What would you do???

Discussion in 'Homesteading Questions' started by sidepasser, Sep 14, 2004.

  1. sidepasser

    sidepasser Well-Known Member

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    Hi,

    I am in the spin cycle over what to do about my farm and building a house. I have exactly 14 months before the whole kit and caboodle is paid for. I have my barn/house that is not completed due to paying cash for every single thing I do.

    I could take out a home equity loan and finish the house. I could build a new house and turn the barn back into a barn with a small apartment. If I complete the barn/house, then I will need to build a new barn which will cost me about the same as completing the barn/house.

    What would you do provided:

    1. It will cost approximately $80,000 to build a new house.
    2. It will cost me approximately $50,000 to finish my barn/house - but I am having major problems obtaining insurance. Last quote was $4,000 as it was not a "normal" house and does have wood heat and does have two horses living in the end of it. Most companies I contacted would not even consider writing a policy even though the house/barn is block, with a concrete foundation and up to code wiring and plumbing.
    3. If I complete the barn house for $50,000, I will still need to build a new barn to house all my horses ( at least six stalls, tack room, and feed room). Estimate was for $40,000 to do it properly (foundation, wiring, plumbing, nice metal roof, etc.).

    I have over $140,000 equity in my farm so have plenty of collateral and for the time being, I have a good job - (of course one never knows how long any job will last!). I still have one child at home and he begs for me to either finish this barn/house or build another one - we both are tired of living in a construction zone! One other kink - I wanted to retire in five years....but won't be able to if I have a loan or still need to finish this house/barn.


    Thanks for the input
    Sidepasser
     
  2. Mudwoman

    Mudwoman Well-Known Member

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    We are in a similar situation. Money is gone. House unfinished, but place is paid for with lots of equity.

    As I see your accounting figures. $50,000 plus $40,000 to finish barn/house and build new barn. Or $80,000 est to build another house.

    I vote for finish the barn/house and build another barn. My thinking is this. A barn is cheaper and faster to build than a house. You estimate $40K, but I would start looking at what could possibly done cheaper----even if it is temporary. Although your house is like ours probably----construction everywhere, it is still livable in that it keeps you warm and dry.

    My suggestion would be borrow on a 5 year loan enough to get some type of housing for the horses. You don't really have the luxury of $40K for the horses. Think outside the box on this one. For instance, we went down to see how a new neighbor is coming along on his building and moving to his land. He purchased a 12 x 16 metal storage building with blown on insulation for $2200. We can purchase a 18 x 22 metal carport with the sides all the way to the ground for half that much. His storage building has a particle board floor, our carport would not. So, you might look at the metal carports and get 2 of them that you put together with partitions that you build-----or keep thinking. But, you want to borrow as little money as possible with the idea of paying it off within 2-5 years. The horses won't care. It may not be your dream, but sometimes we just have to put things in perspective.

    The house you already have may have to continue on the pay as you go plan, but sounds like if you could get the horses out of there and you didn't have much of a loan to pay on a barn, that you would still have the money to complete the house. It still works in your plan to retire in 5 years and it doesn't obligate you to a huge 30 year mortgage that if times got hard could cause you to lose all you have.
     

  3. rambler

    rambler Well-Known Member Supporter

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    Are you going to live here until you are burried, or might you possibly sell the place in 10-20 years?

    It will be worth a lot with a good house & some outbuildings. It will be worth nothing if you have an 'unusual' house that is uninsurable & questionable on housing codes - you will be grandfathered in, but new codes will likely restrict what new owners could do.

    So, I would lean real strong for the good new house.

    But, if ever, ever, in your wildest dreams you ain't never going to sell the place for any reason, then it's all up to you.

    --->Paul
     
  4. sisterpine

    sisterpine Goshen Farm Supporter

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    Greetings from Montana! We recently found ourselves in a very similar position. OUr house was built "pay as you go" and was about ninety percent finished. However we had run out of money, owed on a tax error from 97 that we were just notified on and wanted to drill a well, as well as I wanted to retire in five years. Finally ended up getting a home equity loan, very difficult to do on an off the grid place. The well turned out to be a dry hole, poor us! But all else is going fine, got carpet installed last week, and added on a utility water storage room laundry room thing that turned out great (just one more small leak to fix!) I think i will still be able to retire if we dont have to buy a new car or anything.
    We will be staying here for the rest of our lives and I just wanted my house done after 5 plus years of building with every spare cent!
     
  5. sidepasser

    sidepasser Well-Known Member

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    Hi,

    I do plan to move further north once the child is in college as I can't tolerate these GA. summers anymore and I want to buy more land. I know that this house/barn is probably one of the coolest houses in the county, but probably wouldn't be an easy sell unless the next buyer loves horses. Land in large tracts is non existent as most of the farms have been turned into subdivisions, so we were looking at TN or lower Kentucky and have found lots of farms for sale, most were pretty expensive, but I figured that if I built a house, I would be able to get more money for my place to allow me to pay cash for another farm that has a house.

    Right now my farm sits on prime real estate but the appraisal is a lot lower than it would be since the appraisers don't know whether to call this place a house or a barn with apartment (it's 3200 square feet, of which I live in 2500 square feet). My biggest worry is no insurance as I cannot pay $4,000 a year for insurance! A normal house would cost me less than $1,000 a year in insurance. If I moved the horses out and built a new barn, our code here says it must be 200 feet from the nearest property line which would require a lot of grading to get a place level and make a drive way to it.

    I hate taking on debt, but feel that I am just spinning my tires as I never have enough money to finish the house, so am just nickel and dimeing my way along. I still have no insulation, need exterior sheathing, need a/c, and need lots of drywall or sheetrock and now the roof is fixing to need to be replaced (it is over 15 years old and due to the several storms we've had, is starting to leak in places - I've patched them up, but know that a new metal roof (I don't want shingles again) will cost about $3,000 to $4,000.

    On the plus side, I already have a well, and where the new house would go, I have electric run, and a septic tank already. Either way, I am looking at a debt load of at least 50,000 to finish this house as no one would buy it for what it is worth incomplete. Completed it may be worth about $100,000 or more as I was told to figure $45 per square foot, but incomplete to figure around $25 per square foot. That is a pretty big difference!

    As far as a home equity loan - I called the bank yesterday - they said I didn't have a "real house" so didn't qualify and would need to get either a construction loan or a new mortgage. That is the reason I get so frustrated! I have lived in the barn/house for 12 years and the tax appraiser sure thinks it is a house!

    What to do, what to do???
    Sidepasser
     
  6. BCR

    BCR Well-Known Member

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    Its all in the semantics. What you have is a barn with living quarters for the horse trainer. Very salable to someone breeding/raising horses. You just haven't built the manor house ;) yet.

    A home equity loan is more convenient than a mortgage in that you can write checks/charge to it, but it really is just a different mortgage. And yes, the raets of interest are often different. Have you tried online for a good rate? Would a $10K personal loan make enough of a dent in the living space conditions to get you through?
     
  7. shakeytails in KY

    shakeytails in KY Well-Known Member

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    Yup, here's mine- http://community.webshots.com/album/173549613QWbziI
    We'll build the "manor house" after we sell the place we're living in now.

    Sidepasser- please reconsider wood heat(could be part of your insurance problems)- with all the combustibles in a horse barn it's just so dangerous. And if you haven't already, check with Farm Bureau Insurance- they'll insure about anything.

    If you're planning on moving, I would suggest finishing the barn/house because, like you already said, nobody will pay what it's worth unfinished. I'm curious as to the cost($40000) of a new barn. We have less than that into our barn/apt, as we've done 99% of the work ourselves. And before we built, I got a quote from one of the national barn builders(Lester, I think). For just the barn 36x84 w/ 8 ft sidewalls the price was about $20000. I'm sure the local guys would be cheaper.
     
  8. MorrisonCorner

    MorrisonCorner Mansfield, VT for 200 yrs

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    I agree with the "finish what you've got going" posters. And it is for the "manor house" reason. Chances are your property is more valuable without the house on it, but with the finished barn/trainer apartment. It can be sold as a "build your dream...property already equipt with..."

    I live in an area where people buying up our homesteads tear them down and build new. I know that any improvement I put into my home increases the value for tax purposes, but for sale? No. The next buyer will demolish my house, probably my outbuildings, and build a trophy home. So I put things into my house that are either portable (step back cupboards instead of cabinets) or I really want (bathtub!).

    The tub, by the way, is coming with me when I go! I worked hard for that tub.
     
  9. oz in SC

    oz in SC Well-Known Member

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    Like BCR wrote,try marketing it as a Barn with large living quarters(2500' is BIG)

    So to me at least I would bite the bullet,take on a loan to finish the barn/apartment (but NOT to being a house that is also a barn) and plan on moving.

    It can be marketted as a horse farm in the making and all the people who can afford it can build the house to whatever standard they want.

    From watching shows on selling your house on TV,NOTHING you like will appeal to the potential buyers.... :D

    Look at the entire property VERY critically and decide what will make it sell,you could even ask a realtor to come out and tell you what will make it sell well.

    Good luck and look on the bright side,you are in a much better position than most people in regards to owing money.
     
  10. MarleneS

    MarleneS Well-Known Member

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    You've gotten some great advise already but here's my opinion:

    1.) As cheaply as possible finish the barn/house. Lenders first think -- if the borrower defaults on the loan what are the odds of our recooping our money on the resale. Which means they like -- 3 BR 2Bath, Ranchs, with brick exteriors and everything off/white on the interiors. They don't like "one of a kind" - "lots of customer work" etc. I advise as cheaply as possible because if you have too much of your personally built into the place buyers see that as a fault not a positive. Buyers look for faults to lower the price.

    2.) Whoever gave you the advise not to go into debt building a manor house was right on the money. Let the new owners build their dream house when you sell. If you were not planning on selling I would advise the opposite.

    3.) While your getting it "buyer" ready - go ahead and put in central heat and AC -- after all since you are selling you will not be paying the future fuel bills right?

    4.) A no more then 5 year loan is also a great idea - it will give you the money to finish the barn/house - hopefully making it insurable, and at the end of five years you will have a more marketable property and you will be where you want to be on your life goals. And never forget that lenders believe it is their career responsiblity to lend you the most money they decide you can possibly pay back -- sometimes it doesn't even look like they leave you enough to cover food and clothings...so decide beforehand exactly how little you can get by to get the job done and stick with it.


    See how easy that was, now you have a clearer defined goal. Just teasing -- you know what they say about people having opinions right?

    Best of luck to you,
    Marlene
     
  11. Jena

    Jena Well-Known Member

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    I don't know how many years until the kid is gone, but since you are planning on selling at some point...

    See if you can get some realtors out there to look the place over and give you their take on it's saleability. If you can get an appraiser, even better, but the agents usually are pretty good about what can sell or not.

    Get them to look it over and then ask what you should do. You don't have to do it, but it would give a different perspective.

    You can always tell them you are thinking of listing it to get them to come look.

    Jena
     
  12. Jan Doling

    Jan Doling Well-Known Member

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    Save deeper debt for the dream house in the next location. Finish what you've started and as soon as you have an empty nest, make your dreams happen. By the time you are ready to sell, everything should be worth more than now anyway.
     
  13. Nevada

    Nevada Voice of Reason Supporter

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    I'm with Jan on this one, stay your current course and finish what you have. You may see things differently after you finished.

    I would do something about your insurance situation though. I'm sure you can do something about the wood heating. Get an inexpensive propane space heater (used if possible) and install it. Even if you don't use the propane heater the insurance company will be off your back, and it may be a good selling feature when you are ready to move.

    You didn't elaborate on the other concerns of insurance companies. Combination homes are not that unusual. I have a friend who developed and airpark subdivision where many residents have hangar/homes, and insurance isn't a problem.
     
  14. sidepasser

    sidepasser Well-Known Member

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    Most insurance companies I have contacted stated the main reason for not wanting to insure the house/barn is that horses are seen as a liability waiting to happen and even though I removed my one boarder from the property, they still see horses as an "attractive nuisance" similiar to a swimming pool. Also, many will shy away from wood heaters as they see that as a liability also. I do not store hay in the barn part of the house (except for right now when I moved it all from the somewhat unstable hay shed to protect it from the hurricane). Horses only come in the barn in the winter when it is very cold and rainy/icy. My barn looks like a house too, stalls are painted inside and outside, nice real pine board siding on the front of the tack room and completely wired. I am installing a smoke detector and will put in a fire extinguisher as soon as possible. I checked with farm bureau and they didn't want to insure the barn/house as long as I had a boarder so will go back to them on Monday to see if they will at least come out and see if the house is insurable. Most companies said the house/barn had to be 100% completed before they would even consider insuring it. So that is part of the problem so would have to do the finish work prior to having them come out.

    I did have all the construction inspected and it passed the wiring, plumbing, roofing, and foundation with flying colors. So it is up to code on all the major things like that.

    My son will be in college in four years, so in 5 to 7 is when I plan to get serious about looking at new farms and preparing to move, but in the meantime, I really want to be comfortable here! So guess I will look into getting a short term loan that will cover the stuff needed to get this place sellable. I have a friend who is a realtor and she did the last appraisal and said that I needed to build a "normal" house or I would have a very hard time in this area making a sale (suburbia, mini vans, soccer moms, executives, etc.) whose horses are normally boarded off the property....

    Regular working people probably wouldn't be able to afford the payments on this place as the average wage here is $8.00 per hour, not really enough to pay on a 32 acre farm. So would have to market it nationally to the horse breeder/trainer groups.

    Thanks everyone, you've given me lots to think about and I will see my local mortgage company and also my bank to see if I can get some sort of loan to cover at least central heat/air, exterior siding, and flooring!!! I am sick of concrete floors, can live without drywall, but must have floors!!

    Sidepasser


     
  15. shakeytails in KY

    shakeytails in KY Well-Known Member

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    Hmmm...32 acres in the middle of upper-middle class suburbia?? Sounds like a great opportunity for someone to run a boarding/training/lesson barn. The trainer/barn manager could live in the barn/house with his personal horses, the owner could live in the "manor house" (I love that term!) and build a bigger barn for boarders/lesson horses.

    My suggestion for finishing is to make things look expensive. Haunt Lowes and Home Depot for bargain lighting, sinks, faucets, etc. Tile is easy to learn and fairly inexpensive, though it will result in sore muscles. Laminate floors look great and can be cheap (www.profloors.com is where I got mine) Do you have a Carter Lumber nearby? They are usually cheapest on fiberglass insulation and drywall (watch their ads) and Lowes and HD will beat that by 10%. I love to play the 10% game. Are you doing any of the construction yourself?
     
  16. sidepasser

    sidepasser Well-Known Member

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    Hi,

    I hired a block mason to teach me to lay block, and hired a helper to mix mortar and laid all the block myself. I hired an electrician (since I'm scared of getting zapped!) to do the wiring and then have done all the finish work that has been done by myself. I did hire a roofing team to put the roof on and I toted shingles till I was sick of them. I have done the most of the plumbing and all the painting. My boyfriend just put in new lighting in the bathroom, hallway, and we installed really neat halogen lighting in the barn. I painted the interior of the stalls this summer and the aisleway and did the pine plank paneling. I haven't a clue how to install tile, but have bought enough to do two rooms. The barn area right now has a 10 foot aisle, three 12 x 12 stalls, one 12 x 24 feed and storage room, and a tack room that is 8 by 12 ( that used to be a washrack). Part of the storage room has a loft in it.

    The barn/house is concrete block on a concrete foundation. If I built a new barn it would also be concrete block on a concrete foundation. Can't beat it for low maintenance and being virtually horse proof! Not much chewing goes on or kicking at the stall walls either. That is why a new barn would cost me about $40,000 as I would put in 8 stalls, a washrack, tackroom, feedroom and have a 12 ft. aisle as I have found that ten feet is too narrow for these big horses (TBs and belgians). Barns here have to adhere to code just like houses do in terms of foundation, wiring, plumbing and roof structure so that also adds to the cost. I also have skylights in my house part of the barn/house which cuts the electric bill, but had to hire someone to do that as I was afraid of not putting them in right and making a leaking mess!

    The only reason I could afford this place is I bought it in 1986 as raw land and did 90 percent of the work myself (well me and the draft horse have done alot of clearing) and I put up all the fencing myself. I did hire a grader to clear the first 10 acres and put in my dressage arena and am glad I did. Then I put in a well, septic tank and built the barn and driveway. Later I added the house. In 91 a tornado got the house and the barn and of course I built the barn back first and then moved in it so that is why it is a barn/house. not the most conventional housing but I do love the soaring 14 foot ceilings and the airyness of it.

    Guess I will finish it out and then I can always rent it out if I decide to build a normal house. I can get about $600 a month for rent if someone wanted to rent it as an apartment and had a horse or two, but then again I'd have to check with insurance company to see if that would be covered.

    I guess I am just getting a case of "I want it finished NOW" but then again, it has only been 13 years since I started building this after the tornado hit. besides I would really like to have an option in regards to either using wood heat or electric, especially on those days when I get sick and just can't get out of bed like I was last year when I had pneumonia. If it hadn't been for my son I guess we would have froze to death. Something to be said for having that switch on the wall (ha!).

    Take care,
    Sidepasser
     
  17. maro

    maro Member

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    Stay on cash basis and drop the insurance. If it burns maybe it's time to do something else anyway. Life is too short to be a servant to a bank or insurance company. Earthly property can be a master and we the slave. When I had nothing I was free.
     
  18. poultryprincess

    poultryprincess Well-Known Member

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    Just my 2 cents worth-* if you want to be in a finished place with cheap insurance...maybe a house trailer? They usually have propane which insurance guys like more than wood. < you may decide to stay in your house & just rent out the trailer> Best of all is you can move it off the property easily. * I would not spend good money on someone else's idea of a manor. It You don't want a manor yourself then I would forget about doing that. I guarantee that the next person will say --oh, I want a much bigger/smaller/wider/taller/thinner/shorter house--you get the idea.* YOu could always try speaking honestly to your agent. Explain that you are not comfortable with $4000. premiums....what can he suggest. In your "sweetest" voice you can whimper that you feel you would Have to do without insurance unless he can figure how to cut costs.* We had to do without full insurance ourselves. We live in an 1870 farmhouse without a furnace. We have a woodstove & a cook woodstove...& that doesn't sit well with insurance guys. You are only "obligated" to have insurance if there is a mortgage on your place. Otherwise it is up to the individual.* I would vote to keep as much of my $ as possible....ya never know when you might need it :cool:
     
  19. shakeytails in KY

    shakeytails in KY Well-Known Member

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    Wow, sidepasser, you've got more ambition than me! Concrete block is a lot like work, certainly more so than a simple pole barn and wood framing. Kinda funny about building the barn back first after the tornado- I'd do the same thing! I do know all about living in a construction zone, which is why we're NOT moving into the new place 'til the living quarters are completely finished. It sounds like you've got a nice place, and I'm sure all that sweat equity will pay off in the end. Hang in there!
     
  20. BamaSuzy

    BamaSuzy Well-Known Member

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    In my mind there is NO WAY you need to take a further mortgage on anything there if you are going to have the place paid for in 14 months....

    We made that mistake and I'll regret it for the rest of my life. Right now we would be doing fine EXCEPT we're paying a payment of $559 a month, which is awfully hard to come up with some months.

    I would continue "paying as I build" and not take out any further mortgage....even if it meant living in the barn with the horses or living in a camper or tent or whatever.