Is it more affordable to buy land and build rather than buying a pre-built property?

Seeking Advice
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Hey guys, I was wondering if it’s more cost-effective to buy land and build a house instead of purchasing an already-built property. Is it cheaper to buy a piece of land and build on it?

Edit: Never mind, I figured it out! :sweat_smile::rofl: Buying an older house is obviously the cheaper option.

I want to live on an acre of land, but my only choices seem to be a million-dollar house on an acre or something equally expensive. Meanwhile, I found an acre of land for $60K, but it’s just an empty field or forest next to other houses.

I’ve never built a house or bought a manufactured home before. Do you guys know what the prices are like on the East Coast of the United States for something like that?

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Building a custom house almost always costs more than buying a used one, similar to how a new car costs more than a used car, it’s just the way it goes.

Depending on what you’re aiming for, the cost difference can easily reach hundreds of thousands of dollars, sometimes even more. It can get really pricey.

Unless you’re a general contractor or have extensive DIY skills, there will likely be significant expenses you hadn’t anticipated like bringing utilities to your property. For instance, my parents built a custom home at the end of a private road, only to find out later from a county inspector that they needed a new fire hydrant nearby, adding a whopping $22,000 to their project costs just to meet inspection requirements.

Preparing the land, conducting perc tests for septic systems, and other necessary steps can also be quite costly. Unexpected challenges during foundation work can escalate costs significantly; I’ve seen cases where unexpected rocks added $50,000 to the foundation expenses and delayed construction by months.

If you’re set on building from scratch, it’s crucial to choose a development that’s builder-ready or have a solid financial cushion to cover unforeseen expenses.

Keep in mind, some inexpensive land may be cheap because it’s not suitable for building. In Arizona, for example, rocky terrain often makes it challenging to install septic systems. I know of people who spent $75,000 on a 3-acre plot only to discover that the soil wouldn’t support a septic system anywhere on the property. They’ve been stuck with vacant land for years.

That’s why many people opt for new construction tract homes (often called “cookie cutter homes”). You can typically get a small piece of land for around $5,000 to $10,000, and the builder handles all the potential surprises and extras.

It seems like you’re interested in privacy and possibly avoiding an HOA, which means building new could come with unexpected costs. It’s a good idea to consult with reputable local builders who know the area well and can provide realistic advice based on their experience.

Also, consider that there’s a wide spectrum of quality and cost in new construction—from basic code compliance builds to high-end luxury homes with all the bells and whistles. Prices can vary significantly based on the builder’s expertise, materials used, and attention to detail.

In the end, new construction offers flexibility and customization, but it also comes with financial uncertainties that need careful planning and consideration.

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Out in the Western states, I explored that idea for quite a few years. Back when land prices were lower than they are now, it made sense. But as prices have skyrocketed doubled, tripled, even quadrupled the economics no longer add up. The biggest challenge here has been water availability. If you’re looking for an acre or more in that price range, it’s likely far from urban areas, where drilling a well becomes necessary. This can easily cost tens of thousands of dollars, and there’s no guarantee of hitting water on the first try if they drill deep and find nothing, you’ll have to foot the bill for another attempt. In the Eastern part of the country where you are, this might not be as big of an issue, but it’s definitely something worth investigating.

Another significant factor is utilities extending power and water lines to remote lots can be quite expensive, especially if the nearest utility lines are far away. Then there’s the cost of installing a septic system, which can also run into five figures. That’s why you often see rural lots mentioning they’ve already passed a perc test, confirming the land is suitable for a septic system.

Access is another crucial consideration. Some sellers advertise lots that aren’t accessible, not even by easement, which I find quite deceptive.

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Building a house would most likely be more expensive than purchasing an identical one that currently exists.

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Yeah, there are two lots priced at $40K each, completely surrounded by other houses, and I’m thinking, “What’s the point of that?”

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It’s really strange, especially if there’s no official easement documented. You’d practically need a helicopter to reach those properties! Those lots seem only beneficial to the owners of the neighboring homes who might want to enlarge their own properties. I wonder if people sometimes buy such lots without fully understanding the situation they’re getting into…

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I’m just a regular guy who built my own home. We used a home designer for the plans you can sit down with them, design the house, and they’ll draw up all the plans for you. Then, find an owner-builder who acts as the general contractor on paper but consults with you throughout the process. It’s not difficult if you’re organized. We saved over 25% by building this way. We were able to find all the materials ourselves and spent time hunting for deals. The total cost of our house on three acres was comparable to the prices of houses on the market in our area. With some planning and effort, it’s definitely achievable.

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That’s awesome! My wife owns an interior design company, so we handle all the labor ourselves and benefit from discounts with vendors across the industry. We were recently discussing with our general contractor about having them build up to drywall and then handing over the project to us for the finishing touches. According to our calculations, it would cost us around $350K to build up to that point, but with our final touches, we estimate the total cost to be around $450K. It’s amazing how much you can save with a little hard work and effort!