
Embarking on the journey of finding and purchasing land to build your dream home can be filled with unexpected twists and turns. I know it did for me. I wasn't in the market to buy land and I know just how astronomical vacant land prices are in the DC Metro area where I live. So, when I stumbled about a unique and unconventional lot that wasn't on the real estate market for sale, I wanted to buy it right away. It required thinking outside the box when it came to financing. We will explore the steps I took to secure the funds and discuss alternative financing options for unconventional, non-conforming, or tiny lots.
The Unexpected Opportunity
Sometimes, opportunities arise in unexpected ways. In my case, I stumbled upon a vacant lot that was not officially on the real estate market or listed on the Multiple Listing Service (MLS). It happened to be an empty lot adjacent to a friend's yard. Intrigued, I contacted the owner and made an offer, which they accepted. More on that, here. So, now what?
While the opportunity to purchase the lot was exciting, it presented a financial challenge. I hadn't anticipated this opportunity and didn't have the funds readily available. This meant I had to think quickly and creatively to come up with the necessary funds to secure the property.
Tip #1 - Tap into Retirement Accounts

One option I explored was borrowing from my retirement account. Depending on your retirement plan's rules and regulations, you may be able to take a loan against your account balance. However, it's crucial to weigh the potential long-term implications and consult with a financial advisor to fully understand the impact on your retirement savings.
Tip #2 - Utilize Personal Savings Accounts

Another source of funding was my personal savings. I evaluated my financial situation and determined how much I could comfortably allocate towards the lot purchase. It's important to strike a balance between using your savings while still maintaining a financial safety net.

Tip #3 - Support from Family and Friends
In some cases, turning to family and friends for financial assistance can be a viable option. I approached my mother and sister and explained the situation, seeking their support to help bridge the gap in funding. However, it's crucial to approach these conversations with transparency, clarity, and a clear repayment plan to avoid straining relationships. To demonstrate how serious I was, I drafted a contractual agreement with interest rate terms.
Tip #4 - Explore Creative Financing Options

When dealing with unconventional, non-conforming, or tiny lots, it's essential to explore alternative financing options. One such option is to consider purchasing a portion of someone's yard, if zoning regulations allow. This arrangement can serve as a financing method, where you work out an agreement with the property owner to acquire a portion of their land and use it for your project. However, it's crucial to consult with legal and zoning professionals to ensure compliance with local regulations.
Tip #5 - Collaborate with a Local Credit Union

Credit unions can be a valuable resource when it comes to financing unique property purchases. They often offer more flexible lending terms and personalized service compared to traditional banks. Contacting a local credit union and explaining your situation can help you explore financing options that cater specifically to your unconventional lot purchase.
Tip #6 - Consider Joint Ownership
Depending on the circumstances and the seller's situation, you may be able to negotiate seller financing. This arrangement involves the property owner acting as the lender, allowing you to make monthly payments directly to them. While this option may require careful negotiation, it can provide a way to

secure financing without involving a traditional financial institution. Be sure to work with a real estate attorney who specializes in unconventional property transactions to guide you through the process.
Tip #7 - Living Together

If you choose to buy the property with someone else, a practical option is to live together. This cohabitation arrangement can provide financial relief as you share the costs of utilities, maintenance, and other living expenses. Additionally, it can create a sense of community and mutual support throughout the construction journey as well.
If you live together, consider a rentshare agreement, a legal contract that outlines the terms and conditions of living together and cost-sharing between multiple parties. It essentially establishes each person's rights and responsibilities and is everyone's best interest. I provide more information on rentshare agreements here.
In Closing
Purchasing an unconventional, non-conforming, or tiny lot can present unique challenges when it comes to financing. You can even use several of these tips for the purchase like I did. As my personal story demonstrates, creative thinking, exploring alternative options, and seeking professional guidance help you overcome financial obstacles and make your dream of building a home a reality.

By considering the strategies mentioned and tailoring them to your specific situation, you can navigate the intricacies of financing an unconventional lot purchase and embark on the exciting journey of building your dream home. You got this!
コメント