Buying land in Malibu can be a great investment, as well as an opportunity to build your ideal home.
There are some important aspects, however, to consider before buying land in and around Malibu. Here are a few tips to keep in mind.
The Price of Buying Land in Malibu
Factoring the cost to build on a parcel is an important aspect to consider when buying Malibu land. But beware, odds are if the parcel is priced less than $500,000 it could be a sign it is going to be difficult to build on, expensive to develop, or is in an area that is less than desirable. As a result, when your home is finally built it may have a lower valuation.
Malibu has some very steep lots, which will exponentially increase the cost of building when you factor in caisson foundations, grading, retaining walls and grade beams. Lots that previously had homes on them cannot be built on today due to updated building codes or inadequate access for emergency vehicles such as fire trucks.
An option when buying land in Malibu is to purchase a parcel that already has a building permit attached to it. These lots will start at around $750,000. Lots that have a building permit attached can make it much easier to obtain a construction loan at the time of the purchase.
Permits Required to Build in Malibu
Buying land in Malibu is only the first step in the process. If the land you want to buy doesn’t have a permit attached, you will need to apply and receive approval for one before you start any kind of construction. A Building Plan Check is also required.
On raw, undeveloped land you can expect this process to take about 18 to 24 months. You will also need to have your architectural plans, feasibility studies, EIR, geology and archaeology reports ready, which could cost upward of $200,000.
Getting Financing to Buy Land in Malibu
There are not too many lenders who offer financing for vacant land. If they do, oftentimes they will require up to a 50 percent down payment. They may also require geotechnical studies and septic systems to be already installed. This can make buying land in Malibu a challenge because there are few parcels that have septic systems installed or invasive studies already completed on the property.
However, there are a couple of options available to buyers. First, and perhaps the easiest, is to purchase your land with cash. This will give you the freedom to focus on obtaining the permits and designing the plans for your home.
Another option is to buy the property with seller financing. You will be making regular periodic payments with interest to the seller for a period of several years. Usually, once the permits are obtained and construction is ready to commence, the buyer will obtain a construction loan from the bank and then pay off the seller.
Speaking of a construction loan, this is your third option. This is particularly appealing if you are buying land in Malibu that already has an active building permit. As long as you are ready to immediately start construction after the purchase, this can be a good option.
How to Make a Success of Buying Land in Malibu
When it comes down to it, there really isn’t any “cheap land” in Malibu. You may save some money upfront when you purchase it, but the costs to develop the land may quickly exceed the initial cost.
Buying land in Malibu that offers those fabulous ocean views often means building on a hillside, which will require careful engineering of the foundation. In the end, however, your engineered site and fabulously designed home may be valued much more than the actual out-of-pocket costs.
Purchasing land in Malibu so that you can oversee the construction of your dream home can seem like a daunting task when you start to analyze the details. Having a skilled and experienced Malibu real estate agent who is familiar in land deals can help you in this journey.
Russell Grether is a Malibu real estate agent who specializes in buying land in Malibu. You can contact him at 310.994.4247 or by sending a message.