How to Budget For Land-Related Items When Building On Your Land

    Building on your land sometimes comes with a few surprises. Let's say you have a budget of $250,000 to build your house, and you're already dreaming of what type of house you can build for that amount of money.

    But you don't actually get to spend all that money on the house itself. 

    What Land Items Should You Budget For?

    Before you go too much further, there are a few key items to think about that can reach up and bite you if you're not ready for them.

    #1. Preparing the Land to Build

    Unlike a developed lot in a subdivision, the land you have in mind might be out in the country a bit with only a few neighbors per square mile. That land is nowhere close to build-ready. You might need to remove a bunch of trees, move around a whole lot of dirt, and maybe even bring in or haul off extra dirt. That can mean hours of labor for a guy on a bulldozer.

    Your home site might be several hundred feet from the road, which means building an access road for use during construction that will later become the driveway. That might involve a drainage culvert and several loads of gravel.

    When preparing your initial budget, I advise using $5,000 minimum for preparing the land. But I've seen site preparation costs range anywhere from $1,500 to $70,000. It all depends on the land you're building on.

    #2. Getting Water to Your Land

    Most rural land requires drilling a well since it's not serviced by city water or even a rural water district. That's not always the case, but if it is, you'll need to budget for the cost of a well.

    Ask around the community for the recommended well company. Usually there's a local company who has drilled enough wells in the area that they can give you a pretty good idea of cost.

    But keep in mind that the cost of a well is directly related to the depth, and the depth won't be known until the contractor drills deep enough to find good water at a reasonable volume. In my experience, a budget of $6,500 for a well is pretty safe.

    #3. Installing a Septic System

    As with water service, most rural home sites aren't served by a city sewer system. In fact, I've built in several areas where water is available but sewer is not.

    It's a matter of the distance from the nearest water treatment plant and the fact that the sewer main has to run downhill the whole way. If your land is too far away, the pipe would be lower than the treatment plant by the time it got there.

    In many areas of central Oklahoma, the soil has enough clay that it doesn't percolate well, so we mostly see aerobic septic systems being installed. Modern systems are extremely reliable and effective, and the cost typically runs about $6,200.

    Anticipating Other Factors

    While the above three things account for the majority of your land preparation costs, there are other things to consider in your budget beyond just the cost of your house. Think about any exterior concrete, such as driveways and patios, as well as landscaping, sod, fencing, etc. Don't forget to factor those into your overall budget.

    Let's go back to the original $250,000 budget for your home. Now subtract the first three items above, which total around $18,000. That leaves you with $232,000 for the house, which gives you a more realistic idea of your budget. It's always a good idea to shoot for something a bit more conservative to give yourself a buffer, so start at about $220,000 for cost to build your home.

    With the right budget up front and the right expectations about the process and what it will cost, the process of building a home on your land will be much smoother.

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