Whether you’ve been priced out of the market for turnkey cottages or just frustrated that you haven’t been able to find your dream cottage, you might be considering starting from scratch with a teardown or buying a vacant lot. There are pros and cons to both options.
Location, location, location
“The best waterfront lots have already been sold and developed,” says Chris Winney, a real estate broker in the Land ‘O Lakes area, who sold more than a dozen vacant lots in 2021. If you’re buying a vacant lot, you might have to forgo those west-facing sunset views, the gently sloping and weed-free shoreline, and easy access to town and other amenities.
There are some prime lots that occasionally come up but the further afield you’re willing to travel the easier it will be to find an unspoiled plot of land that ticks off all your boxes.
When you do find a suitable lot, your biggest expense may not be the price of the land. If the site isn’t already serviced, you’ll need power, a water source, a sewage system, and road access.
Depending how far the lot is from existing hydro lines, the cost to run power to your new property can run into the tens of thousands of dollars. In 2021, one couple made the news when they were quoted $60,000 to run a line from the nearest existing pole, 440 metres away from the Minden-area dream home they’d constructed on a vacant lot.
One alternative would be to go off-grid with renewable energy, but you’ll need to invest in battery storage and perhaps even a backup generator in case the system is drained. Both will add substantial costs to your budget.
You’ll also have to install a septic system, drill a well or install a water purification system for water drawn from the lake, and if there isn’t already a road leading directly to the property you’ll have to enquire with the municipality to see if you’re allowed to have one built.
You should also know that financing a vacant lot can be difficult. Most traditional lenders will not give a mortgage for vacant land. If you have equity in your home, you might be able to fund the purchase with a line of credit. If not, you’ll have to turn to private lenders for a loan at significantly higher interest rates than a standard mortgage.
Budgeting for a teardown
The main advantage to buying a teardown is that the hydro, water, sewage system, and road access are likely already in place. But there are still potential costs to consider.
For one, in the purchase price you’ll be paying for a building you have no intention of using. Plus, you’ll have to pay for the demolition of the original structure and disposing of the debris. If toxic materials such as asbestos or lead paint are found inside, this will increase the removal costs. If the property is water access, you’ll need to factor in renting a barge to haul in equipment and haul out the trash.
Before you put in an offer, contact the local municipality to find out if there any restrictions that would impact your planned structure. And don’t assume you can simply rebuild on the existing footprint. Some municipalities require new buildings to meet current zoning setbacks.
You may also have to replace the existing septic system, particularly if your new structure expands on the original square footage and number of bathroom fixtures.
Patience is a virtue
Whichever route you choose, Winney points out that with current building conditions you’ll have to be patient. Most reputable builders are booking contracts a year or two out and ongoing supply chain issues mean that almost everything you’ll need to build a cottage will take longer than usual to order.