Buying land is a significant decision. Whether you’re looking to build a dream home, develop a business site or just want to invest in undeveloped acreage, it’s important to understand the key factors you should consider. We have some tips to keep in mind when exploring your next land purchase. Taking time to evaluate all aspects of a potential property will contribute to the long-term satisfaction of your purchase.

1. Assess Your Purpose

Start with your goal. Are you planning on building a cabin in the woods as a vacation getaway? Do you want to start a small goat farm or plant a timber forest as a long-term legacy? Knowing what you plan to do with the land will not only help you narrow the scope of your search but also determines which factors you need to consider when comparing plots of land.

2. Financing the Land

Decide how you’ll pay for the purchase. Cash transactions for undeveloped plots aren’t uncommon. Land loans can also be an option for financing. Raw land may come with higher interest rates than comparable plots with homes or buildings. Down payments for raw land may also have different down payment requirements compared to buying homes. Financing raw land may come with higher interest rates than comparable plots with homes or buildings.

3. Zoning and Restrictions

Filter your search for land by property zoning. If you seek land for commercial use, properties in residential zones are unlikely to be eligible. Different states have different regulations about zoning and mixed-use property. Ensure you understand restrictions, ordinances and zoning laws in your state or municipality that pertain to any land you evaluate for purchase. Missing important restriction details before you buy could create headaches for you down the line.

4. Infrastructure and Utilities

It’s important to understand access and availability of utilities such as electricity, water and sewage. If high-speed internet is important to your plans, be sure you have solutions to access it in areas where you are considering a purchase. If you are looking for land in remote areas, gaining access to utilities could prove costly. Road access is essential. A plot of land encircled by other plots of private land could make access to your property more complicated.

5. Location

Research the surrounding area thoroughly. If you plan to build a home, consider proximity to amenities, supplies and schools. Don’t forget to check into exposure to natural threats such as wildlife, flooding, storm swells in coastal areas, hurricane exposure and whether areas may be more prone to forest fire risks.

6. Soil Quality

One factor that may be frequently overlooked is soil quality. Even if you have no farming plans in your future, soil quality can affect both construction and landscaping. Before buying any plot of land, it might be wise to conduct a soil test to determine and understand the soil composition.

7. Taxes and Government Fees

Just because you pay off a plot of land doesn’t mean it won’t carry further costs. Before buying, make sure you understand property taxes, any applicable development fees, building permits or business fee expenses that the land may be subject to. Make sure you know what obligations come with the land you’re buying.

Remember, you’re not just purchasing a plot of land. You’re buying potential. Researching and thinking through these and other factors that are important to you can help you make the most of any property you purchase.

Need help financing land to work on your dream project? Cadence Bank can help with mortgage loans for every budget. Find a loan officer in your area to get started today!

Sources:

https://www.farmers.gov/your-business/beginning-farmers/funding#land

https://www.selandgroup.com/2018/06/buying-alabama-land-for-the-first-time-here-are-tips-to-get-you-started/

https://www.tn.gov/commerce/blog/2021/6/30/purchasing-a-home-in-tennessee--what-to-know-about-home-inspectors.html

https://www.forbes.com/sites/forbesbusinesscouncil/2023/03/03/a-real-estate-investors-guide-to-investing-in-vacant-land/

https://georgia.gov/owning-property

https://realestate.usnews.com/real-estate/articles/the-dos-and-donts-of-buying-vacant-land

This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.