To buy land for a relocatable or to walk away - advice please

[First time home buyer]

We found a lovely large section with sea views.

But we had no idea what was involved with getting a relocatable onto this site.

We've since done the research and we still believe it's feasible. But not as feasible as first thought.

What we've budgeted:


$110,000 for 170sqm home relocated on piles and nailed in.


$4,000 approx for a Geotechnichal report


$25,000 (high end) sewerage and Drainage


$6,000 forbuilding consent


$10,000 site works and excavations


$600 architect


$20,000 driveway


$3,000 possible rewiring


$3,000 lawyers fees


$300 Lim


$2,000 insulation


$500 insurances

$2,500 - 2 x registered valuations


Plus land costs: $215,000.


Would LOVE TO KNOW IF WE ARE MISSING SOMETHING HERE?

BUT.....We just went to the bank and the bank is now saying that they MIGHT NOT LEND. Even though we had pre approval.

They say they need 2 times registered valuations.

We've not even started this project and i'm starting to freak a little.

2 x registered valuations and they MIGHT NOT EVEN LEND??!! I didn't realise this was necessary.

Then we have to get a Geotechnical report $4,000 - and if that comes back that we can't build.

Then I realise we'll have spent $6k - FOR NOTHING. Just thrown money away. And I find that a hard pill to swallow. When we could just as easily go out and buy a maybe less desirable home that is already on a piece of land. With less stress.

We are a big family - six kids in total - blended family. So we were hoping this would save us money. But now i'm worried - it could send us broke.

Then there is the issue with code of compliance - what if the relocatable we get doesn't get approved by council and then we get hit with fines or whatever - i've seen some horror stories.

Our Bank has also told us to budget for at least an $80k overspend in these type of situations which of course made me baulk.

We need to make a decision and quick...is this worth doing or are we better off buying a house already on a piece of land. We live in Northland - so prices not low but not high either.

We have a finance satisfactory to the purchaser clause - so could walk away now that we realise it's going to cost us more than first thought.

Cheers!!

[donna]

Hi first time home buyer,

Your bank is not wrong you need a very healthy contingency fund. I reckon you can not go wrong with 25% extra. I wonder if you're stretching your risk profile too far and you'd be better off getting a Kiwibuild or the like - i.e. a new home and the Government incentives, using kiwisaver contributions etc.

What you're looking at is not for the faint hearted, and something will always go wrong. e.g. our small renovation turned into a complete rebuild costing 50% more than we were initially keen to spend.

cheers,

Donna

[First time home buyer]

Thanks Donna really appreciate hearing it coming from someone who has done it before.

Hi first time home buyer,

Your bank is not wrong you need a very healthy contingency fund. I reckon you can not go wrong with 25% extra. I wonder if you're stretching your risk profile too far and you'd be better off getting a Kiwibuild or the like - i.e. a new home and the Government incentives, using kiwisaver contributions etc.

What you're looking at is not for the faint hearted, and something will always go wrong. e.g. our small renovation turned into a complete rebuild costing 50% more than we were initially keen to spend.

cheers,

Donna

[hawkeye]

Usually even with a normal renovation even it can end up twice what you think it will be at the start. And where do you get an architect for $600? Have you found an insurer that wants to insure you during the process and after and how close to the sea is it? Will it be at risk with sea level rises and become uninsurable then?
Usually you would need a builder to do a fair bit of work once it’s in place too or are you doing that?

We added a storey on the back of our house of about 150m. The builders ended up pulling down the bottom floor to the foundation and rebuilding that too. Ended up being over $500k. A lot depends on the relocatable and the age and condition it’s in. I would think you might end up having to regib it especially if rewiring and insulating in walls, then plaster and paint....
I guess it also depends how much you can do yourself.

[Meehole]

The geotech report will tell you how far down the piles have to go so very important to get this and make sure you can get good ground.
Whereabouts is the property?

[Hound]

One of my sayings is "Building is for other people" Been there, done that. Had to refinance three times. And sell other large assets to get the job done. Took two following property cycles for the numbers to come right. Once you start, you must carry on until it's finished. Sir Bob Jones, I believe, recommends allowing 100% for over runs. Much more economical to purchase something that's already there. Let someone else do the sweating.

I have bought a relocatable after someone else had done the hard yards, and I believe they were forced to sell as a result of the endeavor. That was a very good deal. Line up your finance so you are ready to pounce quickly.