Looking to purchase the perfect home can be a pretty exhausting task. Right now, the demands of the market far outweigh the supply, which means that every great house most likely has multiple people clamoring to buy it.
Plus, depending on your area, it might be hard to find a place that has everything you’re looking for that’s still within budget.
If you’re feeling creative and ambitious, purchasing a plot of land might be the right step for you! But before you take the plunge, make sure you have all of the facts.
Why purchase a plot of land?
People purchase plots of land for a myriad of different reasons, but the main reason why people purchase land instead of a preexisting house: the freedom to do whatever they want with it (within reason, and local zoning laws).
When you purchase a plot of undeveloped land, you get to choose where– and what– to build. If you want a home with three bedrooms, all with massive walk-in closets and ensuite bathrooms, you’re free to design and build it.
You could also purchase a plot of land for non-residential reasons– for example, to use as a campsite, to build additional storage space, or even to use as parking space.
Can I build a house on a plot of undeveloped land?
Of the many possibilities that await you in a plot of land, building a house is certainly a possibility! However, it’s not quite as simple as it might seem.
Familiarizing yourself with local zoning laws is one of the first things you should do before looking into a plot of undeveloped land. Making sure that your land is zoned for your intended use is definitely a big help before making the financial investment of purchasing it!
If the land isn’t zoned for residential use, but you’d like to build a house there, you can try to petition for rezoning– but it all depends on your local government and the local context of the plot.
How much does a plot of land cost upfront?
One of the main drawbacks to purchasing a plot of land, as opposed to a home, is the difference in cost.
There are plenty of loan programs in place for homebuyers, particularly first-time homebuyers, that aren’t available to people purchasing land– even if they intend to build a home on the property.
You can expect a much larger down payment on a plot of land than you would for any developed property or a plot of land containing a preexisting home. While home loans can allow for a down payment of as little as 3-5%, the down payment for a “land loan” on a plot of undeveloped land can be as much as 50%.
The amount of money you’ll be granted for your land loan depends on the property itself and multiple other factors. Land loans are considered risky investments for lenders, so it might be more difficult to obtain– and might come with a high interest rate.
Don’t go it alone
Working with a real estate agent is the best thing you can do when looking for a plot of land to purchase.
Someone who’s familiar with real estate and knows what to look for, and where, will be a major help in your search.
They’ll help you go through the checklist of necessities for your plot of land (for instance: are there easements on the land? Is there access to a main road? Are there utility hookups?), in order to determine whether you’re making a sound investment or not.
If you’d like to get started on your search for the perfect plot of land, look no further than the experts at Edge Real Estate. We’d be happy to work with you– just send us a message or give us a call today!