You’ve decided to make that land purchase for your eventual log cabin retirement home site. Now is definitely the time to buy. The drawback is getting financing. If you haven’t already started your research, you’ll soon discover that undeveloped land is not exactly a lender’s favorite collateral. A lot of major banks aren’t interested in financing only land. First of all, you will want to focus on smaller local lenders that are at least familiar with the area of the property.
Why is undeveloped land so much more risky than developed? It’s primarily because unimproved land can’t be used to generate income. It’s also a lot easier for the borrower to stop making payments and walk away from land than a property with his home on it. If there’s no road and/or no utility access to the land which is not unusual for a log cabin site, lenders are even less interested. There’s a lot more downside risk than interest income for the lender.
Due to this collateral risk profile, lenders that do finance land, will have much more stringent conditions than a home mortgage. They want to be assured that you have the ability to make the payments. The more confident they are, the lower the down payment required. You can also provide other collateral besides the land. In any case, they don’t want your land. They want your monthly payments. They will typically require:
Higher credit standing
Higher interest rate
Shorter term – 10-15 years compared to 30 year mortgage
Higher down payment 25-30%
If you don’t have the full down payment or your credit doesn’t cut the mustard, what do you do? There’s always one possibility. Who is possibly even more motivated than you for you to be able to buy the land? The seller may be willing to provide you with financing. The conditions such as financing term and rate will depend on your negotiating skills, how desperate the seller is and when the seller needs the money. He may be perfectly content to just get a payment every month for a long term. A seller will usually want at least 20% down but again, that is negotiable.
I bought my log cabin land from a developer. I ended up paying 100% cash from my IRA (see my related article “Using Your IRA to Buy Land for a Log Cabin.”) I did find out that the developer had occasionally lent short term money to buyers. The financing structure was a ‘land contract’, also known as a ‘contract for deed.’ The term is 12-18 months and a down payment is required. The monthly payments include some principal amortization. A large balloon payment (remaining principal) is payable at the end of term.
The developer still holds title and if the buyer does not refinance/pay off the balloon at the end of the term, the developer keeps all the payments as well the property. If you do refinance, you get the title. You had better be confident in your ability to refinance or this option is quite expensive.
The Log Cabin
Wednesday, June 2, 2010
Tuesday, May 25, 2010
Radiant Floor Heat for your Log Cabin
I will be building a basement as part of my log cabin construction. Since the basement will be finished at some point, I needed to decide on a heating system. One alternative that I researched was radiant floor heating. I learned that installation of radiant tubing within a concrete floor was the easiest, most cost effective and highest performance applications of radiant heat. Since the rest of the heating system can be installed at a later date, I concluded that it was the ideal choice for my situation.
What exactly is radiant heat? Why is it used? It is a very efficient heat distribution system that uses the entire floor to provide warmth to the room(s). It’s possible to set the room temperature several degrees lower than a forced air system and achieve the same comfort level. The most popular and less expensive residential system is hydronics, i.e., running hot water through flexible plastic tubing within the concrete floor. This system maintains a very comfortable warm feet and cool head environment. There are no vents as used in a less efficient forced air system.
The tubing is laid down in a serpentine fashion on top of the concrete wire mesh and insulation. The concrete is poured encapsulating the tubing. The two ends of the tubing stick out of the concrete (hot water in and cool water out.) The system is pressure tested before being connected to the water heating system. A floor sensor thermistor is used to monitor the temperature of the floor. A zoned system with multiple temperature monitors and tubing loops can be installed.
The cost of a hydronic system is approximately $4 - $6 per square foot. Installation does require an experienced specialist.
Almost any floor covering can be used over the concrete. The most common is ceramic tile. Vinyl and linoleum sheets, carpeting and wood can be applied. Laminated wood is better suited for radial heat than solid wood which is susceptible to shrinking and cracking. Of course, anything that insulates the floor will reduce the heat release and the efficiency of the system. A covered floor will require a higher temperature setting.
Although my plan is to install a radiant system in just the basement of my log cabin, it can also be installed upstairs with the tubing running between the joists and beneath the subfloor in what is called a dry installation. Wet or dry, it merits your consideration.
What exactly is radiant heat? Why is it used? It is a very efficient heat distribution system that uses the entire floor to provide warmth to the room(s). It’s possible to set the room temperature several degrees lower than a forced air system and achieve the same comfort level. The most popular and less expensive residential system is hydronics, i.e., running hot water through flexible plastic tubing within the concrete floor. This system maintains a very comfortable warm feet and cool head environment. There are no vents as used in a less efficient forced air system.
The tubing is laid down in a serpentine fashion on top of the concrete wire mesh and insulation. The concrete is poured encapsulating the tubing. The two ends of the tubing stick out of the concrete (hot water in and cool water out.) The system is pressure tested before being connected to the water heating system. A floor sensor thermistor is used to monitor the temperature of the floor. A zoned system with multiple temperature monitors and tubing loops can be installed.
The cost of a hydronic system is approximately $4 - $6 per square foot. Installation does require an experienced specialist.
Almost any floor covering can be used over the concrete. The most common is ceramic tile. Vinyl and linoleum sheets, carpeting and wood can be applied. Laminated wood is better suited for radial heat than solid wood which is susceptible to shrinking and cracking. Of course, anything that insulates the floor will reduce the heat release and the efficiency of the system. A covered floor will require a higher temperature setting.
Although my plan is to install a radiant system in just the basement of my log cabin, it can also be installed upstairs with the tubing running between the joists and beneath the subfloor in what is called a dry installation. Wet or dry, it merits your consideration.
Monday, May 24, 2010
Maintaining Your Log Cabin Wood
The last house I bought was a traditional wood frame colonial that was about ten years old. We loved the house and location but over the first few years, the lack of proper maintenance by previous owners became expensively evident.
First, I re-stained the wood shingles that clearly hadn’t been re-done since original construction. The shingles on the southern exposure side were somewhat warped and eventually the stain began to peal. I’ve seen that happen with paint but not with stain. I concluded the shingles were shot. Rather than replace them, I installed vinyl siding to cover them up.
The original wood framed windows also started to malfunction and I replaced them with new vinyl energy efficient ones. I also discovered the hard way that the back deck had been built with non pressure treated wood. It began to disintegrate. The theme was clearly that not only do you need to install the right kind of wood, it requires ongoing maintenance as well.
A log cabin, as the ultimate ‘wood’ home, requires serious maintenance to protect its beauty and longevity. You might think that because I went ‘artificial’ with my previous home, that I would find vinyl windows and composite decking to be attractive low maintenance alternatives. No…I’ve chosen a log cabin and decided that ‘wood is good.’ Fortunately, this time, I will be starting from new. A log cabin is a rustic but gorgeous looking structure and I intend to keep mine that way.
With a new cabin, you should get a warranty that specifies log maintenance requirements. The logs must be treated with a preservative within a certain number of months of delivery and every few years on an ongoing basis for the warranty to remain valid. (Don’t forget to save your receipts to prove you completed the required applications.) To me, it makes sense to treat all the external wood including window frames, soffits, decks etc. on the same log maintenance schedule.
I will also be cleaning the wood before the stain/preservative retreatment. In fact, I intend to clean the wood on an annual basis. I would recommend using a brush and a regular hose rather than a power washer to clean the wood. There is no need to test the integrity of your seals with something other than what nature already provides.
First, I re-stained the wood shingles that clearly hadn’t been re-done since original construction. The shingles on the southern exposure side were somewhat warped and eventually the stain began to peal. I’ve seen that happen with paint but not with stain. I concluded the shingles were shot. Rather than replace them, I installed vinyl siding to cover them up.
The original wood framed windows also started to malfunction and I replaced them with new vinyl energy efficient ones. I also discovered the hard way that the back deck had been built with non pressure treated wood. It began to disintegrate. The theme was clearly that not only do you need to install the right kind of wood, it requires ongoing maintenance as well.
A log cabin, as the ultimate ‘wood’ home, requires serious maintenance to protect its beauty and longevity. You might think that because I went ‘artificial’ with my previous home, that I would find vinyl windows and composite decking to be attractive low maintenance alternatives. No…I’ve chosen a log cabin and decided that ‘wood is good.’ Fortunately, this time, I will be starting from new. A log cabin is a rustic but gorgeous looking structure and I intend to keep mine that way.
With a new cabin, you should get a warranty that specifies log maintenance requirements. The logs must be treated with a preservative within a certain number of months of delivery and every few years on an ongoing basis for the warranty to remain valid. (Don’t forget to save your receipts to prove you completed the required applications.) To me, it makes sense to treat all the external wood including window frames, soffits, decks etc. on the same log maintenance schedule.
I will also be cleaning the wood before the stain/preservative retreatment. In fact, I intend to clean the wood on an annual basis. I would recommend using a brush and a regular hose rather than a power washer to clean the wood. There is no need to test the integrity of your seals with something other than what nature already provides.
Thursday, May 20, 2010
Log Cabin Warrantees - Buyer Beware
Most log manufacturers provide a limited warranty with the sale of their log home packages. Having read a number of them, the value of their warranty is not entirely clear. ‘Limited’ seems to me that they not only do not cover all the costs related to their defects, their coverage is subject to interpretation. In other words, you need a lawyer to figure out what you’ve got.
The warranty typically states that the company will replace any logs that develop manufacturing related defects. There is, of course, no definition of what is considered a manufacturing defect. For example, insufficiently dried logs are naturally susceptible to shrinking, settling, checking, warping and twisting as they dry. Are these considered manufacturing defects? It’s not clear to me.
Honestly being unsure, I recently asked a log cabin manufacturing company representative, what constitutes a manufacturing defect? His response via e-mail was contradicted by his company’s written warranty. Even the company representative wasn’t clear on the warranty. The warranty specifically excluded checking, warping and twisting. He didn’t exclude those conditions. Shrinking and settling were not specifically excluded. So maybe they were covered. Maybe they weren’t. I, as the buyer, should know.
The warrantees also specifically exclude ‘labor, installation and shipping costs related to their manufacturing defect. Give me a break. I’ve got to pay anything because of your bad quality work? Fortunately, some states wisely have laws that will take precedence over the limitation or exclusion of consequential damages. Check your state law. If your state law doesn’t protect you in a situation like this when you’re not at fault, you have my sympathy.
One condition to these warrantees that I fully endorse is the proper maintenance of the logs by the owner. You are required to follow a recommended ongoing preservation treatment of the logs. If you don’t comply, the warranty is voided. Hey, if you don’t want to maintain it as required, you shouldn’t buy it.
Many log cabin warranteess are lifetime. Some are for limited terms. If the coverage is not clear, does the term really matter?
There are a lot of log home manufacturers out there. Apparently there are not quite enough. Warranty provisions seem to me to be less than customer friendly. Under these conditions, I would want to be satisfied that my log cabin manufacturer is providing quality logs. It’s all the more reason to verify claims with customers. You will once again hear my battle cry! Do your research!
The warranty typically states that the company will replace any logs that develop manufacturing related defects. There is, of course, no definition of what is considered a manufacturing defect. For example, insufficiently dried logs are naturally susceptible to shrinking, settling, checking, warping and twisting as they dry. Are these considered manufacturing defects? It’s not clear to me.
Honestly being unsure, I recently asked a log cabin manufacturing company representative, what constitutes a manufacturing defect? His response via e-mail was contradicted by his company’s written warranty. Even the company representative wasn’t clear on the warranty. The warranty specifically excluded checking, warping and twisting. He didn’t exclude those conditions. Shrinking and settling were not specifically excluded. So maybe they were covered. Maybe they weren’t. I, as the buyer, should know.
The warrantees also specifically exclude ‘labor, installation and shipping costs related to their manufacturing defect. Give me a break. I’ve got to pay anything because of your bad quality work? Fortunately, some states wisely have laws that will take precedence over the limitation or exclusion of consequential damages. Check your state law. If your state law doesn’t protect you in a situation like this when you’re not at fault, you have my sympathy.
One condition to these warrantees that I fully endorse is the proper maintenance of the logs by the owner. You are required to follow a recommended ongoing preservation treatment of the logs. If you don’t comply, the warranty is voided. Hey, if you don’t want to maintain it as required, you shouldn’t buy it.
Many log cabin warranteess are lifetime. Some are for limited terms. If the coverage is not clear, does the term really matter?
There are a lot of log home manufacturers out there. Apparently there are not quite enough. Warranty provisions seem to me to be less than customer friendly. Under these conditions, I would want to be satisfied that my log cabin manufacturer is providing quality logs. It’s all the more reason to verify claims with customers. You will once again hear my battle cry! Do your research!
Wednesday, May 12, 2010
The quality of your log cabin logs
There are a number of factors that determine the quality and strength of a log. The Log Home Council, an organization of log home manufacturers, developed a log grading system to determine the structural integrity of a log. The system addressed defects in logs that affect its strength. Those defects include, among other factors, the slope of the grain, the size and density of knots, holes, splits and checks and decay. There are four grading levels of logs depending on strength requirement –
beam, header, wall and utility. The grading sets a maximum number of defects for each classification.
The levels are:
Beam – Supports a structural load
Header – Above a window or a door
Wall – stacked wall
Utility – used for sheds and barns
The defect categories among others are:
Slope – The angle of the slope of the grain, i.e. the change of angle of the grain from parallel between the edges of the log. The larger the angle, the weaker the log.
Knots – There are numerous knot classifications. Defect rating is driven by knot circumference and concentration. The bigger the number, the lower the strength.
Checks and splits – Wood naturally develops cracks in the growth or drying process.
Decay – the wood rot caused by fungi.
Warp – a distortion of the log shape
Log standard enforcement is up to the local authority. It is not commonly enforced. Nonetheless, you as home owner should insist on grading. Graded logs are more expensive than ungraded but as they say, ‘you get what you pay for.’ The end result is more than worth it. Nonetheless, I would confirm that your manufacturer does grade the logs. They will stamp the logs or provide a certificate of grading. The Log Home Council does audit the manufacturer’s classifications. Personally, I would make it a condition in my sales contract. If you don’t ask, you will never know with absolute surety. If they balk, I wouldn’t trust them anyway.
beam, header, wall and utility. The grading sets a maximum number of defects for each classification.
The levels are:
Beam – Supports a structural load
Header – Above a window or a door
Wall – stacked wall
Utility – used for sheds and barns
The defect categories among others are:
Slope – The angle of the slope of the grain, i.e. the change of angle of the grain from parallel between the edges of the log. The larger the angle, the weaker the log.
Knots – There are numerous knot classifications. Defect rating is driven by knot circumference and concentration. The bigger the number, the lower the strength.
Checks and splits – Wood naturally develops cracks in the growth or drying process.
Decay – the wood rot caused by fungi.
Warp – a distortion of the log shape
Log standard enforcement is up to the local authority. It is not commonly enforced. Nonetheless, you as home owner should insist on grading. Graded logs are more expensive than ungraded but as they say, ‘you get what you pay for.’ The end result is more than worth it. Nonetheless, I would confirm that your manufacturer does grade the logs. They will stamp the logs or provide a certificate of grading. The Log Home Council does audit the manufacturer’s classifications. Personally, I would make it a condition in my sales contract. If you don’t ask, you will never know with absolute surety. If they balk, I wouldn’t trust them anyway.
Log Cabin Financing
Now is the time to build. The economy is still shaky, housing manufacturers are hungry for business, delivery lead times have come down and interest rates are low. Keep in mind, however, that log cabins are still different. Finding financing for them requires some extra diligence. Here are some tips.
Find lenders with log cabin financing experience. Don’t go down the road with an inexperienced bank only to discover insurmountable roadblocks. Your builder and/or manufacturer should be able to make recommendations based on their customer experience. Find out what problems other borrowers have run into. Ask prospective lenders what issues may arise that could cause a problem.
One common drawback of a log cabin is finding comps for the appraisal. Log cabins turn over much less frequently than traditional houses and there are fewer of them to begin with. There may be insufficient comps in the vicinity for determining appraisal value. Experienced log cabin lenders can usually overcome this problem.
If you are building a new log cabin as is often the case, construction loans will also be a consideration. The ideal structure is where the construction financing automatically rolls into a long term mortgage upon completion with the same lender. This minimizes closing costs and the need to deal with two separate institutions. The construction lender is secured by the value of the land and is more risky for the lender. Payments will consist of interest only.
The time frame for the construction is not always controllable so the longer the better. Keep in mind that log home manufacturers will expect full payment upon delivery of their materials. If the lender sells the mortgage to Freddie Mac, due to real estate market volatility (to the downside), there is a 120 day construction limit before a new appraisal must confirm the value of the property.
You will develop a construction schedule with your builder but always expect the unexpected. You should be prepared with contingency funds for those unexpected costs. A good example is someone I know who was building a new home and had agreed to a price with his builder. They immediately hit rock ledge upon excavation and his ‘cost plus’ fee took a significant bump up.
Local lenders with local access and decision makers are desirable but not necessary. You will need to develop your priorities, research your alternatives including the rates and closing costs for each lender. The lowest cost is not necessarily the best deal. There will always be tradeoffs.
Find lenders with log cabin financing experience. Don’t go down the road with an inexperienced bank only to discover insurmountable roadblocks. Your builder and/or manufacturer should be able to make recommendations based on their customer experience. Find out what problems other borrowers have run into. Ask prospective lenders what issues may arise that could cause a problem.
One common drawback of a log cabin is finding comps for the appraisal. Log cabins turn over much less frequently than traditional houses and there are fewer of them to begin with. There may be insufficient comps in the vicinity for determining appraisal value. Experienced log cabin lenders can usually overcome this problem.
If you are building a new log cabin as is often the case, construction loans will also be a consideration. The ideal structure is where the construction financing automatically rolls into a long term mortgage upon completion with the same lender. This minimizes closing costs and the need to deal with two separate institutions. The construction lender is secured by the value of the land and is more risky for the lender. Payments will consist of interest only.
The time frame for the construction is not always controllable so the longer the better. Keep in mind that log home manufacturers will expect full payment upon delivery of their materials. If the lender sells the mortgage to Freddie Mac, due to real estate market volatility (to the downside), there is a 120 day construction limit before a new appraisal must confirm the value of the property.
You will develop a construction schedule with your builder but always expect the unexpected. You should be prepared with contingency funds for those unexpected costs. A good example is someone I know who was building a new home and had agreed to a price with his builder. They immediately hit rock ledge upon excavation and his ‘cost plus’ fee took a significant bump up.
Local lenders with local access and decision makers are desirable but not necessary. You will need to develop your priorities, research your alternatives including the rates and closing costs for each lender. The lowest cost is not necessarily the best deal. There will always be tradeoffs.
Sunday, May 9, 2010
Building a Log Cabin Basement
Including a basement in plans for our log cabin was a foregone conclusion. The slope of our property, on the side of a mountain ridge, made a basement necessary. Nonetheless, we would have considered a basement as a relatively cheap way to provide additional space. We plan on a couple of bedrooms, a bathroom and playroom for the grandchildren as well as storage and the utility room.
Dampness and darkness are the two major drawbacks of a basement. The dampness is primarily due to the coolness of the basement. Good insulation is a key to a warmer basement.
Our log cabin property slope will allow us to have a walkout basement with sliding glass doors and windows on the back end. A four foot slope is sufficient for windows and eight feet will work for a walkout setup. Windows and doors will provide a source of natural ventilation and light. They also reduce any potential exposure to radon. Having them face south, if practical, also improves the natural warmth.
If possible, plan on ten foot ceilings. A higher ceiling allows for ductwork for HVAC and a less confined atmosphere. There is additional cost but the tradeoff is more than worth it. Although it is optimal to finish the basement up front, you may be facing financial constraints that currently limit your options. You can always finish off the basement in the future but you need to plan ahead. It is crucial to include plumbing lines and drains for bathrooms etc. up front.
There are several options for type of basement construction. The floor base will be poured concrete. If you are not finishing the floor, a layer of rigid insulation and radiant barrier are recommended. Alternatively, stone, tile, carpet, vinyl and wood flooring can be applied. Wood flooring should be raised off the floor.
There are a number of walls construction options.
Concrete blocks – The advantage is the price as it is cheapest option. Hollow blocks will not provide anywhere near as good a support as solid. They are also susceptible to leakage.
Poured concrete – It has no seams that promote leaks and stronger than blocks. Should be sealed on outside. However, walls can develop settlement and shrinkage cracks.
Precast concrete walls – Concrete walls can be made offsite, cured and then transported to construction site.
Insulated concrete forms (ICF) – Hollow foam forms are fitted together and filled with poured concrete. ICF is more expensive than poured concrete. Foam provides moisture block and energy efficiency as foam also blocks heat escape.
Dampness and darkness are the two major drawbacks of a basement. The dampness is primarily due to the coolness of the basement. Good insulation is a key to a warmer basement.
Our log cabin property slope will allow us to have a walkout basement with sliding glass doors and windows on the back end. A four foot slope is sufficient for windows and eight feet will work for a walkout setup. Windows and doors will provide a source of natural ventilation and light. They also reduce any potential exposure to radon. Having them face south, if practical, also improves the natural warmth.
If possible, plan on ten foot ceilings. A higher ceiling allows for ductwork for HVAC and a less confined atmosphere. There is additional cost but the tradeoff is more than worth it. Although it is optimal to finish the basement up front, you may be facing financial constraints that currently limit your options. You can always finish off the basement in the future but you need to plan ahead. It is crucial to include plumbing lines and drains for bathrooms etc. up front.
There are several options for type of basement construction. The floor base will be poured concrete. If you are not finishing the floor, a layer of rigid insulation and radiant barrier are recommended. Alternatively, stone, tile, carpet, vinyl and wood flooring can be applied. Wood flooring should be raised off the floor.
There are a number of walls construction options.
Concrete blocks – The advantage is the price as it is cheapest option. Hollow blocks will not provide anywhere near as good a support as solid. They are also susceptible to leakage.
Poured concrete – It has no seams that promote leaks and stronger than blocks. Should be sealed on outside. However, walls can develop settlement and shrinkage cracks.
Precast concrete walls – Concrete walls can be made offsite, cured and then transported to construction site.
Insulated concrete forms (ICF) – Hollow foam forms are fitted together and filled with poured concrete. ICF is more expensive than poured concrete. Foam provides moisture block and energy efficiency as foam also blocks heat escape.
Subscribe to:
Posts (Atom)