One of the biggest decisions any person has to make at some point in their lives is purchasing property. But just how hard is it to buy land?
How difficult it will be to buy land will be determined based on your budget, location, land intentions, land type, zoning rights, as well as any other restrictions that are associated with the property.
As you begin looking for your perfect parcel of land, you may feel a bit overwhelmed by the number of obstacles and complex procedures that come with acquiring property. In addition, there are so many variables that involve carefully calculating your finances, choosing the right place to set up shop, as well as determining what your end goals are for a project. With that being said, if you have a clear idea of what you want to do with your land, you will be able to significantly narrow down your options, which is why we are going to help take the weight off your shoulders and guide you through the process.
Individuals purchasing land within the United States must do so through a private seller, a real estate organization, a private land trust, or acquire property through the Bureau of Land Management. In addition, you should always consult your county’s local building authority to ensure that you are developing within your legal rights.
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Choosing The Right Land
With a country as large as the United States, you have a lot of options to choose from when it comes to acquiring land. This can seem challenging, as having so many options available can sometimes feel overwhelming. However, the opposite is also the case, as you are given the versatility to select the right property that fits your needs, which can result in a much easier purchase.
Before you go out and start physically hunting down land for inspections, it always helps to have a clear idea of what exactly your ambitions and goals are for your property. This is a very important step to start out with, regardless of whether you are an aspiring homeowner, an commercial business owner, or a real estate investor, as it will help narrow down all of your options and make your search way more efficient and far less stressful.
Once you have a vision for your property, you should sit down and start considering what your options truly are. Let’s dive into what you need to assess to make your land purchase as smooth and easy as possible.
The first thing you should do before you go looking at properties is to sit down and have a good evaluation of your finances.
This can be a challenging aspect of hunting down land, as everybody’s financial situation is a little bit different and the number of hurdles you have to overcome can be greatly mitigated by either how financially well off you are or how carefully you calculate your savings and earnings to predict what you can afford.
If you’re financially backed and have a substantial savings in your bank account to pay for the property upfront, you will find that buying land is relatively easy and that all you need to likely do is commit to land that you like and deal with any logistical issues with the property.
However, most people don’t have this luxury and need to make more cautious decisions when considering their land options. This can feel intimidating at times, but if you approach your budget with careful consideration, you will find that the process isn’t all that bad.
Here’s what you should consider:
- Savings - having even a small amount of savings to get yourself started will be the foundation for your property options. While you can begin searching for land without savings, having some leverage to lean on will give you the confidence and reassurance to put a downpayment on your property.
- Income - if you are receiving a consistent and regular income, it becomes much easier to predict what kind of savings you will likely be able to acquire over the coming years while you pay off your property. What you should carefully consider is your job security. The last thing you want to do is commit to a property loan that falls through, which is why you should feel confident in being able to hold on to your current or new job during the process.
- Financial advisor - hiring a professional financial advisor can make help your budgeting evaluation a lot smoother and more precise. At the end of the day, if you are not completely confident in your budget, having the second opinion of a financial advisor can give you the reassurance that you are making the right decision. Be sure to sit down and make some self-calculations before seeking a professional. You should really just be seeking a second opinion from a professional - opposed to completely relying on them.
Your long-term budget is the first thing you need to carefully evaluate before you begin looking at properties. Once you’ve determined your budget, your options will be narrowed down and your search will be much easier.
The golden mantra recited by every real estate enthusiast is, ‘location, location, location’. You’ve likely heard it before, but you shouldn’t forget it - location is one of the most crucial determining factors that will decide how easy or difficult your land will be to buy.
The location of your land not only has a lot of physical appeal in regards to aesthetic surroundings and economic benefits but it will also help you configure your budget.
There are few things that will determine the price of your land and the complications that come with buying it then the location you choose. With that being said, you should carefully consider where you want to live or pursue your business venture.
To understand this better, let’s analyze how the location will affect how difficult land is to buy.
When buying land in an urban area you will find that the process can prove to be a bit more challenging than in a rural environment.
There are a lot of benefits that attract many buyers to pursue their land purchases in urban environments. You will find that cities offer more economic and financial benefits to many landowners, as well as the prospect of acquiring land that will likely become more valuable over time. This tends to be a great quality that appeals to homeowners, as well as real estate investors.
What will determine how hard your land is to buy will ultimately be what you intend to do with your property.
The most common land purchase in urban environments is private homeowners looking to buy a permanent residence.
If you are on the market to buy a property that has already been developed, a lot of your logistical obstacles have essentially been eliminated, as the build will have likely been set up within legal zoning rights.
What you will likely encounter in this situation - especially in an attractive neighborhood or area - is that you have to deal with a competitive market. Many people within cities that have thriving economies have to deal with housing shortages, which can make hunting down that perfect property especially difficult.
However, if you are buying a vacant plot of land in an urban area, you’ll find there are some areas of focus that you don’t want to overlook. Cities often have strict guidelines about what you can build and how you can build. This can greatly complicate your development plans and make your land purchase all the more difficult.
To make your residential land purchase as smooth as possible, you should be fully aware of all restrictions tied to your property. Let’s take a look at some potential restrictions urban residences have to adhere to.
Urban Zoning Restrictions
One of the most common zoning restrictions for urban land developments will be in regards to the parameters of your home.
You will likely be limited by how high your building can be, as well as how many buildings and structures you are allowed to develop. In addition, certain cities have significant historic or intrinsic value which demands that you adhere to certain architectural and aesthetic guidelines.
It’s not uncommon to find that the inner and outer structure of your building is limited to how you can modify it. Moreover, you may have limitations as to the types of materials you are allowed to use when repairing your home and you may not even be allowed to change the color of your building.
To ensure that you are not violating any zoning restrictions on your property, you should always seek the console of your local county building authority.
Urban Commercial Business
Acquiring land for commercial purposes will follow much of the same suit as residential properties - except for the that you will likely be looking for lands that are more suitable for your business.
If you are purchasing a developed property that is compatible with your business and already has all of its permits in order, you shouldn’t have any major issues transitioning into your new property.
While if you are aiming to develop your commercial business from scratch on vacant land, the process can become a little more complicated. Let’s take a look at some common zoning restrictions associated with urban commercial developments.
Urban Commercial Zoning Restrictions
Depending on what kind of business you are setting up, you may find that certain types of businesses are not allowed to be within a certain distance of residential and school areas.
If you are aiming to buy land for the purpose of establishing a bar, restaurant, or shopping center, you may find your options to be a bit limited and your purchase more challenging.
In addition, you will likely have to adhere to more regulatory restrictions such as noise and pollution. Buying land in urban areas for commercial business use can prove to be quite more difficult, which is why you want to carefully consider all zoning restrictions that will be in place on your land.
Depending on what your intentions are for buying land, you may find that purchasing property in rural areas can be significantly easier.
Given that there is far less oversight and often less job competition in rural areas, land options can often be far more versatile and much cheaper to acquire. This can make rural land purchases not only more cost-beneficial but also much less of a hassle.
The important thing to keep in mind, as always, are your land intentions, as this will determine the challenges you will face when buying land in a rural area. Here’s what you should consider.
Buying land for residential use in an urban environment is one of the most straightforward and easy land purchases you can ever make. The reason for this is that land is significantly cheaper in rural environments.
This leaves many land buyers that strive for a location with economic growth and financial prosperity to look for urban areas for their property, which significantly eliminates the amount of competition you will have to deal with.
In addition, your zoning restrictions will be far more relaxed. There is often very little regulatory presence in regards to what you can build and how you want to build it. So long as you are not violating the basic restrictions that your local building authority has in place, you will find that buying land in a rural area is about as easy as it gets.
The only exception for this that you will likely find, is that you will want to ensure that your property is located in an area that has access to your basic and essential utilities.
Rural Commerical & Industrial Use
The prospect of acquiring cheaper land with less restriction is a major reason why many commercial and industrial businesses choose to establish themselves in rural areas.
Buying land that is spacious and has more development versatility provides business-minded individuals the opportunity to set up their commercial or industrial businesses with far fewer complications.
Finding a huge plot of land that meets these qualities within urban environments is either very challenging and or even impossible. Zoning restrictions for businesses and especially industrial businesses can often be more trouble than they’re worth.
With that being said the zoning restrictions commercial and industrial businesses to have to adhere to will be things such as pollution control and the proper disposal of industrial waste and chemicals.
Mortgage & Loans
Getting involved with mortgages and loans is always a bit unsettling, as no one wants to be in somebody else’s pocket. The best way to bypass this obstacle and make your land purchase a lot easier is to have the money upfront in your savings.
Given that this is rarely the case for most aspiring landowners on the market, you are going to want to carefully approach getting your mortgage or loan.
Once you’ve evaluated your finances, determined your budget, and are feeling confident about a parcel of land that you’re considering, you will likely need to meet with an organization that can help pave the way to your land purchase. As you begin looking at institutions that specialize in such financial assistance, you are going to want to make sure you are working with a trusted organization that has built a solid reputation.
In these situations, it’s always best to not hop on the first option that catches your eye and consider all of the resources available to you.
As you sit down with a representative of the financial organization you’ve selected, they are going to evaluate your budget and determine the interest rate of your mortgage. In this situation, it’s always going to work out in your favor to have a downpayment on your land that is 20% or more. This can significantly lower your overall interest rates. The good news is that interest rates for mortgages are lower than ever - with 2021 having an average interest rate of just 2.1% over a 30-year period.
Acquiring a mortgage is much easier when you are looking for a private residence - especially one that is already developed. If you are looking at raw or vacant land for your purchase, you can find that this is a more risky investment for your financial institution and they may require that you put down a larger downpayment (sometimes as much as 50%) or pay a higher interest rate. This can make your financial backing more complex and your overall land purchase much more complicated.
As you begin looking at properties, you should always inquire as to whether or not the land has any sort of easement in place on it. This is not something you will likely find with an urban area, but you should still ask nonetheless.
However, easements are quite common to be associated with lands located in rural areas. Lands that have been classified with an easement entail that the property owner has given up certain rights to the property.
For the most part, you will find that these rights are quite irrelevant and will not affect the difficulty of acquiring the land nor will they provide many challenges that hinder any potential developments. Some common property easements would be sharing a property barrier with a neighbor, which could entail mutual maintenance and upkeep, or it could simply mean that you have to allow public access to a certain area of your land for the sake of reaching a public road or highway.
Where easements can become complicated and make acquiring your land more challenging is when you have a conservation easement in place on the property. In this situation, you may be dealing with a non-profit land trust that has acquired the land from a private seller. The land trust will have put in place certain restrictions on the property that has permanently converted the land to conservation land.
In this case, you will find that you must be vetted by the land trust to prove that your environmental values are in line with their own and that you will continue to adhere to the ecologically beneficial restrictions that have been put in place on the property.
These restrictions will have to do with what you can and can’t build. While this does add an obstacle to buying your land, it can actually also prove to benefit certain individuals and make their land purchase much easier. Since the cost can be a major obstacle for many individuals when buying land, aspiring landowners will be pleased to find that properties with conservation easements generally have a significantly lower price tag associated with them.
About THE AUTHOR
Brittany has been in the land business since 2020 when the world was starting to shut down because of COVID-19. Since then, we’ve sold to dozens of people from ATV weekend warriors to camping enthusiasts to retired truck drivers. Our inventory spans mostly in the western United States. We’ve been trained by experience, land acquisition courses, and hundreds of hours meeting with county assessors and clerks, zoning officials, realtors, and land investors. We’ve answered hundreds of questions from people regarding the buying and use of land.Read More About Brittany Melling