There’s something thrilling about buying your own piece of land – untouched property on which you can build your dream home from the ground up. But picking the perfect parcel might be a little more complex than you’d expect. So, know what’s involved before you dig in!
Check local zoning laws
If you think you’d ever spied the site of your future dream home, before you start drawing up an offer, you’ll want to check local zoning ordinances. Because no matter how appealing a piece of land may appear on the surface, if it doesn’t meet the specifications for your intended use, you’ll find yourself with a costly but worthless hunk of land. Zoning and other land regulations can be accessed through public records at your local zoning office. Here are some other important things to check : access from a street, setbacks and view ordinances.
Figure out how much it will really cost
The cost of a plot of land to build on averages $3,020 per acre. But even if you’re able to acquire the land for a song, you’d better have big bucks if you’re planning to build something there from scratch. According to data from the National Association of Home Builders, the median cost of building a home is $289,415. That’s hardly where your expenses end. There are substantial expenses for getting land ready for construction. You will need a survey, permits from the municipality and health department approval. The site must be cleared, graded and excavated. Departments of local, county and state governments can be involved, all with associated fees. And this can take awhile: The process from identifying a parcel for purchase to receiving the certificate of occupancy can take a year or more.
Determine which utilities you want to install
Chance are quite good that you’d like your home to have water, electricity and other modern day conveniences. And these things don’t come cheap. One major installation where the condition of land itself is critical is a septic system – a series of pipes that empty wastewater deep into the ground, where bacteria breaks it down. While most existing homes are connected to a municipal sewer system, for a new home you can go either way. But not all land can sustain a septic system. To determine this, you’ll need to perform a percolation test. This means that the ground must be able to absorb water at a specified minimum rate; otherwise the lot will not support a septic system.
Hire a land planner
If you want some help figuring out whether a certain lot is ripe for building a home and how much it will cost, the professional you’ll want to turn to is a land planner. Much like home inspectors size up a house for potential flaws that you’ll have to fix, land planners scrutinize land. This is an individual whose job it is to find out everything possible about the land related to getting it ready to be built upon. Vegetation, wetlands, soil type, water table, slope and access are just a few of the items that will have a major impact upon whether structures can be erected. It can happen that, for various reasons, a certain parcel will be unbuildable. If so, you do not want to be left holding the bag. Better to find out beforehand.
Prepare for financing
Getting a “raw land loan” is different than getting a loan for a home. Since there’s no building on the property yet, it’s easier for a buyer to simply walk away, leaving the lender holding the bag. Due to this risk, Some lenders may require a higher down payment on land – anywhere from 20% to 50%. The loan may also have more stringent credit score requirements and a higher interest rate. On the bright side, the U.S. Department of Agriculture offers loans called Section 52 direct loans, which help low income people purchase plots in rural areas and prepare them for a new house from scratch.
