal email. You can call me at 314-827-5263 or email me at email@example.com.
Talk to that local banker and ask his advice. Stay away from the big guys.
A Little History on Surveying and Land Records
If you look at old surveys or at the deed to your home you will find a legal description.
It probably says Lot x of xyz subdivision Located in Section cd and in Township ef North and gh East as recorded in the land records of abc county in the State of Missouri.
Just what does all that mean? I have put letters in where numbers belong.
Lot 10 of Beautiful Acres Located in Section 25, Township 43 North Range 3 East in Jefferson County Missouri.
The system started back in the days of Thomas Jefferson, and does not apply to the entire US, but it does apply to Missouri. A township is roughly 36 square miles containing 36 sections. A section is roughly 1 square mile containing 640 acres. I say roughly because the size changes depending on where you are in the township. Think about a globe and a flat map of the globe. The globe is round and the map is flat. Adjustments are made to sections every 6 miles to account for the curvature of the earth. But in general a section is 640 acres, and one mile square.
A section conveniently divides up into 40 acre parcels. The Northeast Quarter of a section is literally the northeast 1/4 th and contains 160 acres give or take. The northeast quarter of the northeast quarter is just that. It is the northeast quarter of the 160 acres and contains 40 acres. Back in the day, a homesteader would be given 40 acres and a mule for settling on a piece of land. It took about 40 acres to support a family with subsistence farming and that is about what one farmer could manage with a mule.
If you have seen old deeds you will see old measurements in chains, rods, and links. Newer surveys are in feet but the old measurements made sense, and an old deed will refer to the old measurements. A mile was 80 chains. 80 chains by 80 chains is 640 acres. 40 chains by 40 chains is 160 acres and 20 chains by 20 chains is 40 acres. That is pretty convenient math. That is a lot simpler than 5280 feet by 5280 feet equaling 640 acres. 4 rods by 4 rods is 10 acres. The old measurements made the math easy before computers and calculators. And in the old days, in rural areas, who owned less than 5 or 10 acres? They were very convenient units of measurement.
You might see something else in your deed. In addition to saying Section, Township and Range, it might refer to a US Survey. US Surveys generally pre dated United States ownership of the land and referred back to old Spanish and French Land Grants. They became US Surveys when the United States recognized the individual grants as being legitimate land holdings. They are generally in creek or river valleys and were the prime land worth surveying 200 years ago. There are lots of those in Jefferson County. They show up on old maps.
Old deeds, not part of a subdivision have what is called a "metes and bounds" description. It is literally a path around your property described with compass bearings and measurements. It might say go north 300 feet, then east 200 feet to a creek, then in a southerly direction along the stream bank, etc. It's actually more technical and will have more precise measurements, but the point is that the legal description says something similar to an old treasure map, but with precise measurements. Go north 300 feet, then turn to the right and go 200 feet and then follow the creek. The legal description in metes and bounds literally walks you around the property. Metes refers to the distances such as north 300 feet. Bounds refers to natural boundaries such as the creek.
Do you remember the old expression, "Beating the bounds"? It dates back to King Alfred's time in England where village elders and children would walk around parish boundaries and farm boundaries. They might hit or beat landmarks with the switches or they might spank the children at important landmarks as they walked property lines (boundaries) of the farms and villages. The purpose was to teach the younger generation where property lines were. In some parts of England and Wales, they still have a ceremonial beating of the bounds as kind of a holiday festival. I don't think they beat the kids anymore. Personally I like survey markers better.
The 1880's farmhouse on 7 acres for sale on my web site is in Harlow's second subdivision which is part of Lot 1 of Stites Subdivision in US Survey 1982 which is in Township 42 North Range 6 East in Jefferson County Missouri. Recorded subdivisions are recorded in Plat Books at Page Numbers in the county land records. The US Survey designation indicates a very old land holding pre dating the Louisiana Purchase. You can view this property and others at on this site.
The 1860's Victorian mansion which just sold, and is on the same website, is in a subdivision called Windsor Harbor and that subdivision is recorded in Plat Book 1 at Page 7 of the Jefferson County Land Records. The Hollows at Frisco Hill is adjacent to US Survey 783 and is recorded in Plat Book 261 at page 20. Now I do not know how many pages are in a plat book, but I have property in Book 1 and in Book 261. Book 261 was late 2009. Book 1 was 1860's.
Individual deeds used to be recorded in Deed Books at Page numbers, but the system changed a few years ago and a document number is assigned to each deed.
The entire purpose of this system of surveys and plats and deeds being recorded is to keep track of who owns what.
You have a deed to your property. It means little as proof of your ownership because you could have deeded it later to someone else. Your deed is proof you owned it at one time, but no proof you own it now. What is important is what is in the recorded land records. I have a deed framed on my office wall. I bought the land in the early 1970's and I have no clue as to who owns that land now. I sold it in the 1970's. My piece of paper means nothing. The land records mean everything.
What if the courthouse burns? What if a tornado takes it away? How do I prove I own my land? This is such an important issue that there are many safeguards. When a deed is recorded there will be a number put on the deed, and it will be filed in the local land records. There will also be a micro fish or scan or picture of some kind made of the deed and the recording information. It will be sent to a remote location for storage so that records can be recreated if the local courthouse is destroyed. I'm probably a few years behind on my technology. I now suspect, but do not know, that the records are both at a remote physical location and also on computers somewhere. The point is our system for proving real estate ownership is so important, that there are backups. When you buy a home or a piece of land, and pay $30.00 to have your deed "recorded", you are paying for the documentation that both proves your ownership and allows the records to be recreated.
This is so important to our society, that you elect a local official to supervise all of these records. It is The Recorder of Deeds. Think about the importance of this position the next time you vote. It was important at least as far back as Alfred the Great of England. They "Beat the Bounds" as a way to document land ownership in the minds of the villagers.
You can review my properties at this site or http://www.cannonhouseproperties.com/.
All are recorded in the county records. Several have some interesting history.
I have been asked by a reader to write an article on construction financing. It will be comming soon.
I'm glad that some are reading my articles, even though no one is following me. I got an email question on my financing article. The specific question was whether a definite building time line was required for a bank to make a favorable land loan.
The specifics were that the person was interested in land for a custom home in the somewhat distant future. But they want to pick out the land now. Can they still get such favorable financing from local banks?
My answer is, yes they can.
I am not intimately familiar with bank regulations and regulations do play a part here. The loan application has a section on the purpose of the loan. For a bank to give you the lowest down payment, that purpose must be for your future home. If it is for investment or speculation, regulations and/or bank policies typically require more down.
The banks I deal with are not concerned with a time table. They are concerned with ultimate intent. If you want to buy land now and plan on building in a year, it is for your personal home and use. If you want to buy land now for your retirement home 10 or more years out, it is still for your personal home and use. You can honestly answer the question that you are buying for your home. And based on that simple honest intent, you can get better terms.
The good local banks know plans and circumstances may change, and you might totally change your plans in a few years; but your intent at the time of applying for the loan is what counts.
The original article was posted May 29, 2010 and was titled, "Financing is Readily Available for Home Sites for Custom Homes". It was copied to this site today.
Check out my properties on this site and at http://www.cannonhouseproperties.com/.
Send me questions at firstname.lastname@example.org
and I will try to answer them.