DFW and buying land....ready to pull the trigger and then wait

4 Replies

I would like to buy land in the DFW area, anywhere from .66 to 1 acre.  I am conflicted about whether to buy now or wait until I am actually planning to build as I do not wish to pay property taxes on the land but I am concerned the few remaining lots in the areas I am interested in (Fairview, Allen, Lucas) will be gone and\or that by the time I am ready to build (in about 18 months from now) I will be priced out of the larger lots and will have to build on something smaller.  I am a bit shocked that in Allen I can get a .3 acre lot for $275K which I think is a lot of money but I can certainly afford it.  I have never built a house before, I have no idea of the lending process of a home build, yet for something reason, I feel an urgency to buy land right now.  Am I over reacting?  Will there be no more lots in a central area in Allen in 12 months or will the $350K for an acre of land in Fairview seem cheap in 12 months?  I would like some thoughts on people with more experienced than myself on this as I do not wish to make a mistake with hundreds of thousands on the line plus being on the hook for about $7K in property taxes per year while I figure things out.

My thought is you will have to pay cash for the lot or if you are lucky and have good assets and good income you might can finance 50% of it.   You will have to pay property taxes.  I don't think every single lot in those cities will be gone in 18 months.  You have to think they're not all for sale today.  They won't all be for sale in 18 months.  Lots tend to trickle in.  They other option you have is to buy from a builder who owns the lots already and sells it to you with the new home included.

Of course one thing you may want to do before you move forward is go to one of the local banks or your credit union.  This is not Wells Fargo, BofA, Chase, etc, but some one like Texas Star Bank.  See if you can get a new construction loan.  See if you can get a land loan.  Then you know where you stand and have a pre-approval letter to go shopping.  That's really the first step in the process, even before you look at lots.

Originally posted by @Bruce Lynn :

My thought is you will have to pay cash for the lot or if you are lucky and have good assets and good income you might can finance 50% of it.   You will have to pay property taxes.  I don't think every single lot in those cities will be gone in 18 months.  You have to think they're not all for sale today.  They won't all be for sale in 18 months.  Lots tend to trickle in.  They other option you have is to buy from a builder who owns the lots already and sells it to you with the new home included.

Of course one thing you may want to do before you move forward is go to one of the local banks or your credit union.  This is not Wells Fargo, BofA, Chase, etc, but some one like Texas Star Bank.  See if you can get a new construction loan.  See if you can get a land loan.  Then you know where you stand and have a pre-approval letter to go shopping.  That's really the first step in the process, even before you look at lots.

Are interest rates on land loans and loans on home build higher (they would practically have to be) than an inventory home? @Bruce Lynn My wife and I love north DFW and spend a lot of time in Plano and Mckinney, is there any other area you would recommend we look at to buy a lot and build other than Mckinney, Allen, and Fairview (we are not into Frisco and see very little in the way of lots in Prosper).  We checked out Heath and didn't fall in love with it.

Kelly,

If you don't mind going East down 380 a bit towards Princeton and Farmersville, there will be more options (and options for 1+ acre lots) in that area. There are also more options in North Collin County around New Hope and further North. It really depends on how close in proximity you want to be to McKinney/Allen/Fairview. The further out you go, the more lot options and varying prices/sizes you will have. 

@Kelly M. .....yes interest rates will be higher than buying from a production builder.  In most of the newer growth cities like Frisco and Prosper it will not be as common to find a lot and then build a custom house and that process is probably more expensive.  If you just want a new house, then buying from a production builder in any of those cities will likely be a lot more cost effective, both from just the price stand point and probably the interest rate stand point as well.   Interest rates depend on several factors, but the biggest one being your credit score and then perhaps how much you put down and how much you borrow.