Some prospective homeowners relish the thought of looking at homes to buy, while others prefer to live in a home they have built themselves.
Buying an empty lot of land building your own home is an alternative to purchasing a pre-built home but it does come with its own set of risks.
Before buying an empty lot of land and building your own home, consider these steps:
Do Your Research
You wouldn’t purchase a home without doing your research on it, so why would you get an empty lot without looking into it?
Research the lot you want to buy to make sure that it has what you need on it and as yourself these questions:
- Are there any current structures on it? If so, do they need to be demolished?
- Are there utilities hooked up?
- How much will it cost to purchase the land and build a home?
- What zoning and building restrictions are in place?
Know If You Can Afford It
Unlike purchasing a home on a lot that has already been built, purchasing an empty lot and building your own home is expensive, so know if you can afford it.
You may also have to work harder to secure a loan, since a land purchase is riskier for lenders than for a home, since there is no home on the land to leverage. Instead, you will want to look into a construction loan. These loans are short term and are used to cover the costs of the build project before you get a longer term loan for the home itself.
Know that construction loans will have a higher interest rate.
Survey & Do Environmental Tests
You will have to do surveys and environmental tests on the land you wish to buy. Surveys and tests are used to make sure that the land is both suitable and safe to build and live on. Professional surveyors will check the soil for contamination, if there is flooding risk, or poor soil for building.
Even if there is already a structure on the land, you must get the land surveyed and tested, as the zoning or soil quality could have changed between now and the time it was built.
Understand Zoning Restrictions
Know that when you purchase a lot to build on, there will be zoning restrictions on what you can and cannot do with it. For example, if the land is zoned for commercial use, you cannot build a residential home on it. Of course this can vary from place to place, as there are mixed zoning areas, but always do your due diligence and understand the type of zoning the land is in and what permits are in place.
This is especially true if the land was surveyed and it was discovered that the land once held a gas station, making it unfit for residential use.
Hire A Professional Agent
When looking for empty lots to purchase, it is always best to hire a professional real estate agent who knows land. An agent is qualified and has the knowledge and experience necessary to find you the best empty lot to meet your needs.
They will also be more than happy to guide you through the process and help you do you due diligence.