Being a Land lord can be achieved through two routes: (A) SELF BUILD (BUILDING YOUR OWN DREAM HOUSE) OR (B). BUYING A BUILT HOUSE OF YOUR CHOICE.
Why self build?
Most self builds, if managed properly, should be worth considerably more than the construction costs. If all goes to plan this means you get your ideal home for a fraction of the market price.
Building your own home gives you the freedom to include features that may be impossible or at least very costly to install in other properties, like energy efficiency and green features.
Luxuries such as under floor heating can also be added for a fraction of what it would cost to install them in an existing property.
Is it cheaper to buy?
Before you start, assess your local area to make sure that your dream property is not already built and waiting for you.
If you do find one that is a close match, you need to work out whether you would be able to build a replica for less than it would cost to purchase and renovate the existing property.
If you could build your own version for a fraction of the asking price, doing so is definitely worth considering if you are up to the challenge.
(A) HOW TO BUILD YOUR OWN HOUSE
Taking on a self build project is a big task that will take months, possibly years, to complete.No matter how moderate your plans, it will be an expensive and stressful undertaking, so it is not something that should ever be entered into lightly. Hence these following steps should be considered.
ENJOY YOUR HOME
WORK OUT YOUR BUDGET : Set a realistic budget
Despite what you might think from watching shows such as Grand Designs, most custom home projects don’t end up turning into money pits. That’s because the majority of self builders take a sensible approach to budgeting, setting a firm and realistic figure for the project before the design stages begin.
You should always include a contingency – at least 10% of your overall budget is prudent. This money should only be used for unexpected costs during the project, such as additional foundation requirements or unavoidable delays. If you still have the contingency at the end of the build, you can consider upgrading interior finishes or landscaping schemes
The costs involved in a self-build project can easily spiral out of control if you fail to be realistic from the word go. Make sure you consider the following:
Research the likely cost of land, architect fees, builders, materials, fixtures, fittings and everything else you will need when you build a property from scratch.
Look at your finances and decide whether you can cope with such a huge financial commitment.
Consider ongoing costs, such as if you will be able to afford to pay rent or a mortgage while working on the construction.
Get a self-build mortgage
Self build mortgages are often priced slightly higher than standard mortgages.
You will also need a sizeable deposit up front before any lender will be willing to offer you a self build mortgage.
A self-build mortgage is specifically designed for anyone looking to build their own home.
Unlike traditional mortgages they typically release the money in stages so you are able to pay for land, labour and materials as your build progresses.
Find the perfect location
Finding a plot of land for your new home is the first and often the most crucial decision you need to make. Tracking down the right site for your project can seem like a headache, but don’t panic – over 13,000 people manage it every year! There are plenty of online resources to help, such as Plotsearch, but often word of mouth is the most powerful tool – so let local residents know that you’re looking to join their community. Click here for our full guide to plot hunting.
There is a good chance that you will already have an idea of the area in which you want to live, but it is still worth doing a bit of investigation before looking at specific plots.
Consider how you will get to and from work, and if you use public transport, check what areas are best served by rail and bus services
If you have a young family you should also check the local schools’ catchment areas when you decide where to buy land
Investigate whether any land developers, local farmers or utility companies hold undeveloped land in the area you are interested in building in. If so, you should consider contacting them to find out whether they are open to offers.
There is little benefit to having a sizeable plot of land if you cannot access it.
Before buying a property, check that there is access to public roads to allow you (and build traffic) to drive onto the site without having to pay for right of access over someone else’s land.
What else you should check
Is the land on a flood plain?
Is it under a flight path?
Is it close to a rail line or large road?
Are there any planned developments nearby (property, industrial or otherwise)
Are there are any public rights of way across the land?
Is the plot big enough for your plans?
What are the views like?
Is your property likely to be overlooked by neighbouring homes?
You should also look at the market value of properties in the surrounding area and see how the cost of land compares.
This will give you an idea of whether the land is worth the asking price and help you to establish whether you are likely to make a profit if you sell it at a later date.
Get planning permission
Without planning permission, you have no legal right to start construction, meaning your council could order the destruction of any work at your own cost.
Therefore, it makes sense to check planning permission rigorously and to not actually buy a plot of land until suitable planning permission has been granted.
There are two levels of planning permission:
Outline planning permission
This works by granting approval of an outline plan. This means that the plot has permission for a certain type of development to be built on it, but that specific construction plans have yet to be agreed.
If a plot has outline planning permission, you will have to submit a detailed plan for approval before construction can begin.
Note: Outline planning permission is usually valid for three years, before re-application is needed.
Detailed or full planning permission
This is where a full construction proposal has been agreed in detail, for a specific build such as a three bedroom house, or one bedroom bungalow.
If your plans do not match the planning permission, you may need to submit further construction plans for approval.
PURCHASE THE PLOT.
Treat the asking price of a plot as a starting point for negotiation and offer an amount you are happy to pay.
Do not be afraid to go in with a low price first of all (especially if you have had a mortgage approved in principle), as you can always put in a second offer if your first one is not accepted.
On the plus side, when you self build you only need to pay stamp duty on the cost of the plot itself, not on the value of the completed property.
You will need to be as specific in your requirements as possible while remaining flexible with how they are implemented to keep your costs down and ensure you stick to your budget. Consider the following:
How many bedrooms and bathrooms will you need?
Do you need a large garden or are you looking at building an urban sanctuary?
How large should each room be? Would you be happy with a smaller kitchen in exchange for a larger living room?
Find A Designer
Whether you choose a package supplier (who will literally design and build your home for you), an architect or another house designer, be sure to choose someone who understands your requirements is able to produce thoughtful responses that fit with your budget. Click here to find out more about designing your home, or find inspiration in fellow self builders’ completed homes.
Find an Architect
Why use an architect?
They will keep you compliant with building regulations and planning permission
Ensure your house is structurally sound
Tell you what is affordable within your budget
Incorporate unique features that are unavailable in a standard construction
Advise on construction practices and materials
Manage the build project should you wish
Getting a good architect can be the key to realising your idea of your perfect home.
Choosing the right architect is hugely important so it makes sense to book initial meetings with a number of different architects and to discuss your requirements, ideas and plans with each.
You should also look at examples of their past work and, if possible, get case studies or testimonials from previous clients.
Doing so will enable you to engage the services of the architect that will not only provide you with a suitable design for your new home, but also will help to make the whole self build process as stress free as possible
Get Full Planning Permission
Once your plan is completed, if your plot of land only has outline planning permission, or if you have made changes to the detailed planning already granted, you will need to get full/detailed planning permission before you can start work.
Choose Your Team
Every time you have to hire someone to work for you, you will pay a premium for their expertise, so it is important that you choose your team carefully.
Getting quality, reliable tradesmen on board will also help to ensure your property is well finished and that the build stays on track.
Are you up to the Challenge?
Before work can begin, you may need to take out insurance to protect anyone working on the site.
There are lots of specialised site insurance policies available for self-builders, but if you are unsure what you require, speak to an independent financial advisor or insurance broker to discuss your needs.
When faced with the prospect of having to hire people to work on a self build project, many people are fearful of the costs involved. However, if you can take on some of the tasks yourself you can significantly reduce your outlay.
While certain jobs will need to be left to professionals, such as installing the electrics and water system, there are other jobs that you can take on yourself, such as:
You may also want to consider taking on the role of project manager on your site, to avoid having to employ someone else to oversee construction. This will be a demanding task, however, so you should make sure you have the time and patience to adopt this role yourself.
Speak to other people who have used construction staff to seek recommendations, or use review websites to find contractors that are highly regarded in your area.
Always ask for a price for the whole job, an estimated date of completion for the work required, and the number of workers needed up front (anything additional should be priced extra).
However, as a rule you should never go for a builder simply because they give you the cheapest quote – ask for examples of their work and speak to previous clients to check for quality.
Even if a builder comes on recommendation you should never pay the full amount up front. Instead agree to pay in instalments as this protects you against poor craftsmanship.
Finally, where possible, you should source materials yourself to cut costs (as you are able to shop around for the best price whereas the builder may be tied to a particular merchant).
START THE BUILDING
Starting work on the structural shell of your home is an exciting time. Most self builders choose between two construction methods for their project, both of which are pretty much on a par for cost-effectiveness. Brick and block is the traditional and familiar favourite, while timber frame is great for quick, predictable construction schedules. Many other systems are available, including structural insulated panels and insulating concrete formwork, and it’s worth researching whether these might better suit your project.
Loosely speaking, your home building project will fall into five stages: foundation work; getting the house wind and weather tight (roof on, windows and doors in); first fix (the initial services, structural carpentry and plastering work); second fix (work carried out after plastering); and the final decoration. .
ENJOY YOUR NEW HOME!
With building work complete and the interiors finished, you’ll be ready (and probably raring) to move in to your dream home. There are a few practicalities to consider – such as obtaining the Completion certificate from building control, ensuring any small issues are dealt with as part of the ‘snagging’ process and making that all-important VAT reclaim. But now you’ve reached the end of your self-build journey, it’s time to enjoy the fruits of your labours.
(B) BUYING BUILT HOUSE OF YOUR CHOICE.
Buying a home can be a very intimidating process, especially if you’ve never done it before.
So the first thing you should do before you start the home buying process is to figure out whether owning a home is right for you. It may or may not be and this decision depends on you and what your circumstances are. Take into account that if you do buy a home, there are extra responsibilities and costs that go along with owning a home-such as lawn care, home maintenance and repairs, etc.
Step 1: Check Your Credit Report & Score
Before getting a mortgage or any kind of loan, you should always check your credit. According to the law, you’re allowed to receive one free copy of your credit report per year. You can do this by visiting Annualcreditreport.com. Scores range from approximately 300 to 850; generally, the higher your score, the better loan you’ll qualify for. Don’t forget to check your report for errors. If there are any, dispute them. It may help your credit score.
Step 2: Figure out How Much You Can Afford
You can calculate how much you can afford by starting online. There are several online mortgage calculators that will help you calculate an affordable monthly mortgage payment. Don’t forget to factor in money you’ll need for a down payment, closing costs, fees (such as fees for an attorney, appraisal, inspection, etc.) and the costs of remodeling or furniture. Remember that you don’t always have to put down 20 percent as your parents once did. There are loans available with little to no down payment. An experienced home loan expert can help you understand all your loan options, closing costs and other fees.
Can I afford it?
Most people need to borrow large sums of money to purchase a house, with a secured loan or mortgage over the house itself. These are provided by banks and building societies, but the choice of loans on the market can be fairly bewildering.
If you do not have a financial adviser, we would be happy to introduce you to one who can help you find the perfect mortgage package for you.
If applying for a mortgage, you should remember that you will normally require to produce copies of a number of recent wage slips as proof of income, along with your passport, driving licence or other photographic ID, and a copy of a recent utility bill or bank statement to confirm your identity and current address
Step 3: Find the Right Lender and Real Estate Agent
To find the right mortgage lender It’s best to shop around. Get recommendations from your friends and family and check with the Better Business Bureau. Talk to at least three or four mortgage lenders. Ask lots of questions and make sure they have answers that satisfy you. Make sure to find someone that you are comfortable with and who makes you feel at ease.
Once you have the right mortgage lender, make sure you at least get a pre-approval. Pre-qualifications are only a guess based on what you tell the lender and are no guarantee, whereas a pre-approval will give you a better idea of how big a loan you qualify for. The lender will actually pull your credit and get more information about you. However, you could even take it one step further by getting an actual approval before you start home shopping. That way, when you’re ready to make an offer, it will make the sale go much quicker. Besides, your offer will look more appealing than other buyers since your financing is guaranteed.
Step 4: Look for the Right Home
Make a list of the things you’ll need to have in the house. Ask yourself how many bedrooms and bathrooms you’ll need and get an idea of how much space you desire. How big do you want the kitchen to be? Do you need lots of closets and cabinet space? Do you need a big yard for your kids and/or pets to play in?
Once you’ve made a list of your must-have’s, don’t forget to think about the kind of neighborhood you want, types of schools in the area, the length of your commute to and from work, and the convenience of local shopping. Take into account your safety concerns as well as how good the rate of home appreciation is in the area.
Step 5: Make an Offer on the Home
Now that you’ve found the home you want, you have to make an offer. Most sellers price their homes a bit high, expecting that there will be some haggling involved. A decent place to start is about five percent below the asking price. You can also get a list from your real estate agent to find out how much comparable homes have sold for. Once you’ve made your offer, don’t think it’s final. The seller may make a counter-offer to which you can also counter-offer. But you don’t want to go back and forth too much. Somewhere, you have to meet in the middle. Once you’ve agreed on a price, you’ll make an earnest money deposit, which is money that goes in escrow to give the seller a sign of good faith.
Step 6: Get the Right Mortgage for Your Situation
There are many different types of mortgage programs out there, but as a first-time home buyer, you should be aware of the three basics: adjustable rate, fixed rate and interest-only.
Adjustable rate mortgages (ARMs) are short-term mortgages that offer an interest rate that is fixed for a short period of time, usually between one to seven years. After that, the interest rate can adjust every year up or down, depending on the market. These are good for people who don’t plan on living in their home very long and/or are looking for a lower interest rate and payment.
Fixed-rate mortgages are more traditional and offer a fixed interest rate (and thus a fixed monthly payment) for a longer period of time, usually 15 or 30 years, though they’re available in 20 or 25 year terms. These are good for people who like a predictable payment and plan on living in their home for a long time.
Both fixed and adjustable rate mortgages can have an interest-only payment. What this means is that for a certain amount of time during the loan term, you’re allowed to pay only enough to cover the interest portion of your payment. You can still pay principal when ysou wish, but don’t have to if your budget is tight. There is a myth that with interest-only mortgages, you don’t build equity. This is not necessarily true, since you can build equity through home appreciation. The benefit to interest-only mortgages is that you increase your cash flow by not paying principal.
Remember to ask your mortgage lender or mortgage banker lots of questions about which mortgage is right for you and your situation.
Step 7: Close on Your Home
Make sure you get a home inspection before you close. It will be well-worth the money spent since it ensures the property’s structural soundness and good condition.
Setting the closing date that is convenient to both parties may be tricky, but can certainly be done. Remember that you may have to wait until your rental agreement runs out and the seller may have to wait until they close on their new house.
Be sure you talk to your mortgage banker to understand all the costs that will be involved with the closing so there are no surprises. Closing costs will likely include (but are not limited to) your down payment, title fees, appraisal fees, attorney fees, inspection fees, and points you may have bought to buy down your interest rate.
Step 8: Move In!
You’ve got your mortgage, closed the deal and now it’s time to move in! Whether you use a mover or not is up to you, depending on your financial situation and how much stuff you have to move; perhaps also, whether you have a lot of friends willing to help you move. Either way, you’re done with the home buying process! Just start unpacking and start enjoying your first home! Buying a home for the first time doesn’t have to be a hassle if you’re prepared and you know what to do and when to do it. Choose an experienced home loan lender and a friendly, knowledgeable real estate agent-they are the key to helping you have a smooth home buying experience!