As I understand it—and I hope you will correct me if I’m wrong—the real problems with building something like this are first, that it’s very hard to get a construction loan, so you have to pay cash up front for everything, and second, that you have a prolonged construction process because you have to buy the land, contract to put in the utilities, well, septic, foundation, driveway, outbuildings, etc., and supervise the trades as your own general contractor. The regular tract-house builder can turn these houses out on an assembly-line basis but it is a little more exasperating and time-consuming for one or two guys. Still, it’s a good idea and very much worth considering.
I have a friend who started a company where he serves as the “builder of record”. He manages the job just like any other “builder”. So, the construction loan is easy to get.
That’s IF you qualify for a permanent mortgage. Bottom line is he’ll build the house for $6.15 above cost. With me, that won’t be charged because I’ll manage the job myself using his trade contractors.
The way it works is you get a 90% loan based on the appraised market value. With the first draw you pay off the land. Since I’m doing it myself I’ll save the builder’s overhead and builder profit. I’ll end up borrowing about 75% of the loan amount.
It always takes a little longer so you pay a little more in interim interest on the construction loan than a tract builder. His trades finish a job and move to the next lot. The trades I use will have to travel a little farther, and truthfully, they’ll put me off for a week if one of the bigger builders calls them.