Jim Valentine: Tips for buying vacant land
With the increase in home prices, it makes financial sense once again to buy a lot and build a home if you are so inclined. There are benefits to building a new home versus buying a resale or spec home. You can design it specifically for your lifestyle, add nuances that reflect your character and customize it totally to your tastes.
The key to building a home is the land you put it on. Besides the proverbial “location, location, location” mantra, you should pay attention to the amenities of the property on which you are building. Will the view you currently enjoy be there in the long run or is there a potential threat to your view corridor? Are you comfortable being on a well and septic system or, conversely, are you OK with paying for water and sewer services? What community controls affect your property, i.e. CC&Rs, HOA, etc.?
There are things to consider when you set out to buy vacant land besides location. How much land do you want? Many people coming from out of state think they want five acres. It is a common refrain from the imports that are leaving the home they lived in for 30 years that is located but 10 feet from their neighbor’s house when they proclaim that they want room want to be away from their neighbor. Most don’t know how big five acres really is and are OK with one acre. It is important to know how much land you really want and/or need for your lifestyle and interests.
Development costs are another factor when considering land. A lot in a subdivision likely has all the infrastructure you need to start construction, i.e. utilities to the lot, but you should confirm everything. Not all is what it appears to be. You might have a power pole with lines on your property but not be able to connect to it. You might need to install an additional transformer at your expense. Larger parcel subdivisions often have primary power to the lot line also necessitating the need for a transformer.
If you want to be near water or in a “green” area, you might find yourself in a FEMA designated floodplain. That in itself is not a reason to panic, but you should know what will be required to build on the lot you are looking at. Different FEMA designations have their own improvement requirements. Some development in the same designation may require more work at greater expense than others, i.e. mapping. Don’t walk from the lot you want just because it is in a floodplain; investigate and hire a good engineer to provide the answers that will help you make the final decision.
If you plan on getting a loan, understand that land loans are different than residential home loans. There aren’t many land lenders and their programs are different. There are some good land loan programs out there; consult your land agent to find out about them. Consider, too, if you are going to build for cash when you sell your current home or if you will want to roll your purchase loan into a construction loan followed by a takeout loan. Confusing? Make an appointment with your agent to discuss the options.
Our advice: If you are thinking of building next year, now is the time to be looking and buying your land. It takes time to process your acquisition escrow, design the home, get your bids and to get the permits. If you want to start construction in the spring, you should be buying right now. If you are afraid of the construction process, get with your agent and, perhaps, a builder, to discuss the process. You will find that most have good systems that, while requiring effort on your part, aren’t really as scary as the thought of them is.
Be clear about what you want in your land. Are you buying for the future, speculating or wanting to utilize it immediately? Your purpose will actually have a large role in your attitude, approach and expectation for the property you ultimately buy and how you buy it. When it comes to choosing professionals to assist you with your real estate needs, experience is priceless!
When it comes to choosing professionals to assist you with your real estate needs … Experience is Priceless! Jim Valentine, CDPE, SFR, RE/MAX Realty Affiliates, 775-781-3704, firstname.lastname@example.org, http://www.carsonvalleyland.com.