Whether you crave the seclusion of country acres or a quaint residential lot in a subdivision, buying a piece of land is a bit different than buying a house.
Whether you’re buying land as an investment or for residential use, ask yourself the following questions before making any decisions.
Nothing bulldozes plans like zoning issues, so before you buy land, pay a visit to the county zoning and planning office.
Look at the long-range general use plan for the area surrounding the lot, which will outline permissible use of the land and what the future holds for the immediate area.
If you intend to build a home, look for things such as a future plans for a landfill or power plant in the area that may affect your home’s value and your family’s lifestyle.
Have you ever driven down a major highway and wondered why anyone would build a home so close to it? Chances are the house was built before the highway, and the homeowners had no idea it was in their future.
If you can’t decipher the general use plan enough to tell whether road improvements or highways are planned, ask one of the county planners for assistance.
If a homeowners association governs the land, you’ll need to follow their restrictions in addition to whatever zoning rules apply. Read the Covenants, Conditions and Restrictions (CC&Rs) carefully. These documents outline what you can and can’t do with your property. If you have any questions about the CC&Rs, consult your attorney, as it’s vital that you understand everything in them.
How will you get to the property? If it’s on a main public road, you’ll likely have no problem.
Many times, especially in rural areas, the only access to a piece of land is over someone else’s property. Without what is known as an “easement,” your property is considered landlocked. Ensure that a right-of-way easement is granted, in writing, before you agree to buy the land.
Additionally, if there is no existing road to the property, you’ll need to factor the cost of building one into the purchase price.
In larger planned developments, the builder generally brings utilities, such as water, natural gas and electricity, to the lots. With country property, however, buyers may need to secure the utilities and sewage system, which sometimes requires taking on the cost of drilling a well or installing a septic system.
Get bids on any work that needs to be performed before you sign a purchase agreement, or have your real estate agent make your agreement contingent upon your acceptance of the bids.
If you’re buying raw land — without any utilities or streets — the lender will generally ask for a 20% to 50% down payment, and you will likely have a higher interest rate.
Not all lenders handle vacant land loans, so it may be a bit of a challenge to finance your purchase. Many sellers offer financing. If not, try local banks or credit unions.
One of the biggest mistakes residential land buyers make is failing to consider the cost of developing the land when applying for a loan. So get all the bids required in advance of seeing a lender.
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