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Originally Posted by jdso
Right now off the top of my head some things that come to mind:
- how does a mortgage work here? (with or without a house on the land)
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In addition to the above poster, we're going through this now. The way draw mortgages work depends somewhat on the lending institution. Some will fund up to 65% of the land purchase value on a first draw. Our experience was that we did not use a draw until 40% completed (house closed in, roof, windows, doors on). Our next draw was at 60%ish where drywall was up, and we're now struggling to hit the 100% for the finish. The bank will obviously not loan you money on something that isn't collateralized - so you fund to a certain portion of the build, they inspect and then release the funds.
It can really be a struggle to make it to particular completion points. Cost overruns are not uncommon at all.
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-tear-down procedures and costs
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We were lucky that the house on the property was something someone somewhere wanted so we were able to "sell" the house to a salvage company. They removed the house and took it away, leaving us responsible for demolishing the basement and excavating site. We had a financial agreement with them to minimize cost to us, but without them taking away the house it would easily have cost us over $10,000 to demolish and send the stuff to the dump. Excavation to prep the property, basement demolishing, and removal of material cost us nearly $6500. We wound up being "down" about $4000 after all was said and done.
There is a real wax-and-wane cycle in house removal. We had ours removed at a bad time so there was little demand for the house on the property. When the demand is high, you can negotiate for lots more than we were able to.