Buying vacant or undeveloped land might seem like a pretty intimidating prospect to most people. After all, wouldn’t it be easier to buy an existing home?
However, undeveloped land is appealing to people who want to design and build their own home– or use the land for another purpose, like storage, parking, or commercial purposes.
If you’re thinking about purchasing a plot of undeveloped land, there are a few things you should know before you make the investment.
Understand local zoning laws
The plot of land you have your eye on is probably zoned for a specific purpose, depending on the area it’s located in. The zoning laws might restrict how you can use the land.
For instance, if a plot of land is zoned for commercial use, you might have to appeal for rezoning before you can build a house there– and there’s a chance that your appeal might be denied.
Having full knowledge of your property’s zoning is an absolutely necessary step prior to purchasing a plot of land. Once you know what to expect, you can figure out how to proceed.
Do your homework
Depending on what you plan to use the land for, you’ll have differing needs for the plot you’re looking at.
If you’re looking to build a custom home on the plot, you may have to adhere to local aesthetic laws that determine how your house can look.
An undeveloped plot of land may have easements from local landowners on it. An easement is an existing agreement that another landowner can use part of your property.
For example, if your property lies between another plot of land and a main roadway, the other landowner may have an easement that allows them to use your land to get from their house to the road.
Make sure you fully understand any existing easements and determine whether they’re acceptable to you before making the commitment to purchasing a plot of land.
Understand your finances
Obviously, a plot of land is less expensive than an existing house.
But the way financing works will also be quite different than it would be for purchasing a home. When purchasing a home, you’re likely to receive a mortgage loan that allows you to make a fairly low down payment– as low as 3-5%!
Lenders consider plots of land to be a riskier investment than houses, which means that you can expect to make a much higher down payment.
That down payment might be as much as 50%, so it’s necessary to determine ahead of time whether you can swing that amount of money or not.
Even after you’ve made your down payment and figured out financing, you most likely have a lot of expenses ahead of you. If your chosen plot is undeveloped, you might have to arrange for utility hookups.
If you’re planning to build a home on your land, you should be aware of the current cost of building a home.
Typically, that cost is lower than the purchase price of the average home– but due to supply chain issues over the past few years, the price of lumber and other building materials has drastically fluctuated, which can greatly impact the price of building a home.
How can I get more insight into the process of buying a plot of land?
Working with a real estate agent is your best bet for making an informed purchase. If you’d like to connect with an experienced and motivated real estate agent today, just drop the experts at Edge Realty a line. We can’t wait to work with you to find the perfect land for your needs!