Building a custom home starts with a big decision: should you purchase land first—or hire your builder before you buy?
Many people believe buying land is the obvious first step. But in reality, that order can lead to unexpected design constraints, permitting issues, and unforeseen costs. If you’re focused on custom home planning in Paso Robles or anywhere on the Central Coast, it’s worth considering the pros and cons of both approaches before making your move.
Here’s what you need to know.
Buying Land First: Pros & Cons
Pros:
- You’re in control of location. You can focus your energy on views, schools, sun exposure, or neighborhood.
- Faster closing. You can move quickly when you find the right parcel without waiting on a builder.
- Flexibility in shopping for builders. You’ll have time to interview and compare builders on your own timeline.
Cons:
- Site feasibility is often unclear. Many land buyers underestimate grading, access, utility, or soil costs.
- You may design something that’s hard or expensive to build. Without early builder input, your vision might not match the land’s reality.
- Permit issues. Some lots have zoning or environmental restrictions that only a seasoned local builder would recognize.
Example: A lot in rural Paso Robles may require a septic system, well, water tank, or significant grading. If you’ve already closed escrow, these surprises become your problem—not a negotiable item.
Hiring a Builder First: Pros & Cons
Pros:
- Expert input before you buy. Builders know what to look for: red flags, costs, and opportunities.
- Design-build integration. A design-build firm like Ferreira Inc can help you find land that fits your vision and budget.
- Time and money savings. Avoid purchasing land that ends up needing costly prep work or unexpected utility extensions.
Cons:
- You may feel less independent. Some buyers prefer more freedom to choose land without input.
- It can feel slower. Coordinating land shopping with your builder may take more upfront conversations.
Pro Tip: The best approach might be a hybrid—start interviewing builders before you buy land, even if you don’t sign a contract immediately.
Implications for Financing
Your financing options can change dramatically depending on when you buy land and whether you have a builder lined up.
If You Buy Land First:
- You may need a land loan, which usually requires a larger down payment (20–50%) and comes with shorter terms and higher interest rates.
- You’ll likely need to refinance later into a construction-to-permanent loan once your builder, plans, and permits are in place.
- Some lenders won’t finance land unless you show a clear timeline to build.
If You Hire a Builder First:
- You may qualify for a construction-to-permanent loan from the start, which rolls your land purchase and construction into a single closing.
- You’ll need more documentation upfront (plans, budgets, contractor agreements), but the process is often more streamlined.
Financing Tip: Talk to your lender early. Your financing strategy should align with your build timeline and how soon you’re ready to break ground.
The Best Approach in Paso Robles and SLO County
In San Luis Obispo or Paso Robles, site characteristics vary widely—from flat vineyard parcels to steep, oak-dotted hillsides. Custom home planning here requires local expertise. Soil types, water access, and setbacks can make or break a lot’s potential.
By partnering early with a builder who knows the region—especially one offering design-build services—you can:
- Evaluate properties for fit, cost, and feasibility
- Design a home that takes full advantage of your lot
- Avoid delays, redesigns, or deal-breaking surprises
At Ferreira Inc, we often walk lots with clients before they buy, helping them understand what’s possible before making an offer.
Final Thoughts: Choose Your Sequence Wisely
Buying land before hiring a builder might seem intuitive—but it can introduce unnecessary risk. In most cases, involving a builder early helps ensure your land and vision are aligned.
If you’re serious about custom home planning in Paso Robles, start with a conversation. Whether you already own land or are still shopping, we’re here to guide you through the entire journey.
See what order makes the most sense by scheduling a consultation with us today.
