How To Buy Land | Bankrate

Whether your goal is to build a family home, start a farm or use it for refreshment, buying down can be catchy. If you ’ ra curious how to buy farming, here are the essentials you need to know .

1. Decide how you’ll pay 

Before you begin your search for undeveloped farming for sale, give your finances a hard look to make sure you ’ re able to afford it, american samoa good as determine how you ’ ll pay. One of the best strategies is to pay cash, because lenders consider vacant land a riskier investment than a house that ’ s already built, and charge more to finance it as a result.

If you plan to pay in cash, you ’ ll want to budget for both the nation and extra expenses like property taxes and utility installation. If you ’ ra looking for a lend rather, it ’ second important to get your finances in effective shape ahead of time by paying down debts to lower your debt-to-income ratio, and starting to save for a brawny down payment. “ Lenders typically require 20 to 25 percentage down on raw land and farms, though there are some agriculture-oriented recognition unions that sometimes merely require a 15 percentage down payment, ” according to Brandon Garrett, president and headman investment officer of BentOak Capital in Weatherford, Texas .

2. Compare your financing options 

If you ’ re going the finance route, know that buying nation can be a complex process. Land loans aren ’ t the lapp as conventional mortgages, and their higher costs tend to reflect the come of risk assumed by the fiscal mental hospital dealing with an unexploited property. Your financing options might include :

Bank or credit union land loan

A local bank or credit rating union is more likely to be familiar with the land in the sphere, and could offer a loanword with better terms. “ If you do not have a potent existing bank relationship and are looking to finance a kingdom purchase, a consumer-owned credit rating concerted that specializes in rural and agrarian lend is a great put to start, ” says Garrett .

USDA loan

If the land is in an eligible rural area and you plan to build your elementary residence on it, you might qualify for a USDA loan backed by the U.S. Department of Agriculture. These loans typically have low-cost interest rates and down payment requirements. Options include Section 523 loans for those who plan to build the home themselves and Section 524 loans for those who will hire a contractile organ .

SBA 504 loan

The Small Business Administration ( SBA ) partners with fiscal institutions to provide financing for business owners who purchase land for commercial enterprise consumption in the shape of an SBA 504 lend. You could qualify for this kind of loan with a 10 percentage down payment .

Home equity loan

If you already own a home, you could consider tapping your existing home fairness with a home equity lend. This approach will probable be a lot less expensive than a land loan, but proceed carefully when using your sign of the zodiac as collateral .

Seller financing

If the owner of the land is tidal bore to complete the sale, you might be able to negotiate seller finance. It ’ sulfur best to hire an lawyer to assist with negotiating the terms of the deal, including the down payment, interest rate and repayment terms. After you ’ ve been approved for a country lend, there are several steps in the close action :

  • Appraisal – A professional appraiser will measure and appraise the property, taking into account the size and location. This typically takes two to four weeks.
  • Property documentation investigation – The lender will order a title search to ensure there aren’t any outstanding liens or judgments on the property.
  • Insurance verification – You’ll be asked to provide proof of all necessary coverage, such as general insurance, liability insurance, hazard insurance or flood insurance.
  • Document preparation – The loan officer will create the loan paperwork showing the terms that have been approved.
  • Fee calculation – The fees that you have to pay at closing can include title fees, a recording fee, property taxes, real estate commission or other costs charged by the lender, title company, appraiser or real estate agent.

3. Consider every expense

Depending on how you plan to use the property, owning land can come with many obscure costs, such as permit fees or paying to build a septic system. “ In accession to buying and finance, there are add carry costs on land that people tend to not factor in — specially first-time landowners, ” says Garrett.

besides, “ even if you have vacant domain, there are active management requirements and costs, ” says Hank Mulvihill, director and senior wealth adviser at Smith Anglin Financial in Dallas, Texas. “ Be aware that land does not fair sit there. ”

4. Find land for sale

There are several ways to find land for sale :

Online listings

If you have an idea of where you ’ d like to purchase land, you can start searching on-line for parcels offered via auction or properties up for sale. A few websites include :


You can besides try searching for nation for sale on general real estate list sites, such as Zillow or You can even try browsing listings on Craigslist .

Via a real estate agent

Depending on where you live, there could be a real estate agent ( or several ) in the area who specialize in land sales, or at least have an ear to the ground about unlisted plots of vacant land .

Your local paper

The classifieds section in your local newspaper could advertise listings from land owners selling parcels independently, and you might be able to save money by connecting with the owner directly. There might besides be recess publications with listings for domain specific to your interests, such as kingdom for hunting, refreshment or farming .

Take a drive

Another way to find kingdom for sale is to just drive around your craved area and spirit for for-sale signs, or drive over to a local anesthetic real estate function to check the listings in the window. You might be able to uncover land that isn ’ thymine listed on-line this way .

Government land listings

sometimes, the government has land up for grabs, such as reclaim parcels. You can search for what ’ s available on sites such as :


Land sold by the politics normally gets offloaded through an auction, so if this is your scheme, be prepared to go through the auction command summons. If you haven ’ deoxythymidine monophosphate owned land before, it ’ s a good idea to consult a master, such as a actual estate agent who specializes in nation sales or a land planner whose job is to evaluate whether it ’ s feasible to build or develop a piece of country. A farming planner evaluates the gradient of the farming, the water board, type of land and vegetation and early factors to determine what structures the nation can sustain .

5. Research the property 

When you find bring to purchase, do your homework before making an offer. here are some cardinal issues to investigate :

  • Utilities – Are there hook-ups for water, sewer and electricity on the property? If not, you’ll need to install them. “Getting electricity to a remote parcel can be stunningly expensive,” says Mulvihill. “Sewer service is unlikely in remote areas, so be ready to spend up to $40,000 for a septic system.”
  • Road access – Is there access to the property from a public road? If not, you may need to get an easement to build a road.
  • Zoning and land-use restrictions – Is your idyllic country property actually zoned for industrial, agricultural or retail use instead of residential? Will a county road or retail mall be built near the property someday? Check your local zoning authority’s website or visit town hall in person to learn about regulations in the area, and any construction plans that could impact your parcel. “You really do not want to build your dream home next to a beautiful open area which is zoned to become a gravel quarry,” Mulvihill says.
  • Property taxes – “Property taxes on a piece of land can be costly and make holding the property long-term economically unfeasible, which is why most raw landowners try to ensure that their parcels fall under agricultural exemptions,” says Garrett.

6. Make your offer

once you ’ ve done your homework on the property and know how you plan to finance the purchase, you ’ re ready to present the owner with an propose. This written document contains the details of the property, your touch information, the price you ’ rhenium volition to pay and other terms. You ’ ll besides want to include contingencies in your put up to protect yourself from factors that might make you want to walk aside from the deal. Common contingencies with land purchases include :

  • Environmental tests
  • Septic system permits
  • Land survey showing property lines, parcel size and easements
  • Zoning regulations

There are templates available on-line of sample distribution purchase agreements, but unless you ’ re an experienced buyer, you ’ ll want to get a real estate lawyer or real estate agentive role to prepare the offer for you .

Bottom line

Buying land can be more dearly-won than buying a home, and there are different requirements for getting a land loanword compared to a home purchase mortgage. If you intend on building a theater on your land, you ’ ll besides need to factor in construction costs. A construction loan can help. With extra report by Jackie Lam

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