If you've been shopping for your next home but just haven't found the right fit, you might be wondering whether it makes more sense to simply purchase some raw land on which to construct your dream home. In other cases, you may daydream about purchasing raw land now for the construction of your retirement home in the next few decades. What should you know about buying raw land, and what factors should you consider when deciding whether this purchase is right for you?
What to Know About Buying Raw Land
Except for unusual circumstances, raw land is almost always cheaper than residential or developed land. Sometimes, raw land will already include connections for cable, electricity, and sewer hookups; in other cases, you'll be on the hook for the cost of developing the land yourself. Be sure to factor this into the property's purchase price; a $50,000 parcel that will cost another $20,000 to develop shouldn't be considered a steal if similar-sized developed parcels are selling for $60,000.
Raw land may also be subject to zoning restrictions, and changing these restrictions can be tough. For example, if raw land is zoned agricultural or industrial, you may not be able to construct a home there without applying for a zoning variance. It may instead be a good idea to look for raw land that is already designated as residential property.
Finally, raw land may carry lower property taxes than developed land, which can make it a wise investment. However, in most cases, the tax rate on this land will increase once you construct a home or run utilities to the property.
What Should You Consider When Buying Raw Land?
There are a few factors you'll want to keep in mind when debating whether to buy raw land (or when choosing a specific parcel).
- Does the property already have utilities in place?
- If not, is it possible to run utilities to the property? Some properties are suitable only for agricultural or hunting use because utilities like electricity or internet access aren't available.
- What is the property tax rate, and what deductions are available?
- What are the development prospects in the area? The last thing you want is for your peaceful wooded lot to be split by a highway extension; on the other hand, if there are no development prospects in the area and you're used to living in a part of town with amenities, it may be tough to adjust to life in a secluded area.
By evaluating your needs (and wants) for your next home, you'll be able to choose a property that will meet these needs for decades to come. To see if there is land for sale in your area, contact a local seller.
When you are faced with a down market, there are a lot of things that can run through your mind as a homeowner. If you had to sell, would you be able to make your money back? What will you do if you have to sell your property at a loss? Do you think you are ready to buy a new home?
Although there are a lot of things that are important to think about, the fact of the matter is that understanding real estate challenges is instrumental to making money with your property. From moving forward with new ideas about real estate to working with the right professionals, it pays to read up on the market. Learn more today!