The Complete Guide to buying land in North Idaho

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Real Estate

Before you buy land in North Idaho or the greater Coeur d'Alene area, see this VIDEO first and read the guide below:

The complete guide to buying land in North Idaho and the Coeur d'Alene area:

 Before you ever look at raw land listings, it is important to answer these questions up front:

 “Why are most vacant lots on the MLS?”

 Most likely because someone bought it with beer goggles on!

They bought it without asking the tough questions and counting the cost before buying it. After counting the cost of building or developing it, they realize it is too expensive and too much work. As a result, now they are hoping YOU buy their land so they can buy a pre-existing home.

North Idaho does not have illegal immigrant cheap labor, so skilled laborers are busy and expensive. Materials are more now than ever with tariffs and natural disaster rebuilds. The result is new builds cost more than pre-existing…about 10-30% more!

In North Idaho, you build to get what you want… NOT to save costs!

***For those who are considering saving cost by building on their own or using alternative building methods…more on that below.

“Why do I want raw land?”

 There are generally four categories of people who buy vacant land:

 1) Those who don’t want to, or can’t, pay the prices of pre-existing homes: North Idaho real estate prices are not as affordable as they once were. Additionally, there is a certain romance stoked by “Self-sufficient Youtubers” who make building on the cheap and living off the land look like a sexy and easy experience. As a result, one strategy buyers look to enter the market is to buy raw land and build or use alternative building approaches, hoping to save costs. Those considering buying from this approach will find this article very informative.

2) Those who build to get what they want: What these buyers want is just not on the market. Perhaps it is a timber framed home or a certain style or a unique area. Whatever the reason, they are not sensitive to price (or are at least realistic about it) and are determined to build what they want, even though they will pay more for the end result.

3) Those that want raw land now, so it is available for them at a future time: This group is not ready to build due to being years away from retirement, etc. They want to get into the North Idaho market ASAP…someway, somehow, but don’t have the funds or logistical ability to buy a pre-existing home. The most reachable goal, based on their budget and timing, is to buy vacant land now and worry about the logistics…later.  Truth is, it’s this approach that accounts for the largest percentage of properties that go back on the market…later. Eventually, this buyer will need to confront the cost and logistics of building on the land!

4) Those who buy raw land as an investment: Unless you are a builder/developer, land is a poor investment. Vacant land is a yearly net drain due to property taxes and HOA payments (if applicable) if not generating revenue.

“What do I want to spend on raw land?”

 Realistically in North Idaho, you can expect to spend 100K+ on a piece of raw land from 1-5 acres that is “plug and play.” The closer you are to Coeur d’Alene or Sandpoint the more the price will be.

Many are enticed with raw land that is priced under 100K. Understand, lots under 100K are so for a reason. To get lots under 100K to a buildable state you WILL end up spending 100K+ in the end...only with the added unknowns and efforts. 

Keep in mind 70% of raw land listed on the MLS has no water. Wells cost a min of 30K to drill, with a waiting list. If the property has water and is priced under 100K, something else is wrong,  such as poor access and/or challenging terrain/slope.

“How am I going to pay for the land?”

There are only three ways to pay for vacant land:

CASH: This is usually the only way to pay for raw land.

Owner financing?: IF (and few do) owners are willing to carry a loan for you to purchase the land, typical owner financing is a large down (usually 25-50%) at a higher than normal interest rate, with a balloon payoff within 3 or 5 years. Terms are negotiable, but this is the typical scenario.

Lenders: Few lenders finance raw land unless there is a construction loan attached to it. Those that do, will want a large cash down payment and strict terms.

 “How am I going to pay for THE HOUSE I eventually put on the property?”

Building yourself: Building yourself will require cash!

If you get a construction loan, banks WILL NOT let you do the work yourself unless you are a licensed general contractor! The bank will require a bid up front from one or more general contractors and then the bank will only pay (draws) after work gets done in stages by licensed and bonded sub-contractors and approved by a building inspector.

That “Mountain Guy on YOUTUBE” who is milling the trees from his property and building a log cabin or tiny home…no lender!

Or, that “Builder guy on YOUTUBE” who is building a traditional build himself to save the cost of labor…no lender!

Banks have systems in place to ensure licensed contractors build the home, so don’t think you can beat the system by doing the work yourself… unless you do it with CASH!

Alternative builds…Manufactured, “Barn-dominiums” and “Tiny” homes: these are more affordable, but they are limited in where you can put them, either because of HOA/CCRs, city/county codes, and/or limitations due to slopped lots or poor access. For manufactured homes…can you get half a house up the road where the property is? We recommend you talk to manufactured home contractors before searching for land.

Lending is also a challenge with alternative builds, so be sure to talk to a lender about your plan if you will be seeking funding as a strategy.

Using a General Contractor: If you are going to use a general contractor, talk to several about your plan…before you look at properties. They have insight into the market and can tell you what it costs to build in your area.

General contractors and sub-contractors have more than their share of work here in North Idaho and are charging a premium for their services. At the time of this article (early 2020) the avg cost of building was 200 dollars per square foot. For more details about the challenges of building in North Idaho see our video here.

 “What are some of the other challenges of buying vacant land I should know about?”

 *Access, access, access! How are the roads and do you want to be on them in the winter. Roads surrounded by trees get icy and do not melt as fast.

As a general rule, blue street signs mean privately plowed and maintain by you and neighbors. Green street signs mean publicly plowed and maintained. Did you know that lenders may not give you a loan if your property/home is on a private road without a road maintenance agreement?

ACCESS will be your most common disqualifier. Don’t rationalize this one away…it matters…a lot!  

* Amenities: How far are you from the things you will need like work, schools, health care, church, food, hardware, donuts (this one is critical), etc.

* Hidden Neighborhood faults: Ah, what those tricky internet photos and glorified descriptions  don’t tell you! Pay attention to who and what is around your potential property. Unkempt properties, unfinished homes, railroads, domestic animal noise or smells, etc.? Get out of the car and just listen and pay attention to how you feel about the neighborhood.

* Lot slope/challenges: Many of the “affordable” properties available on the MLS are steep and challenging to develop. Is there a level spot to build on and room for a yard, shop, septic drain field, etc. Grading, engineered foundations, and poor septic drainage add significant costs most don’t even consider!

*Internet: Most rural properties do not have cable internet. If you are in a deep canyon without line-of-sight to a cell tower…say hello satellite internet! With satellite internet you can’t have trees blocking the south facing skyline.

*Utilities: How are neighbors drawing power to their homes…aerial or underground? Where are the utility boxes and/or poles, and how close are they to your potential property. Costs add up quick when drawing power from far away, especially up or down slopped properties. Remember, it is heavy equipment that sets poles and/or digs trenches for power and they charge a premium for steep and difficult work conditions. For every football field (300 feet) you pull power, it averages a cost of around 10K.

Now, onto the Building Phase…

Written by Kory Martinelli - Owner/Realtor with The Martinelli Realty Team of Professional Realty Services Idaho