Owning Land In Tennessee: Pros & Cons | askBAMLand

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You’ve just bought land in Tennessee and are looking to learn more about it. Read on to find out more about the pros and cons of owning land in Tennessee.

Why should you buy land in Tennessee? What are some of the advantages of buying land in Tennessee? What are the disadvantages? What factors should you consider before buying land in Tennessee? In this article, we will walk you through the advantages and disadvantages of buying land in Tennessee in order to help you determine whether investing in land in the ‘Volunteer State’ is the right decision for you.

The pros of owning land in Tennessee include:

  • great investment opportunities
  • great climate
  • large tracts of land available for farming

The cons of owning land in Tennessee include:

  • severe weather
  • rapid population growth

In this article, we will look at the pros of buying and owning land in Tennessee and also list the cons of choosing to invest in the ‘Volunteer State’.

Our meticulously researched and superbly written articles are designed to provide you with relevant and accurate information that guides your decision-making process. We ensure that we get our information from the most reliable sources in order to provide you with credible answers to your questions.

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More people moved to Tennessee than to any other state in 2020. Census data also shows that the state’s population grew by 9% between 2010 and 2020, making Tennessee the 16th most populous state in the USA.

This is thanks to the fact that the state has a low cost of living, enjoys a pleasant climate and has a low tax burden. Tennessee mostly attracts retirees who are looking to spend their golden years in an affordable state with pleasant year-round weather.  The state is also popular with younger people who are looking to grow their careers and families in a place with a stable economy and job opportunities, affordable living, and low taxes.

Owning land in Tennessee is therefore a great way to take advantage of the population boom caused by the migration of both retirees and workers looking to build careers and raise families in a stable and secure environment. Below are a few pros and cons of owning land in Tennessee.

A Growing Economy

Tennessee’s economy is expected to grow by 4.2% by the end of 2022 with agriculture, automotive manufacturing, energy, film production and healthcare being the biggest contributors. In 2020, Tennessee had a gross state product of $364.5 billion and median household income of $53,320.

Professional and business services are the fastest growing sectors in Tennessee, with construction coming a close second as builders redevelop core urban estates with infill housing. Vacant lots of land are quickly disappearing as investors snap these up and the development of retirement communities and family housing continues to grow.

Tennessee has seen a large influx of retirees from over 39 states, leading to tremendous growth in the construction industry, as more and more developers looks to build retirement communities to cater for Americans looking to move into active retirement homes. This influx has seen millions of dollars pumped into the local economy of places such as Knoxville and Loudon County as retirees increase their spending on groceries, gas, recreational facilities and others.

Low Property Tax Rates

Tennessee has some of the lowest property tax rates in the country with the average effective property rate being 0.64%. The rate ranges from 0.37% to 0.84% depending on the county you have purchased your property in. While some counties have a property tax rate that is higher than the national average, most counties have an average to the below average rate. Homeowners in Tennessee pay an average property tax of $1220 which is about half the national average

In addition, landowners with 15 to 1500 acres may qualify for the Greenbelt Program. This is a law that allows land to be taxed at its present instead of market value. The law was introduced in 1976 in order to help preserve land for food and fiber production while at the same time leaving spaces open for public enjoyment. You can qualify for the Greenbelt program depending on the size of your land, what you use it for, and the money you make from farming.

The Greenbelt program was designed to encourage the production of food and fiber, prevent urban sprawl, and provide wide-open spaces for people to enjoy and prevent the loss of family farms and land due to high taxes based on speculative rather than use-values. By owning land in Tennessee, you can take advantage of the Greenbelt program to significantly lower your property taxes. You qualify for the program if you own farming, forestry or open space land.

Low Cost Of Living

In spite of the fact that places like Chattanooga, Nashville, Memphis, and Knoxville have experienced population explosions that have led to higher costs of living; most other areas of Tennessee continue to provide a low cost of living. It costs up to10.3% less to live in Tennessee compared to the national average. In addition, Tennessee has the 8th lowest cost of living nationally. Items like food, housing, healthcare, utilities, transportation, and miscellaneous goods and services cost significantly less than the national average in most parts of Tennessee.

Investing in, and owning land in Tennessee, therefore, means that you will get to enjoy grocery bills that are 93.75% of the national average, housing costs at 81.2%, healthcare at 90.1% and utility costs at 92.1% of the national average.

The median value of a home in Tennessee is 253,000. House values tend to be higher in the larger cities like Nashville, Memphis and Knoxville. However, housing costs are still cheaper than the national average of $374,900. Housing in Tennessee tends to be cheaper than other parts of the country due to the fact that most people live in the rural areas on properties that have been handed down through the generations. If you choose to construct a home on the land you have bought, you can expect to spend $106-$114 for a mid range home. The national average ranges from $100-$200.

Other bills are also lower in Tennessee compared to national averages. Transportation costs $1229 which is almost $300 cheaper than the national average. Food costs range from $2,990 annually for a single adult to $8,820 for a family of four.

No Pension Tax

Tennessee is one of the few states that do not levy tax on income, 401K’s, social security benefits, and even inheritances. This means that if you choose to buy or even if you already own land, you will not have the added burden of having to pay taxes just because you choose to invest in the Volunteer State. Having no tax on your pension also means that you can spread it out a lot more and with the cost of living being so low in Tennessee, you will be able to cover most of your bills without straining.

Affordable Investment Options

The average cost of an acre of land in Tennessee is $14,400 depending on location.  Vacant lots in prime locations may fetch up to seven figures while hard-to-access acreages cost as little as a few thousand dollars. Even if you do not plan to use or develop it immediately, buying or owning land in Tennessee is a great investment that is bound to appreciate over time.

A report by the US Census Bureau shows that Tennessee was among the top ten states to experience high population growth between 2020 and 2021. 55,099 people moved to Tennessee during this time period with retirees and young people looking to build careers and raise families making up the majority of this number. As a result, there is a huge demand for housing and anyone who currently owns land in Tennessee or is looking to invest in land will have major advantages as developers look for more land to build housing in order to meet rising demand.

Ideal Geographical Location

Tennessee is in America’s heartland, an area of the USA that consists of central states that are not bordered by either the Pacific or Atlantic oceans. Thanks to its central location, Tennessee is popular with businesses that want to reach many parts of the country from one location. Major interstate highways such as I-24, I-65 and I-40 also meet in Nashville’s downtown, making the area popular with distribution companies such as Ingram Barge and DK as well as companies that want to centralize their distribution operations in the Midwest.

As more and more companies move to Tennessee and as larger numbers of workers relocate here for work, there is increased demand for housing and investment real estate such as land. As a result, anyone who owns land will be in a great position to take advantage of this demand and benefit from rising land prices.

Low Unemployment Rate

Tennessee’s average unemployment rate stood at 4.3% in 2021, which is slightly lower than the national average of 5.1%. In addition, Tennessee’s employers added 146,500 nonfarm jobs to the state’s economy, with hospitality and leisure, trade, transportation, utilities and business and professional services being the biggest employers.

One-third of the 55,099 people who moved to Tennessee in 2021 did so for work, while the other two-thirds moved in order to be closer to the family as well as for retirement and lifestyle reasons. The average worker in Tennessee earns $32,611 and thanks to low living costs, most workers can afford to pay for food, housing, utilities, and other bills.

An unemployment rate that is below the national average, high salaries, and low cost of living continue to attract more workers to Tennessee, driving up the demand for housing and rewarding investors who currently own land or are planning to invest in real estate.

While there are many advantages of owning land in Tennessee, there are also a few cons that you should consider, especially if you are still making the decision to buy. First of all, rising land prices mean that investing is becoming significantly more expensive than it was a few years ago. This has been brought about by the rising demand for vacant space to build housing units, retirement homes, and business premises as more people and businesses move to the area.

Another major disadvantage of buying land in Tennessee is that the more affordable real estate will likely be found in the rural areas and not in the fast-growing areas such as Knoxville, Memphis, and Nashville. As farmland in this state appreciates slower than residential properties, it could be many years before you can recoup your investment.

An additional disadvantage of owning land in Tennessee is that you will most likely have to purchase your land in cash. This is because, unlike a residential purchase where your mortgage provider allows you to put down a certain amount, typically 20% of the purchase price, and provides you with a mortgage of 80%, most banks, and mortgage providers are not willing to fund land purchases. This means that if you want to own land in Tennessee, you must have access to a significant amount of cash with which to purchase it. Once you have the land, however, you may be able to qualify for a construction loan as the house you build can be used as collateral.

You might experience zoning restrictions depending on which part of Tennessee you choose to own land in. For instance, if you purchase land in a farming area, you might be restricted from constructing residential homes. It is therefore prudent to ensure that you conduct sufficient research on the zoning restrictions in the area you want to purchase land in.

The final con of owning land in Tennessee is that you will have to deal with extreme weather including hot and humid summers as well as severe thunderstorms, hurricanes and tornadoes. Temperatures in the summer can rise to the high 90s and come with high humidity as well. If you plan to own land in Tennessee, you should be comfortable dealing with severe weather and possibly having to take out crop insurance to protect your land against tornadoes and thunderstorms should you choose to farm on your land.


Brittany Melling

Brittany Melling

Brittany has been in the land business since 2020 when the world was starting to shut down. 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.

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