Real Estate Advisor: February
In this month's Real Estate Advisor we examine the art of the land deal and the increasingly popular trend of custom-designed closet spaces
Buying Land
There is something romantic in the idea of buying an open plot of land, a place untouched by human hands and open to a world of possibilities. One might think that buying land is a simple process, but in actuality it can be surprisingly complicated and in many ways is more difficult than buying a home. Despite the challenges, many consumers decide that vacant land is the right real estate investment for them.
Location
As with single family homes, one of the most important factors to consider when buying vacant land is location.
- Land that is near shopping centers, schools and other community features will be higher in price but is much more likely to increase in value.
- When looking at land in an undeveloped or underdeveloped area, it's important to investigate the future of the area as well. Local land-use plans should be available at city hall or from the county. Land that is in the path of development will appreciate considerably as the infrastructure nears. Researching upcoming development can alert you to any potentially objectionable future neighbors such as refuse transfer stations, major highways or noisy industrial parks.
- The proximity of the land for sale to developed areas can affect building costs, as some contractors will charge extra for jobs on remote work sites.
Things to consider
Zoning
Zoning is the single most important
consideration when looking to purchase vacant land. Simply put, how
a parcel of land is zoned will determine what, if anything, you will
be able to build there in the future.
Zoning regulations are often complex and highly specific, even in rural areas. They may deal with matters as large in scope (such as the permissible size of home to be built on a lot) or small (the maximum slope allowed for a driveway, for instance). In almost all areas, violation of zoning rules results in hefty fines.
Zoning regulations vary greatly from area to area, so carefully study the local zoning rules that apply to any prospective land purchase.
Utilities
If the land doesn't have hookups for water,
sewer, electricity and/or telephone, check with the
city/municipality regarding plans to extend access.
Septic tanks & wells
If sewer utilities are not
available, you will need to order soil tests to see if the land can
support a septic system. If water utilities aren't available, you'll
need to see if a well is an option and if so how far down the well
must be dug. Well digging can become expensive, and septic systems
alone can range from $3,000 to $18,000 dollars depending on local
labor rates and material costs.
Soil quality
Additional soil borings may be necessary
to determine how far down builders would need to dig in order to
excavate for the buildings foundation.
Topography
The grade and slope of the land will
determine how much you can build and the costs you will incur. Hilly
land requires careful water drainage management. Wooded areas may
require extensive tree removal prior to any construction.
Road Access
If the land isn't accessible by a public
road, there should be a deeded right-of-way that gives you the right
to access your land. You will share the costs of road construction
and upkeep.
Future construction budget
Most buyers of vacant land
purchase the property with the intent of building a home at a later
date. When doing so, it's important to factor in realistic future
construction costs to help determine the true value of the
individual land deal. Some buyers may have the tendency to get
caught up in the excitement over a promising piece of property, and
in the process ignore real fiscal challenges that the land itself
may present.
Finding Financing
While the mortgage industry today has focused on making it easier for homebuyers to secure financing, land loans are more difficult to secure. Most lenders view vacant land buys as riskier in comparison to purchases of existing homes.
Story loans
Land loans are often referred to as "story
loans", meaning that you will have to tell lenders the story behind
the property and your plans for the property in the future. Getting
the lender to buy into your vision is essential.
Risks for lenders
Why are land loans considered
riskier for lenders than home loans? Primarily because the loan's
collateral (the property) is not in current use, making it easier
for the owner to walk away. Land value can also be harder to
accurately assess.
The bottom line
Because of the risks, down payments
and interest rates are generally higher for land loans than they are
for home loans. Using a local savings and loan or community bank
whose loan officers are familiar with the area may lessen some of
these increases.
Other factors
Unimproved, raw land is the hardest type
of land to finance because it is essentially a speculative
investment. Some lenders will require a 50 percent down payment for
a raw land loan, although loans with 20 percent down payments are
not uncommon.
Loans for improved land (land with utilities, sewers, street access etc) will have a lower down payment and interest. Buying improved land with immediate plans for construction is the easiest way to secure a land loan, because the lender will be paid off when you take out a mortgage on the structure. Land loans generally mature in 10-15 years.
Financing options
A home equity loan or cash-out
mortgage refinance of your current home may be better ways to
finance a land purchase. Because your current home secures a home
equity loan, the interest rates should be lower.
Custom Closets
In the past half century, the emphasis in home storage has moved from freestanding furniture to built-in closets, and closet design has evolved accordingly. Once little more than shallow cupboards, closets have grown more generous in size and sophisticated in design. Over the last quarter century, custom-built closets have become one of the most popular trends in home remodeling.
What is a "Custom Closet"?
The custom home storage industry began in the early 80's, when California Closets© began designing and installing custom closet solutions. Placing an emphasis on both organization and style, custom closets continued to grow in popularity, particularly amongst high-end homeowners. Interest in closet design grew rapidly during the real estate boom of the 90's, many homeowners eager to add value and creative detail to their homes.
Generally speaking, custom closets combine shelving, drawers, clothes hangers and storage bins. Effectively closets are arranged along clean lines of functionality. Today custom closet designers can be found across the country. Closet designers provide storage solutions for both old homes (which are often limited by oddly configured closets) and newer homes (many of which have been built with poor closet distribution).
Why Customize Your Closet?
Proponents of improved closet design feel that a custom closet can reduce clutter-induced stress and improve a homeowner's overall relationship with their home. Some of the more tangible benefits of a redesigned closet:
- Improved accessibility
- Space efficiency
- Increased storage capacity
- Improved aesthetic appeal
- Added resale value
Basic Elements and Closet Styles
The actual makeup of a given closet differs according to the layout of the closet, the taste of the designer and the needs of the client. Some of the more popular elements used by custom closet designers:
- Pullout shelving
- Shoe shelves or racks
- Storage baskets or bins
- Drawers, often with glass paneling
- Rotating carousels
- Tiered hangars
- Islands/peninsulas
- Telescoping rods and racks
- Wood veneers
- Specialty lighting
- Solid surface countertops
- Inset glass
- Stylized doors
The look and feel of a custom closet project can be adapted to virtually any style of décor. Most custom closet professionals are well versed in both contemporary and traditional styles of interior design.
Costs
The average professionally designed closet costs between $3,000 and $4,000. High-end closet work (which in many cases are for closets the size of the average American bedroom and utilize fine materials such as marble, oak and stained glass) can run from $10,000 to $30,000.
DIY Quick Tips
Accurately assess your needs - Professional organizers often suggest you make an itemized inventory of your clothing. Generally the key is to determine how much of each "type" (hanging, folded, drawer-ready) of clothing storage you will need. Don't underestimate!
Space shelves out - Leave adequate vertical space between shelves for folded clothes. The minimum height is approximately 8 inches, while the ideal height is somewhere around 12-13 inches.
Centralize drawers - Drawers generally need the additional room provided by a centralized placement, and can server as a great visual anchor anyway.
Don't get cornered - If your closet has deep corner areas, use that space for hangers or rotating carousels rather than simple corner shelves. Corner shelves are often too deep for easy access, and folded clothes or stored items are often pushed to the back and out of mind.
Hang smart - Place one closet rod above another to maximize vertical space for the hanging of coasts, shirts and blouses.
Door to door- If you are looking for ways to save on a closet project, consider a door-less design or employing the use of a curtain or lightweight door material.
Organize your threads - After your clothing is organized by "type", you should arrange clothing by use. Separate casual, work and formal attire. Some professional organizers recommend arranging clothes by color as well. Whenever possible, keep multiple articles from one outfit grouped together.
Identify your excesses - The hardest ingredient of getting organized is identifying and parting with the things you don't really need. An easy way to make sense of it all is to "tag" (with stickers or safety pins, for example) all of your clothing, removing the tag the first time you wear the garment. Any items that are still tagged after one year are articles of clothing you can probably live without.
