So You Want to Homestead?

Location, location, location! There are two options when purchasing a property to homestead on. 1. Develop a piece of raw land, or 2. Buy property that is already established. I highly advise the latter, unless you are filthy rich, in which case this entire article is not for you. Carry on. When my husband and I started out on this adventure a little over a yea ago, we fell in love with a parcel of land in Western Oklahoma. The landscape was beautiful, and the fact that the mineral rights were being sold with it was defiantly a plus. There was an existing pump jack on the property, so it is very likely the property is on top of an oil deposit. That however is a whole other machine and won't be covered here either.

Our youngest pictured on the parcel of land we wanted to develop.

What I would like to cover in this article is costs to develop raw property. The obvious cost is the land itself, but there are many more that aren't so obvious. Keep in mind, these estimates are very competitive for our neck of the woods.

We will start with the heart attack number. The water well drilling came in $7,000 for a 100ft well. My husband, who is currently in the oilfield industry decided he is in the WRONG industry! Drilling for water is obviously very lucrative. The water pump itself, we found for $885. Our construction contractor gave us a bid for the installation of the septic system with permits $3,825. Nearly $12,000 for running water folks. Moving on…..The electric provider for that area charges $861 for a 200 AMP Meter Loop. Depending on how far from the road you are setting your loop will determine the amount. After so many feet, this price increases dramatically. We found an electrician that would hook the home to the meter loop for a few hundred dollars. Our local propane company quoted us $632 for a 250 gallon tank to be installed. (we attend church with the owners, that was the homie hook up price) The second heart attack number was from the construction contractor to clear the land, build a pad for the home and a gravel road to the house. $8,000 I about fell out of my chair when that fax came in. Because the land we were purchasing was being sectioned out of an existing piece of land, we would have to have it surveyed for the county records, showing the exact boundaries. That estimate came it at $1,075. So just to develop the raw land was going to cost us over $21,000 and that is just to get it ready for a home.

Since we were on a budget and needed a fairly large home, we decided to put a manufactured home on the property. Seems like you get more bang for your buck with a manufactured home. However, we found ourselves in a nightmare trying to find a lender that would do a loan for the construction phase (land development) as well as the home itself. There very few lenders doing those types of loans and the ones that are, are racking in money by the handfuls. The interest rates are thought the roof! Most lenders will only do construction loans for stick built homes.

We worked on finding a decent lender for over a year!

One afternoon, I stumbled upon an advertisement for an upcoming auction. The auction was for a manufactured home that was already set on 12 acres of land. Did I mention the property is backup to a wild life refuge and next to a lake? So we thought we'd put our hat in for it. The day of the auction came and we had funding secured. Just so happens, it snowed that day and there was only one other person that bid against us. We basically stole the property. After the remodel, the appraisal came in $30,000 more than the purchase price.  Thirty grand in equity and a house payment that is half of what we were up against with the development of raw land. The total cost for remodel was roughly $10,000 and lots of labor on our part. We are still the winner here.

The property needed a little TLC, so I will go over the remodel in my next blog post. So keep your eye out for that.