Homesteads: Buying before selling

[quietintheland]

(I wasn't sure whether to post this here or in Real Estate. If the moderators think this to be a better topic for that section, please move. Thanks!)

I would like the collective wisdom of other homesteaders on the feasibility of our two plans.

We presently own a few acres and a house. Our current mortgage (PITI) is about $500/month. We have about $30K in equity in the house, and an equal amount in savings. For personal and financial reasons we have been attempting to sell our current property and purchase another homestead for "cash". Our credit has no blemishes.

We've had two different plans:

1. Find a piece of land for $15K or less and work as an owner/builder building a small cabin (something like this: http://coyotecottage.com/cabin/cabinintro.htm) as time and money permit, hopefully being able to move in by this fall. Disadvantages are splitting our time between two properties, concern if our current property would sell first, unimproved land can be expensive, limited experience building, and limiting our options as to where we could locate (probably no more than 3 hours from our current location). Advantages would be that we could do this without obtaining another mortgage, build entirely debt free, and build exactly what we want.

2. Find an existing house and a few acres for no more than $40K, and put 25% down from our savings. Stay in our current house until it sells, then use the proceeds from the sale of our current homestead to pay off the mortgage on the new one. Disadvantages: Tying ourselves into another mortgage, not getting exactly what we want, having to pay two mortgages at once, making finances tighter than what they already are (but doable), banks don't like to lend on small amounts. Advantages: Not tying ourselves into a geographic region, not needing to build from scratch, generally cheaper to buy an improved property than improve it yourself in the current market conditions.

I'm presently working 5 different part-time contract jobs (essentially self-employed) to make things work where we currently live (which is part of the reason we'd like to move). Total net income averages $2000/month, but we we typically have lived off about $1800 of that. We've tightened the belt a bit more for this year, and intend to live on $1600/month. About 1/2 of my current income comes from one of the jobs, which is portable and could possibly be expanded. I would be giving up 3 jobs if we moved. If we moved my income would initially drop to about $1100/month. Moving would save us apx. $500/month from our current budget categories. So financially, I'm not seeing much difference if we stay here or leave, except there would be less stress from needing to work so many different jobs.

Or we could just stay here and keep doing what we're doing, which again, we'd really prefer not to do. Conventional wisdom says not to buy another property before selling the one you have, but I know at our price point, properties don't stay for sale for long and are like looking for a needle in a haystack. We're also trying to avoid a double move.

I'm sure many of you have moved from one place to another to follow your homesteading dreams. Any thoughts or words of advice on the above scenarios?

Thanks in advance,

QuietInTheLand

[Tarheel]

Quiteintheland......sent you a pm

[Miss Kay]

That's a lot to think about. We bought our second home/farm before our first sold. It took us about a year before we sold and that was stressful but like you said, doable. Building will cost you more and take more time than you think. I think a lot of it also depends on your age, if you have kids at home, skills, etc. I say for now keep all your options open and start researching all of them and then the decision may make itself.

[libertygirl]

We bought a second property with our investment account money last February. So we are going on a year since the purchase. We have made 5 trips so far moving the farm, and hope to make the final move this spring/summer. We do still need to sell our current home, but also have the option of renting it until it sells if necessary. The new property is payed for so that is not an added burden. We felt insecure with the investment market and felt the money would be better invested in property. The property we bought was a repo and at an excellent price. Went with my father's saying, "Strike while the iron's hot".

[Rick]

Don't increase you debt, buy land for land - a tolerable home is a plus.

[dkhern]

like said investigate options. most fin instutions dont like to lend on raw land. your equity in your home is only what you can get. real estate is depressed and prices are down time on market is long, competing w/foreclosures. good luck

[Dusky Beauty]

If it's possible to buy before selling without leaving your finances over extended I would-- It's much easier to know the place you are going to to pack/sell/giveaway stuff to fit the new place, you can take your move on your time, keep costs down with several small trips instead of one giant truck rental, and as you move your "personality" out of your old home, it will be easier to stage it well enough to get it sold quickly.

It's been said time and again, a potential buyer wants to see THEMSELVES in a home, not the current owners.