Published: Sep 21, 2022 | Updated at: Sep 21, 2022
Did you know that the average monthly rent in the United States surpassed two thousand dollars in June of 2022?
Since it is getting more expensive to rent homes, more people are choosing to buy land in order to build their own homes.
But knowing how to buy land can be challenging if you've never done it before. We've written a guide to help you out. Keep reading to find out more.
1. Work With a Real Estate Agent Who Is an Expert in Land
It will be easier for you to find the right piece of land if you hire a real estate agent who specializes in buying and selling land.
Agents who have expertise in buying and selling existing homes or commercial properties don't always understand the ins and outs of buying land.
A skilled agent will help you to know how to find suitable land and they will inform you whenever new properties hit the market.
On top of this, you'll have peace of mind in knowing that you are working with a professional who understands the buying process. They will be able to help you to secure the right kind of financing to make a purchase.
2. Don’t Ignore Inexpensive Listings That Look Like Fixer-Uppers
It can be challenging to find bare land that is ready to build on if you want to live in a popular area or community.
It's often the case that these kinds of communities have rules in place that require landowners to build cookie-cutter houses that look similar to other houses in the area.
But it is common for those who are buying land to ignore the potential value of investing in inexpensive land that has fixer-uppers.
These kinds of homes are often listed for less than the value of the land that they're built on. If you invest in a fixer-upper and then demolish it, you can then build a new home.
This is an easy way to get a perfect lot in a popular neighborhood or community.
3. Look at Property Values in the Area
The best way to make a long-term investment when you buy land is by building a home that has a similar value to nearby homes.
For example, if you build a four hundred thousand dollar house in a region where other houses sell for less than three hundred thousand dollars, it might be difficult for you to find a buyer if you eventually decide to sell.
Keep in mind that you can easily increase your property value by investing in renewable energy solutions.
4. Look into Restrictions on the Property
You'll need to figure out if a piece of land comes with restrictions before you make an offer. These restrictions often take the form of covenants and ordinances.
For example, many rural areas will require buyers to own a minimum amount of acreage before they can get a permit to build a house.
5. Buying Land: Don't Expect a Conventional Loan
Banks and lending companies don't usually want to offer loans for empty land and bare lots because they are not able to sell these loans on the secondary mortgage market to other large financial entities.
This means that it is often challenging for banks to recoup their money. Therefore, they will risk losing money if you choose to walk away.
Don't be expected if your lender asks you for a large downpayment so that they can lower their risk. This downpayment could be up to half of the purchase price.
6. Don't Expect Your Property to Be Rezoned After You Buy It
Don't make the mistake of thinking that you'll be able to navigate zoning issues after you buy a property.
There is no guarantee that it will be possible to rezone your land from residential to industrial or agricultural.
7. Consider Getting Environmental Testing Done
If you are purchasing land that is rural acreage or a lot that has been vacant for a long time, it might be difficult for you to get a building permit.
This is common if the land you are thinking about buying has contaminated soil or groundwater that is polluted.
8. Know What it Will Cost to Build a New Home
In most cases, the least expensive aspect of a building project is the land cost. It will cost much more to build a new home. This is why you should take this cost into account before you buy a piece of land.
9. Get to Know the Neighborhood
Take time to drive around while taking notice of where parks and schools are located.
You should also figure out if there are nearby commercial developments that are in the works.
10. Don't Forget to Look for Hidden Natural Hazards
Regardless of how beautiful a piece of land might seem, watch out for natural hazards that might make it difficult to build a house.
For example, if the property you'd like to invest in is along the shores of a large river, it may be challenging to get a building permit.
How to Buy Land: Know What You're Getting Into
If you have been wondering how to buy land, the best thing you can do is hire a real estate agent who specializes in land. You should also make sure that it will be possible to get the right kinds of building permits.
Make sure do your research about the area that you are looking to invest in and have a good plan for how the investment will make a return. Buying land can seem like an arduous task, but with the right preparation and planning, it can be a lucrative business.