If you’ve been scouring online property listings and scoping houses for sale in desired neighborhoods without finding your dream home, chances are it doesn’t exist yet. Fortunately, building your dream home enables you to customize it and also choose what property it sits on. Buying vacant land to build your house on proves a valuable and viable option. When it comes to choosing a foundation, however, it is important to do the necessary preparation and research to avoid any zoning and environmental surprises that can lead to buyer’s remorse.
Prepare Your Finances
Land purchases without structures on the property aren’t as easily leveraged with a bank as property purchases. Even with a good relationship with a bank or other collaterals, you might be lucky to receive 50 percent of the land’s value in the form of a loan. More likely, that percentage is lower, sometimes even closer to zero. It is advised you prepare your finances beforehand, often saving up cash to purchase the land.
While filing for a loan may prove difficult, you may have better luck with applying for a construction loan on the building you’ll establish as the house will serve as collateral on the loan.
Work With an Agent Who Knows Land
When purchasing land, it’s important to assess every aspect of the purchase. Experienced real estate agents will be able to proactively identify zoning restrictions and easements, ensuring all surprises are accounted for. They will assist you with due diligence, unfamiliar negotiations, and closing the deal.
Assess the Value of the Neighborhood
While you may have lavish aspirations for your dream home, you have to assess the value of other houses in the neighborhood. Lenders may be less likely to approve construction loans if the cost of the land combined with the projected cost of the build is significantly more than the value of the other homes in the neighborhood.
Survey the Property and Perform Environmental Testing
Just as inspections are crucial when purchasing a house, surveys and environmental tests are important to provide information on the land you’ll be purchasing and whether or not you’ll be able to actually build on it. Surveyors will be able to identify the boundaries of your property, determining whether neighbors may have intentionally or unintentionally encroached beyond property lines. Environmental tests check the soil for contamination and uncover any land conditions that may discourage building.
Assess Utilities and Road Access
Access to electricity, running water, and sewer lines is often overlooked when purchasing an existent house. With vacant land, however, you will have to determine whether utility access is already serviced or will cost money for infrastructure to reach your land.
While buying vacant land may be a complicated process, with the proper research and preparation, you can establish the foundation for your dream home.