What do I need to know about buying land?
It might be cheaper than buying a house, but it's probably more complicated.
So you want to buy some land and have some questions. I can speak to that. My partner and I bought land in the mountains and learned a lot through trial and error.
Let’s get into some of the things to know, things to look out for, and things to avoid.
First and foremost, the biggest distinction between buying land and buying a home is that banks don’t tend to grant loans on land as readily as they do loans on houses. This is because land is harder to appraise and is more of a niche purchase. A bank doesn’t feel confident about the value of what it’s lending on and its ability to sell the land if it was forced to take possession. So they just avoid it.
You essentially have three options:
If you’re paying all cash, great. But I imagine most folks will be wondering how to finance the purchase.
“Seller financing” is a common route. (Look for that term used in listings, or for “Seller will carry note.”) This means the seller will act as the bank and instead of paying for the whole purchase price up front you’ll pay them in monthly installments, plus interest. They’ll probably run a credit check and you can expect the terms to not be as favorable as those you’d get from a bank—a lot more cash as a down payment, higher interest rates, and the loan to be paid off in a more timely manner.
You might be able to find a bank to work with, but it’s unlikely. But one alternative is finding a property that’s marketed as “ready to build” with plans already accepted by the local building department. A bank may be more ready to loan on this packaged construction project because they will have possession of a known commodity (a home) at the end of it.
What about water and power? Does the property have them already on site, or is this an off-grid parcel?
Power is a little less necessary as solar is more and more of an affordable option, and occasional properties can make do with a generator or battery power. But it’s hard to go without water. I’m thirsty just thinking about it.
There are a few way to get water:
A property that has water on site from a utility company will cost a premium, but can be worth it.
You can drill a well, but the cost of doing so is generally a little unknown. You can ask around to neighbors and drilling companies and see how deep they had to drill to find water to try and get a sense of it. (You can also ask neighbors about sharing their wells.) But ultimately it will be uncertain and drilling until you hit god water might might cost $7,000 or it might cost $70,000.
There’s rainwater catchment, though setting it all up as a primary means and storing enough for your needs can be a serious undertaking.
Water delivery can be surprisingly practical if this is a weekend spot that only sees so much use and you’ve got a road that can accommodate a water truck’s access to your storage tank.
Speaking of roads, how’s the road in? When you get outside of cities and into the sticks, road care often fall on community shoulders. This can cost you time and will certainly cost some money. Are the property owners around you caring for your roads? Is the local government? Is the road into and through your property going to see a lot of erosion? Road work is an unexpected cost of ownership which seems to increase in cost with every inch of rainfall.
What about the general location? There are more involved considerations if you’re constructing a new permanent residence, but even for a weekend getaway you’ll want to take into account the distance to services such as groceries and a hardware store. How far is the drive to a major city?
If you’re like us and looking for a weekend spot, you need to consider proximity to your residence. We’ve found three hours is about the maximum drive time that we, or friends, will tolerate for a weekend trip. A property that’s closer than that doesn’t feel like a waste if one needs to go there for the day, or for a normal weekend. Any further and it becomes a special treat, reserved for longer getaways— an arrangement you might come to resent in the early days when you’re excited to visit and are working on projects. Obviously the closer the better when it comes to drive time, but proximity to a major metropolitan area comes with an added cost. It’s a balance.
More than that, consider your neighborhood.
You might think that you’ll have less headaches with neighbors getting out of the dense city and into acres of raw land. This is entirely wrong. You might have fewer neighbors, but you’ll be more intimate with them, more dependent on them, and the relationships will matter more. There are bad neighborhoods in the woods; we certainly drove down a few stretches you wouldn’t want to live in (or be near). Pick your vibe. Pick your people. Find responsible, non-desperate, quality folk to share property lines with. When it comes time to fix the road, fallen trees, a broken water line, etc, you’ll be grateful you chose wisely.
Consider your social circle:
On a similar social note, you’ll want to consider your social circle. Or at least, I want you to want to consider it. If this is a cabin in the woods just for you, there’s less to ponder. But if you’re trying to invoke some summer camp vibes and hang out with friends, where is this property located for them? Near folks? Near an accessible airport? Is there parking for some cars? Can they get to it without hiking? Try to find a spot that reduces that friction and makes the social component more attainable.
Hazards and unexpected costs:
I mentioned fallen trees. That’s another thing to keep in mind… changes. Water. Erosion. Trees. Look at the serene landscape not through the lens of what it is now, but what it can be after a week of storms. You will either need to get comfortable with chainsaw and heavy equipment, or hiring folks who are. The exact cost depends on your location and terrain, but just keep in mind that trees WILL fall across roads and something will need to be done with them.
In that same vein you’ll want to consider snow. Will your access to the property be seasonal? Do you need a differently equipped vehicle to get in? Who does the plowing? Will you be parking down the road and snowshoeing in?
How about fire? If there’s a fire risk in the area can you clear 100 feet of defensible space around your structures? If so, what’ll that cost? Is your road in emergency vehicle accessible? Is the area likely to be defended by fire crews?
Speaking from experience, the upside of living deep in the thicket at the end of a little trodden road is wild landscape and privacy, but the downside is the fire department doesn’t know you’re there and won’t be there to defend your property.
Visualizing its potential:
One benefit of buying a house is that it requires less vision. You can picture what it would look like with your furnishings, or new coat of paint, or a wall taken down. With the unlimited possibilities of raw land it can be much more difficult. You might be looking at a plot that has a cabin pad already carved out and utilities brought to the site. This is a bit more straightforward. But just as likely you’ll be looking at wild, untamed bramble. Acquiring the vision that you can cut down trees, clear brush, or move mountains of earth, can be surprisingly difficult.
I know I said before to be prepared for the unexpected cost of dirt work in terms of road maintenance and such. But the flip side of that is that it’s not prohibitively costly. Don’t get too bogged down in the way the property looks as is. Does it need a road through this section over here, or a pad flattened out on top of this hill? You can hire someone to do that. (Though don’t jump into that without finding the right professional who really understands topography and drainage.)
The most important part:
I think the most crucial component of this journey is knowing it’s all an experiment. If you’ve never bought land before it’s a huge unknown. Lessons will be learned. Costs will be incurred. Accept it. And if you’re comfortable with the gamble, give it a shot.
Start small and just spend some time there. Build a picnic table. Camp. You can build an outhouse or a small shelter for cheap. We built an amazing outdoor shower with piping hot water using a $180 off-grid water heater. Our wood-fired hot tub was a $3,000 kit. You can experiment and play and feel out property ownership without committing to building a full home on it. Baby steps.
Now, I realize this might be the biggest expense any of you have ever taken on (it was for us) and so I offer this last bit of advice with the understanding that most can only be so cavalier about the purchase. I get that. But keep in mind that real estate isn’t a normal purchase… it’s an investment in an asset. It will hold some value. (Hell, hopefully it might even appreciate in value.) But if you do happen to lose some money on the venture hopefully it was well spent in the service of lessons learned and experience gained.
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