What About Buying Some Land and Building A House?
Posted by Richard on August 6, 2020
With the housing supply tight, some buyers are checking out land to build their dream home.
It feels sensible, after all. You can find some blueprint for the perfect house, maybe get away from urban areas, and live peacefully on a pretty little plot of land you picked out yourself. What could go wrong?
Like most ideas that seem perfect, buying land can be more complicated than you think.
The place to start is with a real estate agent who has experience negotiating land deals. There are many problematic elements with buying vacant land; from surveys to environmental considerations. So don’t go into it alone.
Know how much you want to spend before visiting properties. Land purchases are often done in cash and lenders may not be open to financing undeveloped land. You’ll need to have proof of funds for a cash offer. Get cash out of investments first. Don’t count on getting a loan for land.
If there are other homes in the neighborhood, you’ll want to consider their value. Lenders may not make new construction loans if the cost of land and buildings is higher than surrounding construction.
Don’t skimp on tests. You will want to know if the previous land user in any way contaminated the land. Get a report on flooding potential and soil.
A surveyor will identify property boundaries. Other owners in the area may have encroached on the property.
Make sure the property is zoned correctly. Rezoning can be a nightmare.
Finally, don’t talk to the neighbors. They like that vacant land and you don’t want a fight.