How to Wisely Buy Land
Real estate can be a great investment as the population continues to grow. It can also be a very challenging investment if you are not fully prepared to research, evaluate and negotiate for the lots of land. This helpful overview will help prepare you to succeed in buying a lot of land that will be a smart investment for years to come.
Make sure your eyes are not bigger than your stomach
For most people the biggest restriction in our lives is financial consideration. Before you start looking for land, talk with a mortgage broker or the loan officer at your local bank. They will be able to help you determine how much you can afford. If you are building a home on the lot of land you may also need to apply for a construction loan before converting it into a standard mortgage. Don't forget to factor in mortgage insurance and legal closing costs which can significantly increase your monthly payments. cover the construction period It is best to talk with several different loan providers to find the ones with the best interest rates and match for your situation. But at this point we are just looking for a good loan estimate so you will know what you can and can not afford.
Prepare the Budget and Timeline
Now that you know how much money your bank is willing to give you it is time to prepare a budget and timeline. Talk with local home builders in your area for estimates of the cost and time needed to build a home. Try to provide them as specific example as possible so your estimate will be more reliable. It is very important that you properly determine if you will have enough money to finish what you start. If you buy a lot of land and run out of money in the middle of construction it is going to be a disaster. Make sure you determine all of your construction needs. Is the lot landlocked? Will you need to build a road to it? Do you need to ask for any special permission to build? Are there any zoning or environmental regulations you need to be aware about? How are the local utilities handled? Do you also need to install a septic tank or drill a well for drink water? Identify all of the costs and time needed so you will minimize the amount of unpleasant surprises during construction. No construction project is ever perfect and there will be surprises along the way. Make sure to allocate an emergency fund to handle these surprises and do you research and planning to hopefully reduce them. To find the maximum amount you can spend for land, deduct the estimated building costs from your total budget--then deduct a bit more for unexpected expenses.
Ok so now we know from the bank an estimate of our available money and our research has highlighted the expected costs. The next step is to evaluate the property for its desirability. Is the lot of land all flat and buildable or does it contain any parts too steep for construction? What are the views available? Is there privacy or is it located next to a road or very close to neighbors? Is it near water which can be a nice selling point and also a risk of flooding. What are the local zoning ordinances? Do you have the option to divide the property into multiple lots if you wanted to?
Keep these fundamental factors in mind and you will have a much easier time finding that perfect lot for your home. Good Luck!
Home buyers also enjoyed these modular home articles: