Financing an LHBA style home

[WyoFox]

Ok, first post with a question!

My husband and I are in a trailer with 5 young kids (crazy, right?) So understandably we are itching to get out of here. Luckily it's a larger mobile home so we've survived this far! :p We have been saving and investing and waiting for those investments to grow and for that perfect piece of land to come up where we can build our log home (FIL built an LHBA style home, lives next door, we've learned a lot from him and plan on attending the next available class - June is full already).

Well, we are closing soon on an owner financed piece of the most beautiful 8 acres. So now, we're trying to figure out how to come up with the money to get started on building. One idea was to get another owner financed piece of land closer to town (there is one available that we know of), build a smaller log home there and sell it, then use the cash to pay off that loan and the rest can go towards our house. DH wants to make it a duplex and rent it out for long term cash flow and pay for our house as we go. I can see advantages with both but maybe long term it would be better to rent it out. We also considered dividing the acreage we are currently buying and selling a home there, but that would involve sharing our lot... which might be ok if we end up with good neighbors but that's a risk too.

Of course we haven't attended the class yet so should we hold off on our plans until after that anyway? It's just the beginning of summer and we'd hate to waste this whole building season sitting around.

Any other suggestions we're not thinking of or flaws in these plans we're not seeing? Thanks and can't wait to become members ourselves!

[allen84]

FIL=Father In Law?, DH=Dumb Husband? Honest question... that sounds like some kind of acronyms my wife would use.

[panderson03]

I wonder if you've seen the thread about Blaine's story? he was in the same boat. a family of seven (someone correct me if I'm wrong!) in a trailer while they built their LHBA cabin on their property.
sorry but I cannot tell you which way to go. just thinking of the finances it seems as though dividing the acreage seems the most expedient way to get cash for the build.
sorry I'm not more help!

[panderson03]

that's how I read it, Allen :)

[allen84]

If you subdivide, get all the soil work done for both parcels first so you know you have two perc sites. That's my only advice.

Just kidding... One other thing. If you subdivide, maybe consider splitting what you sell into more than one lot. Look at the market and demand. Four 1 acre lots might bring more (or sell faster) than one 4 acre lot Or however you choose to split. There are plenty of options if the land and locals allow.

[WyoFox]

FIL=Father In Law?, DH=Dumb Husband? Honest question... that sounds like some kind of acronyms my wife would use.
Haha! Father in law, and I intended it as Dear Husband but now that I think about it I don't use many acronyms correctly so who knows what it's supposed to be!

[WyoFox]

I wonder if you've seen the thread about Blaine's story? he was in the same boat. a family of seven (someone correct me if I'm wrong!) in a trailer while they built their LHBA cabin on their property.
sorry but I cannot tell you which way to go. just thinking of the finances it seems as though dividing the acreage seems the most expedient way to get cash for the build.
sorry I'm not more help!

Is it a thread in the general forum? Don't think I've seen that one. Thanks!

[loghousenut]

Building with five young kids growing up in a trailer on the property seems like a very relaxing way to raise a family the proper way. I could really get into that. I'd suggest homeschooling them.

I can in no way fathom doing this LHBA thing with a loan. It would drive me nutser.

[allen84]

"Financing" doesn't always mean "Loan"... I understand, it sounds like the owner financing the land is a given but selling off part of it could give them the financing to build. I'd try to avoid borrowing for the build as LHN stated.

[WyoFox]

Sorry for the confusion, I meant financing as in having the money to build. We are staying as far away from banks as possible.

We actually do homeschool! It's awesome. I always tell people it's much less stressful than getting all the kids ready and to different schools in the morning and then home again in the afternoon and then dealing with homework, teacher meetings, pta, etc.

[blane]

So, here's my story. We purchased our land that had a single wide 35 year old trailer on it that was literally falling apart and moved into it with 5 children and built our home debt free. We homeschooled all five children while doing it and wouldn't change any of it if we had to do it over. It was hard but during that time we all learned some of life's most valuable lessons. Like hard work is easier than debt and how you have to depend on every member of a family to do their part to succeed. And most of all we learned to depend on the Lord to get us through it all.
I would urge you to avoid going into debt if at all possible.
Where there is a will there is a way

[WyoFox]

Blane, thanks for the words of encouragement. I checked out your blog and your house is beautiful! We'll hang in there and try to be patient. I'm sure it'll be worth it!

[Basil]

We bought our farm (with borrowed money)with a mobile home on-site and lived there while we built the house with savings. Then we converted our farm loan to a mortgage on the house (thus qualifying for a MERS secondary market loan) for the lower interest rate. Now we own 70 acres and a 3000 square foot house and our mortgage is under $120,000. Most of our farm is owned free and clear now. There are a lot of options for creative financing, even with a family and obligations.

[loghousenut]

I guess you Wyoming folks are smarter the I originally assumes. Lucky bunch of kids. Keep at it.

Sent from my LG-H631 using Tapatalk

[david80]

"...hard work is easier than debt..."

This is probably the most valuable piece of advice ever posted on the internet

[Arrowman]

Ok, first post with a question!

My husband and I are in a trailer with 5 young kids (crazy, right?) So understandably we are itching to get out of here. Luckily it's a larger mobile home so we've survived this far! :p We have been saving and investing and waiting for those investments to grow and for that perfect piece of land to come up where we can build our log home (FIL built an LHBA style home, lives next door, we've learned a lot from him and plan on attending the next available class - June is full already).

Well, we are closing soon on an owner financed piece of the most beautiful 8 acres. So now, we're trying to figure out how to come up with the money to get started on building. One idea was to get another owner financed piece of land closer to town (there is one available that we know of), build a smaller log home there and sell it, then use the cash to pay off that loan and the rest can go towards our house. DH wants to make it a duplex and rent it out for long term cash flow and pay for our house as we go. I can see advantages with both but maybe long term it would be better to rent it out. We also considered dividing the acreage we are currently buying and selling a home there, but that would involve sharing our lot... which might be ok if we end up with good neighbors but that's a risk too.

Of course we haven't attended the class yet so should we hold off on our plans until after that anyway? It's just the beginning of summer and we'd hate to waste this whole building season sitting around.

Any other suggestions we're not thinking of or flaws in these plans we're not seeing? Thanks and can't wait to become members ourselves!

Welcome, WyoFox! We homeschool as well.

But to your post, I think it really depends on your timeline for getting the log home built. Even a small rental house will cost some money to be built. Just saying it's $50k, which would be a really small one, if you had that money, you could have just put $50k to your log home instead. It will take awhile for you to recoup your investment in a rental home. As long as it's in the right spot, it should be a good investment, but on a small rental home, you may only get $300-$500 a month for rent, or basically $4-$6k a year. Not a huge amount to finance a new log home construction.

If you want to be in the log home sooner rather than later, building a small one and selling is your best bet of the two options. At $6k a year for rent, it would take you 10 years to make back your initial investment, so all else being equal, if your time horizon for being in the log home is <10 years, don't build a rental unit. If you think you want to build and sell, make sure you do some due diligence in the local real estate market. Not sure where you live in Wyoming, but the wife has family in Gillette, and the real estate market there is having a real tough time since oil has crashed. Also, bear in mind, you might be building debt free, but if you build to sell, there is a good chance the person buying it will need a loan to do so. Lender's can be finicky about financing log homes, so you may want to do some homework on banks around there to see if log home financing is readily available for any prospective buyers. Not a lot of people can bring a quarter million in cash to the closing table.

I would agree with Panderson that your best course of action for a quick cash infusion would be to subdivide some of the land and sell it off. If you are determined to do this debt free, take that cash and whatever you were going to use for building a rental or small house to sell, scrimp and save every dime, and start trying to buy things on the cheap and make connections with loggers and sawmills. But it won't be the easiest route.

But then again, there is a saying that floats around these boards; you can have quick, good, and cheap, but you can only pick two. I would talk with your husband and see which two are the most important to you guys and let that guide your decisions. I won't discourage you from going the debt-free route, but you also wouldn't be the first person not to if it came to that as well. My wife would go crazy homeschooling our four children in a small trailer. Our marriage and her sanity, is worth the mortgage. But if you guys can make it work, my hat is definitely off to you.

[MPeterson1020]

So, here's my story. We purchased our land that had a single wide 35 year old trailer on it that was literally falling apart and moved into it with 5 children and built our home debt free. We homeschooled all five children while doing it and wouldn't change any of it if we had to do it over. It was hard but during that time we all learned some of life's most valuable lessons. Like hard work is easier than debt and how you have to depend on every member of a family to do their part to succeed. And most of all we learned to depend on the Lord to get us through it all.
I would urge you to avoid going into debt if at all possible.
Where there is a will there is a way

Ahh.. some well timed encouragement. :) Blane, I think of your journey as we start ours, which will be much easier as I only have one adult child living at home. We are preparing to move into the 31 ft camper and 1/2 of the garage so that we can tear down our old mobile home to build the log home in its spot. If you had enough room for all of you, then we should be fine! :) Sara has been an encouragement as well. People ask why don't I just put a modular or double wide where my current mobile home is.... honestly the thought of a mortgage scares me more than the work involved in building a house even if it takes us 5 years.

[blane]

I have spent the past 4 months tearing down the old trailer that was once our home. It had a plak on the front side that said "Madison Mansion" mounted to the front. It's the only thing my wife wanted to keep out of it. She is going to frame it and hang it in a wall with photos of the build.