Giant Leaps

Giant Leaps

I mentioned in my last post that I put an offer in on a piece of land. Yes – it was the land that I’d mentioned previously. (If you missed it, read about it here.) I have good news to share and bad news to share.

The good news is that the sellers accepted my offer!

The bad news is that the sellers accepted my offer…

So I now have the very interesting task of tearing down the structure that is on the property. I wanted to share a few pictures before I begin the process. I will try and get to the property soon to take some more pictures since I don’t have any of the view, which is the best part.

WARNING: They are not pretty!

I also went to the bank to set up my loan and payments, and since I’m documenting my process I will share with you the strange way I’ve had to go about my financing.

First I got a personal loan to pay my builder, Tiny House Squared, and pay for some immediate upgrades to the property. I paid my builder a down payment, plus paid for the order of building materials. (He chose the materials but we worked collaboratively on the layout of windows, the door, walls, etc.) In lieu of a traditional personal loan, I went the route of refinancing my car. This made it a secured auto loan, which gave me a much lower interest rate. I highly recommend it if this is an option for you.

I knew if I bought this property that I would need to pay for some things immediately, like fixing the driveway and renting a dumpster to haul away the trash. (I also need to hire a company to haul away a car that is on the property, but I have to get a abandonment title first since I don’t know who owned it.) Additionally I’ll need to buy some tools I don’t currently have, like a reciprocating saw. I don’t think I’ll need the entire amount of the loan I took out, but I figured it was better to be safe than sorry in this situation.

My next step was to find a bank that would lend on a piece of land. The trouble I ran into was twofold. First, most banks will not give you a mortgage for less than $50,000; the risk-reward is just not in their favor on these loans, I’m told. Second, few banks will give a land loan, which is what I need. The suggestion I ran into again and again was to take out an additional personal loan. With a 4-5% difference between a personal loan and a land loan, I continued to pursue the latter. I was finally referred to a small bank about an hour away from where I live for my land loan. To save yourself a lot of time and a migraine or two, I suggest starting with smaller banks and credit unions if you need this type of loan.

Now that the loan is in process, I have to focus on tedious tasks, such as getting the aforementioned abandonment title and calling electricians to get a quote on temporary electric service. I am also getting a quote from a demolition company just to see if it would be worth my money for someone else to tear the modular home down. I’m currently doubling my income with my second job, so I think about one month of my second income is my cut-off amount for the demolition. I’ve also left messages for the Fire Marshall to see if the volunteer fire department would come and do a controlled burn. That would be ideal!

Either way, once the structure is down I will need to get someone to take the I-beams that the house is resting on. They are very long and obviously heavy, but I have a few options.

The most exciting part so far is that my trailer is finished and my build has begun! Here are some pictures of that as well!

Thank you for continuing to follow my journey! More exciting updates to come!

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Financing My (Tiny) Dream

Financing My (Tiny) Dream

In my last post I talked a little bit about my personal budget. Since then I’ve been trying to figure out where I’m going to get the money for each step of this process. I have had to figure out:

  • The Trailer – How will I pay for the physical trailer that the Tiny House shell will be built on?
  • The Shell – Banks do not lend money for Tiny Houses, especially in the form of a traditional mortgage.
  • The Interior Build – This will all be done as I can afford it, but how long will it take to save the money to pay for everything I need/want?
  • The Land – Since my parents are not on board, where will I put my Tiny House? Once I find the land, how will I pay for it?

I’m going to try and address these one by one, with some extra emphasis on land since that’s what I’ve been focused on the last few days.

The Trailer

I decided to take a fairly unique approach to financing my trailer. Rather than lump this in with a personal loan, I qualified for a new credit card with 0% interest for 12 months. Since I am working two jobs right now (and I intend to continue working both jobs until I’m done financing my build), I feel I can pay this off well before the 12-month timeframe. I will put the entire trailer cost on one credit card.

The Shell

I will have to get a personal loan for the financing of my shell build. I had been planning to save all the money for this before beginning this process, but fate stepped in and I was able to get a great deal with my builder if we started sooner. While the loan will cost me some interest, I intend to get a secured loan by putting my car title up for collateral. This will give me a lower interest rate and save me money. In addition, the money I save by not paying rent for an extra 12-18 months while saving will actually be far less than the money I spend in interest.

The Interior Build

I’m not at this stage yet, but my plan will be to recycle, reuse, and refurbish as much as possible. For example, one piece of land I’m looking at has a modular home on it that is in rough condition. However, I would be able to save some kitchen cabinets, wood siding, decking, cinder blocks, etc. Reusing these materials would save me a lot in the long run. I also plan to use craigslist and local auctions to find interesting pieces, which will be cheaper than I can buy them at the big box stores. I will use the cash I make from my waitressing job to pay for things I find online, at auctions, or at flea markets. I am particularly excited about reusing items that might otherwise be tossed or used for kindling; this is part of the whole Tiny House movement for me. Waste not, want not!

Which brings us to…

The Land

Also known as: the bane of my existence over the last couple of weeks. I am struggling to find what will be the best fit for me. For example…

Should I buy a fresh piece of land with nothing on it? I would be free to put the utilities and my Tiny House anywhere I want on the property. I can look at the blank canvas of grass and mud and figure out what kind of neighbor I want to be, what direction my Tiny House should face, and how many cherry trees to plant. I’d only be hindered by my imagination (and, of course, my property lines).

Should I buy land with a modular or trailer home already on it? This would save me the hassle and expense of putting in new utilities. I don’t know exactly how much it would cost to dig out sewage from the street to my Tiny House, but I can tell you I don’t want to spend it! Having a modular or trailer home already on the property, especially one I could harvest materials from (then subsequently destroy), makes sense because I’d save on all those expenses. It’s also likely that there would already be a clear, level space for my Tiny House to rest, and maybe even a driveway.

Should I buy land with a larger house on it, rent it out, and put my Tiny House somewhere else on the property? This option is a stretch for me, but it does exist. This would make financial sense because I’d then have an income property, but it could also help me navigate the shark-filled waters that are “zoning issues”. As I’ve mentioned, each borough typically has their own zoning laws that govern home size, land use, and mobile homes. One piece of land I’ve fallen in love with does not allow mobile homes or any home under 700 square feet. But I could get around this if there was a house on the property already and I would just be “storing” my Tiny House there (wink, wink).

I always figured that once I found land, I’d apply for the mortgage and follow the normal procedure. One of the rudest awakenings for me in this process has been that most banks will not lend on a mortgage lower than $50,000. Since I don’t intend to spend nearly that much on a piece of land, I’m forced to figure out another option.

This is where I am today. Looking for another option. Suggestions are welcome!