Niether.

Just save your money. Cash on hand settles financing issues MUCH better than any improvement you might consider.

"Which one do you think would help us increase our overall appraisal value after the house is built? "

I agree with billl... neither!

Build whatever YOU will enjoy, and forget about increasing any appraisal value.

Outbuildings and ponds will not increase the appraisal for the land by doodley squat. We built a 40K 30'x54' garage/shop that is heated and cooled and darn near built better than the house. The appraisal when we were done added $1500 to the home's value. My girlfriend dug a half acre pond in the pasture for the horses. It added $500 to the appraisal. If the money doesn't go toward something in the house, it's wasted as far as an appraisal may go even though the end product may be very user desirable.

Keep the money for the build. You'll need it. Everyone goes over and needs cash reserves to pay for the overages. You should have at least a 20% contingency fund before you break ground. That's in addition to the bank loan and paid off land.

Wow! Glad I asked! I keep reading how ponds increase the value of property, but I guess that's BS.

I think I'll contact an appraiser to see if this is true across the country.

Maybe we'll just hold on to the cash, and then at the end, if we don't need it, we can use it to build one of the two.

Thanks for the input!

Ditto.
My experience:
$55K pool added maybe $10K to appraisal one year ago.
$20K brand-new seawall (which holds the property back, if it failed would be a disaster) added $0
$25K 4-yr-old composite dock, power & water, boat lift added $0
Unfinished walls, ceiling and doorjamb in foyer, kitchen ceiling & backsplash (cost to finish by hiring someone in a hurry, which we should have done had I known, maybe $500-1000, but a big mess covering furniture) subtracted $5K

A pole barn may not increase the value of the appraisal BUT it will help sell the house faster than a pond will.
Most men want that extra storage space/play area for themselves.
If the house makes the wife happy the barn will seal the deal.

Thanks for the opinions!

c9pilot- Wow. That is unbelievable! And very sad! Makes me want to be extra cautious with every penny I'm thinking about spending!

carol- We aren't really thinking about resale value at this point, because we HOPE we will live here for the rest of our lives. But I agree- a barn is much more in demand. And a lot more practical. If we do end up using the money for one of them, we'll probably go with the barn. It leans more towards the "Need" category than the pond! :)

It's amazing how little expensive improvements count in appraisals. We built an out building that was really nice for around $30K - but only raised our overall value by $10K. Still, I was glad we built it, I used it daily, so for me it was worth it. Also, keep in mind that structures will cause your property tax to increase. Not sure if a pond is seen as a taxed improvement or not.

I agree - don't do either one with the hope it will raise appraised value. We built a $50,000 heated, insulated garage with bathroom and also a 36 x 60 horse barn. The appraiser said he didn't want to look at either one as they had "no value" to him. So we spent close to $100,000 and it did not increase our value at all. He also said it made no difference in the home that we had granite counters, hardwood floors, custom cabinets, etc. This guy just gave basic value to everything. Very frustrating.

Before building it would be wise to hire a good realtor to valuate your dream home before you get too far into the process. At least you will know then how much you will need in excess of the loan amount, if any. Another advantage to this is that when shopping builders, you can let them know what you are willing to spend, based on your market valuation.

@ncREguy- how does this work out? I have heard that I will need it appraised, and I assumed the bank took care of that. Are you saying I should hire an agent and have him/her look at it, in addition to the bank's appraisal? How do I compensate this person for their time?

Thanks for the advice!

You hire a real estate appraiser. Your lawyer can recommend one. It shouldn't cost more than a few hundred dollars. A good one will break down the appraisal document for you so you can begin to see your plans from a real estate financing perspective. It may be an eye opener for you. Don't expect your full 8 acres to be valued more than one or two acres. This is always a big shock to buyers of raw lots, I'm afraid.

Re your proposed additions (either pond or barn) expect neither to recoup what you'd put into them. Save your cash, it may be needed to make up the difference between your financing and building costs. If not, then you can do either, or both, after you are living there.

Good luck.

L.

You can hire an appraiser for $400, or hire a GOOD agent for way less. I know that you are pinching pennies, so that is what I would do. Both will be using the same comps.
The bank will be performing an appraisal before building and right before close, but I would get a second opinion, PRIOR to spending money on the loan application, credit report fee, architect...
Depending on your local market, you may find yourself upside down, or you may even find yourself having a little equity in the place. Either way, IMO, it is part of the equation that you want to know now, and not later. You do not want to find yourself upside down a week prior to close with not enough funds to make it happen.
Also add 5 - 10% onto the builders quote. Very rarely do buyers come under or right at the quote.

Another thought on the pond ..

I live in a rural area and have a well; no public water. I get a credit on my homeowners insurance because I have a pond relatively close to the house. The water can be pulled from the pond if there is a fire. I've actually seen that done when a friend's barn burned ...

Before you put in a fire pond (very good thing to have if you live, as I do, in an area without hyddrants), consult with both Soil Conservation Service (free help on best soils to locate a pond) and your local fire department regarding having good access, and possibly a dry hydrant installed in the pond to make it possible to use the water efficiently in all weathers. It's critically important to plan for adequate room for tanker (truck) rotation, etc.

A pond is nice, but it will do no good for fire protection unless the pumpers can get to it and capture the water. Sometimes a fire district will pay the cost of a dry hydrant if you are willing to have the pond used to fight any fire the neighborhood, providing you have good all-weather access to the dry hyrdrant.

Sometmes, though, homeowners' insurance is higher with a pond because of the added liability of it. It could be seen as an attractive nuisance.

I would still wait until you've built your house before paying the cost of a pond, however.

L.

I realize the OP is planning to build a forever house and isn't planning for resale. I also know that stuff happens so resale could always happen.

As a buyer I would find a barn to be a plus and a pond to be a negative. We are currently looking at homes on acreage and many of them have barns and many have ponds (some are stocked ponds). I always see the ponds as simply something that "uses up" my acreage for no good reason so tend to mentally reduce the value of the property since I am effectively getting less land. On the other hand, the barn has value to me since I would have to build one if the property didn't have one.

Not to say that you shouldn't build a pond if you want the pond -- just pointing out that like a swimming pool it is attractive to some buyers but is a turnoff to others.

All the "what's nice" talk is really besides the point. The OP is building new and wants to maximize the appraisal in a crazy market. The ONLY winning strategy is to save whatever money they were going to spend on these improvements and hold that cash until they close on their permanent mortgage. The cash will be MUCH more valuable than a barn or pond at that point. It is SOOOOOOO much easier to close a deal by plunking down $50,000 in cash vs trying to argue about the worth of a barn.

Once the appraisal is over and the mortgage process is complete, then the OP can start with any additions. At that point, if you are cash flowing any improvements, you should just order them in terms of what you value the most.

In this neck of the woods (NJ), engineering reports add value to raw land. e.g. survey, topography, soil logs, driveway design, septic design, building permits, etc. In other words, appraisers like to know that the property is "building ready." If you know where you'd like to site your house, then installing a septic and well would certainly increase valuation.

I agree with the other posters that a barn would be a big liability at this time. Since you won't be living there, you won't get insurance coverage. As for adding a pond, in NJ one would need DEP and town approval. Too much red tape!

@billl- I totally (albeit, reluctantly) agree with you. I wish I could have my land built up with the pond and barn and everything, just waiting for the house. But, it sounds like just sitting tight with the $ is the best option.

Thanks for the advice, everyone!

Late husband was certain a barn would increase the value of our real estate. That was his justification for building one to use as a workshop.

Our house sold for roughly the same amount as any other single family home in town. The money he spent on the barn, (and he built it by himself) increased the sale price by maybe half the amount he spent on materials.

Rural areas w/ acreage almost have to have an outbuilding, or have the area for one to get any interest. Also an outbuilding that is able to be used as a mother in law unit, is highly desirable. Adding value in price and adding interest and action on buying your home are two separate issues. It is getting harder and harder to live for collage grads or seniors on their own.

I agree, keep the money now for the home you want to build. Later build the barn & pond if you want & enjoy them.

I agree with most. When you complete your build and are ready to settle up, the mortgage holder will look the assets you show, and it's a LOT easier for them to judge the value of your cash-in-hand versus a barn. (Yeah, I see you have $50k in the bank. Or, I see you have a new barn. Hmmmmm.....)

Edited to add - and what if the barn costs more to build than it's judged to be worth when finished? Then you've lost money.

Oh holy cow! Apparently the Carpet and Floors person just above rejuvenated this old thread, and I didn't even notice. Oops.

Don't worry...I've made a few enthusiastic responses to ancient posts myself. :,)