As an agent who has specialized in mountain properties, I often get questions from those wanting to buy land either for a mountain property, or their single family residence in the mountains. Most questions I receive center around the start up costs, and things to consider when buying a mountain property.  This article covers some of the most frequent questions:

What are my lending options 

When selecting a site to purchase, assuming there is not a habitable structure, it will not qualify for FHA or VA lending.  Therefore, you will have to select a conventional loan for land, or a construction loan.  Each of these options call for a larger down payment than FHA or VA financing, a 30% down payment is typical.  Land loans typically have a maximum length of 15 years, and construction loans a shorter term, as well as an adjustable rate, with a balloon payment due at the end of the term.  Therefore, whatever term period you choose, you want to make sure that your construction project will be complete by the end of the term so that you can refinance into a traditional mortgage with more favorable terms.

Infrastructure 

One of the things that a lot of buyers find alluring about the possibility of a mountain home, is the ability to live off the grid.  Options for solar energy have come a long way and Colorado receives sufficient sunlight for this is be a viable option.  However, solar power systems are expensive, and usually require a purchase of a generator for days when weather affects solar availability.  The alternative is to pay for a local energy company to run power to your property.  In either case, plan on spending about $30,000 for the initial setup.

Water and septic are also necessities in building a home.  To drill for a well in Colorado, you need to get a well permit.  Typically it is not an issue to get a well permit for household use only, however, Colorado water rights laws are very intricate, and you will want to make sure that you can get a permit on any land prior to building.  Expect to spend around $15,000 on well costs.  As for septic tanks, they too cost around $15,000.  You will also need to have permits to install a septic tank, as the county where your property is located will want to ensure the septic tank is not polluting any downstream water.

Lastly, there is the question of internet service.  Many people choose to build a mountain property and telecommute.  The most common service provider is HughesNet, which provides satellite internet service.  If you’ve never tried using HughesNet internet service, I would highly recommend finding a property on airbnb.com which offers this service.  Try out the service using the features you think may typically use.  I have personally found the service to be slower than DSL or broadband service, but it may be an acceptable speed depending on your usage.  As a bonus, if you are a night owl, HughesNet speeds improve substantially during the night hours.

Site Viability

In the mountains, an acre of land can have a widely varying value, and that value really depends on site viability for building. Generally speaking, more level fields are better for a wide variety of building, but beyond that, there are other factors to consider.  First of all, if a foundation is to be poured, tests should be done to ensure the foundation dig will not yield an underground spring, or a dig will be stopped by a discovery of hard granite below.  Also, access points from the road have differing degrees of appeal.  While some like the idea of living off a forest service road, that road may not be plowed during the winter.

Building Costs

Once the infrastructure basics are covered, the next step in the process is to begin building.  There are many avenues one can take in selecting the building.  The first being, if you truly want your home to be one of a kind, contract with an architect and general contractor to create plans and specs. The plans are essentially your blueprint of the house, your specs are how the house is to be built with details such as insulation type and fixtures.  This first option is typically the most expensive, and is generally difficult to do for less than $250,000.

The second option is to work with a builder that has predesigned a portfolio of homes.  This is typically cheaper because not only are you taking advantage of economies of scale in the design process, but the builder has already found most of the “gotchas” in building this home previously.  Therefore, estimates tend to not only be cheaper, but more reliable.

The last option is to purchase a modular home and have it installed on the property.  Modular homes have come a long way in terms of style.  No matter what your tastes, there is a modular home builder that has something close to the style you are looking for.  This is usually the cheapest option, but not without risks.  As covered in the site viability section, this option may not be available if the property is in a locale that is difficult for semi trucks to navigate.

Whatever your choices, resale ability is also a key item to consider for down the road, even if the mountains are your final destination.