How Do House and Land Property Packages Work? Are They a Wise Investment?

Written by Posted On Monday, 26 November 2018 18:10

When you think of your dream home, do you picture it in the middle of a bustling metropolis? Or, are you more interested in having a little bit of room to breathe? If owning both a house and land sounds like the ideal combination to you, then a house and land package can be an ideal real estate option.


Traditionally, building a new home on a piece of land would require that buyers purchase and finance the acreage first, and then the building process itself would be a separate project. That process led to frustration, financial strain and crossed wires between lenders, prospective homeowners, contractors and subs. With a house and land package, the team takes a comprehensive approach, allowing buyers to purchase both entities together and work seamlessly with the same team throughout the journey. This all-in approach often makes the project more affordable, as well.


As such, these properties are attractive to a range of buyers, from young couples looking to purchase their first space to established homeowners seeking to upgrade or expand as well as investors who want to diversify their portfolios.


How Do They Work?

This type of property often centers around a fixed-price quote that enables buyers to see, from the onset, the cost of the project. Traditional construction projects are often characterized by surprising add-on costs and unexpected changes that alter the price of a quote, even if one is agreed upon at the beginning.

This fixed-price quote is determined by a few factors. First, the price of the land will be calculated, usually by taking into account its size and its location. Next, the house price will be set based on a pre-approved construction design that buyers will select. This home price will include costs for all included design options, contractor fees and more.


Visualizing Your New Home

To help give you an idea of what your new home will look like, a reputable builder will often have already-constructed homes available for interested buyers to look through. Taking the time to browse these model homes is a wise step, as it can help interested buyers determine which design features appeal to them and which they’d like to skip.


Understanding the Finance Process

Your mortgage lender will be the best resource in guiding you through the house and land package finance process. In most cases, the project will be comprised of a mortgage loan that covers the land, along with a construction loan for the home. These are then bundled together to form a comprehensive payment plan. While you’ll begin paying on the land loan as soon as ownership commences, you’ll only pay the stamp duty costs, as the property has yet to be constructed.


Then, you’ll only pay for the home portion as it’s completed in phases. In this way, you conserve money and are able to better plan and save for the construction costs as they’re incurred. In addition, you’ll only pay interest on the amount of the loan that you’ve used to date, rather than the full amount.


Gauging If It’s Right For You

In most cases, house and land packages are an ideal way to get the custom home of your dreams, along with land to stretch out and grow into. Before you sign on the dotted line, make sure you know exactly what’s included in the package price. For instance, some builders might include a paved driveway in theirs, while some might not.


Moreover, make sure to partner with a reputable building team that has experience navigating these types of transactions. In this way, it makes sense to find companies that specialize exclusively in house and land packages, as they’ll be the most familiar with the way they work and can guide you, step-by-step, through the process as you get closer to coming home to your new space.

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