Pay off land or build cabin from sale of house?

I'd pay it off. Given the state of the economy and as a rule in general I much prefer to be free of debt. Something about that payment hanging over you every month with the prospect of losing everything if something unforeseen happens.

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I'd pay off the land. If you build then times get bad you could end up losing both the land and the cabin.

I like the idea of buying a cheap mobile home to live in while you build the cabin on a pay as you go basis. When it's complete, it's all paid for. Then either sell, rent, or use the mobile home as a guest house or even as a storage shed or barn.

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A person can build a garage package and fix it nice enough to live in for temporary. I think that's the way I would go. Much better than a tent or an old mobil home, and still of some use when you go for the main build. Pay the rest on the land.

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Wow! Thanks for all the advice!
We would still have pretty much the same income coming in as we do now. I work VERY part time (15 hours a week) and my husband would still work in Memphis and be at the property with us on weekends and a night or two during the week depending on his schedule. He'd be able to stay with numerous family members so there would be no lodging costs for him staying in town. I'd obviously leave my job and either stay at home or try to get a small P/T job in the area.

We have three children, 18 ds, 16 dd, and 7dd. So at least two of them will be out of the house in a couple of years. All are homeschooled. I'm 39 and dh is 40. Dh can retire when he's 54.

My folks have a 20X12? cabin on their property and staying it on a few weekends really has us anxious to just get something built out at our place. It was built in 2-3 days but has no plumbing, insulation or electric. It does have a small room off of the main room for a little camp toilet and a about a 6X10 overhang to protect generator or other stuff that can be stored outside. I believe it was about $6500 two years ago.

Our property is raw land. County will give us two poles to run electric, there is water at the road, don't know if we'll need a well for livestock in the pastures which are on the back side of the property. We have a few springs and small year round creeks that run all through the property, they flow onto neighbors property and I think that is all the water their cows and horses use, so a well isn't a priority as of now. If we put a cheap trailer out there, we'd still have to get water and electric to it and a septic.

If we paid off the property we'd have to rent a place close enough to the property because of our goats, chickens and horses. We could move in with my folks (it is an option but don't want to do it unless we absolutely have to) and bring all the critters there but would have to put up some additional fencing. They currently have three of our larger horses and my buck and wether in their pasture.

Property is 80 miles from where we are now and with gas prices the way they are it's not like we can go out there anytime we want. When we do we just keep telling ourselves that we need to get out there as fast as we can, we just love it.

We do have a very small, old camp trailer that my husband uses while hunting, I know I could stay in that for weeks at a time, but with three kids I don't think we all could without tempers flaring all the time!

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I'm in the camp of pay off the land. Then when you build your home, you subdivide a portion off where the house is. Then in case you need to sell off a portion of the land, you can do so without having problems with a bank. We built our house on 3 acres of our land, and later sold a small portion of the rest to my in-laws while we still had a mortgage on the house. We had some friends that wanted to sell their son a piece of their property, and it took them two years and the cost of several surveys and appraisals to get the bank to agree to it. Also, if something should happen and you lose the ability to pay the mortgage, you won't lose the whole property.

If you're going to build a garage, build one with a 2nd floor that you make into an apartment. We had friends build a two bedroom apartment over a 30'x30' garage, they lived in it a few years while they built their house, then were able to rent it out when they got the house built. They ended up putting a small office in the back of the first level of the garage, which they used as a bedroom for visiting parents and family. This might be something you could let your 18yo stay in while you are up stairs. They didn't use their garage as a garage until after the house was built, so it made a great family type room/game room - it would also have made a good home school room.

We had some other friends that built a barn before they built their house. One end of the barn was a two bedroom apartment - so they didn't have to go outside to get to the animals in the barn. After they built their house, they have either rented out the apartment or had family live in it.

Dawn

Congrats, Old Macfarm!

I won't chime in on the property vs dwelling debate as only you can come to that decision with your family based on far mor ethan can be shared in an online forum thread.

I would suggest, however, that instead of bearing the expense of a septic system, that you look into a sawdust toilet or some other composting system.

As several others have pointed out, not enough information. What is the length of the mortgage and how far into it are you? What is the interest rate?

If you are in the early part of the mortgage than most of your payment consists of interest. If you are towards the end then it is mostly principal.

It may not be an either or situation. For example, does your mortgage allow a lump sum payment (not the whole payoff amount) and reamortization. This may be worth considering. This would pay off part of the principal and reduce your monthly payments.

The interest rate you are paying is a major consideration. Mortgage rates are fairly low but with all the money the government is printing for financing fannie may and freddie mac (don't forget there is 5 trillion in potential risk out there) plus the takeover of AIG (more trillions of risk in credit swaps), there is a real possibility of high inflation. If you have a mortgage in the 5%-6% range you will look like a champ (holding the cash) if interest rates go to the levels of the late 1970s (17%-18%). 6 months ago I would have thought the risk of this almost non-existant....today I'm not so sure.

Mike

As others have said, lots of variables. Debt-free is good (pay off the land). however, you could still lose the land. If you're dependent on hubby's income, economy tanks, he loses his job and can't get another then you might have to sell out. Saving money is good (getting the house built, locking-in a good price right now). Same deal though - if hubby loses job, etc., and you're mortgaged then you might even be sold out rather than you selling out.

The best deal, if you can really do it, is to put sweat-equity into the buildings - do a lot of the work yourselves. You have to think about that too though - a lot of the sweat while your husband is away would have to come from the older kids, whom you expect to move out almost immediately they've finished. Is that fair to them? Maybe more to the point, would they FEEL that it was fair? You could try to sell the idea to them as more home-schooling, building valuable skills for later life. Also, are they REALLY going to move away - soon, or at all. Maybe they'll find local work, or do at least some schooling in a local college before thinking about going to any other college. Maybe they could build their own homes on your land later.

I'd think about a cheap mobile home as an interim step. Personally, though, I'd try for a barn or garage with power and water. Siting just about has to be where you can connect power - it's so much cheaper than off-grid systems. A lot depends on what regulations you have to comply with. You may not be allowed to connect power to a stand-alone garage, where you could to a barn. As for water, bear those springs in mind. If they're good quality, and they REALLY do run year-round, then you may be able to tap one, pipe it into a holding tank to provide pressure for the residence, then run the water downhill. That MIGHT be cheaper than connecting to public water - or not.

Fact is, if you've got a travel trailer, a building, water and power, you're pretty well off. You want some sort of toilet facilities a little upscale of the bear arrangement, but a sawdust toilet would certainly work at least in the short term. Make a decision whether later on you want septic or composting or not, but you'll still want to do something with domestic waste-water. Site your buildings so they can, or at least could, share a leach-field. Then you start framing-in (or hire it done) and finishing the interior walls that make a residence in your garage or barn. If you make use of the travel trailer in the meantime, and your kids live in tents inside your barn or garage, at least they're got shelter and water (the necessities) and power as well.

I'll look into this as I'm not sure. I think when we pay a little extra it goes toward the principal but doesn't reduce monthly payment.
I do know that the mortgage is not over 6% fixed rate.


I'll be checking into county regulations as to what we could hook up electric to.
I like the idea of a garage or barn. I'd rather put something there that we'll use after a house is built rather than having to get a mobile home hauled in then out when we're done with it.
Whatever we put out there we'll be doing a lot of it ourselves. DH is an ironworker and can build just about anything new from the ground up, and I have reluctantly become very familiar with plumbing as I've been the one designated to crawl under our 100+ year old house to repair things.
Just give me power, water and a roof!

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Well I'll admit I didn't read it all but heres my idea.

Depending on how much land you have, you could have acouple options.

I would look into... I guessing that your primary house as of right now is payed off ? If so I wouldnt sale it.I would determine the cost of how much it would take to build a small starter home with room for expansion plus pay off the land.


After that I would check to see how much you could mortage your primary house for. If you could get what you needed then that the way I would go.

The next step is: I would rent the mortaged location out. Sure It could take awhile to pay off depending on the length of the loan... But in lets say 30 years at the most you or your kids / grand kids will have that extra incom comming in to help them out.

Sorry for any spelling mistakes, and I hope you get the idea on what im thinking.

I know this has worked of me. We are working towards are 4rth extra home right now with 3 rentals working to pay off one house in about 7 years will start on are 5th.

Well those are just my ideas.... Good luck on any of the choices you make.

Depending on: how far out you are, if and where the local fire district is, and wether it's a "build sight" are all questions that will effect what you can get a loan for or build on your property if you have to borrow.

By living 2+ mile away from the main Highway and outside of the local Fire district I was unable to get ANY loan on prefab housing. I could only go stick built.

And the biggy: My sight had the electric, water, gravelled road and bullodozing all done before the bank would grant a Builders Note. It was considered a workable construstion sight. This and the initial survey cost me close to 10K. That was 2 years ago and all the prices have jumped at least 40%.
Even the utility company has had to raise their fees. To bore under a road was $400 now it's over $800. The trenching and power cable only cost me 1$ a foot installed. Now they charge $3. They used to give three poles now its two.
Gravel has jumped from $12 dollars a ton delivered to $20. My 400 ft drive has taken 13-15 ton loads so far and could use 1 more.

At the time of our build the Bank would have loaned me an easy quarter of a Million to build with, more than I could afford to pay back. Instead we kept the loan as low as possible at around 80K and built a house that pre-market-collapse estimated out to 140K. 60K worth of sweat equity.

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