Have you been contemplating the idea of purchasing land and building your dream home? Are you ready to brave the unknown, face your fears, and make the jump? Now may be the perfect time for your land purchase as we get closer to the spring and summer months. Here are some tips to consider before you take the plunge into land ownership.
1. Hire a professional Realtor who understands rural property.
Ask for advice about the following items on this list. Don’t expect an experienced agent to jump and run to show you properties until you have done some homework.
2. Be aware of the costs involved in developing raw land well before you get started.
Ask your Realtor® to provide referrals for septic installers, well drillers, road builders, etc., so that you can investigate the feasibility of the entire project ahead of time.
Estimate the cost of each improvement and double it—it will almost always cost more than you think.
There are many things to learn before purchasing raw land (cost of improvements, regional availability of well water, property taxation, timber values, easements, covenants, title issues, microclimate weather, surveys, zoning, etc.).
3. Talk to a trustworthy lender who can offer a construction loan or an all-in-one loan.
Do you have enough cash saved? Is your credit worthy of such a risky project?
The lender may reject a borrower who is not financially strong, as these projects historically have a high rate of failure.
4. Ask your Realtor® to send you property listings for review that fit exact criteria, including price point, so that you can get a feel for market pricing.
Calculating how much you can afford to spend on land may be a real eye-opener!
You may soon realize that you cannot afford all the must-have items on your previous wish list (e.g., a stream or creek, paved road frontage, 40 acres vs. 10 acres).
Don’t waste time looking until you know your price limitations.
5. Talk to a reputable contractor who can advise you on the approximate cost to build your home.
This process often results in trimming amenities and sacrificing finish quality when the dreamer realizes how wants and wishes translate into dollars.
Remember, most good real estate advisors would rather spend considerable time teaching you about the process than running around looking at properties you are not prepared for. Don’t be fooled by a novice who may jump at your request but lacks the knowledge to get you started the right way.