When it comes to buying vacant land, the opportunities are endless. You can build your dream home as you want and it can be a great investment, but it also comes with a lot of risks. Before you decide to purchase a piece of land, it’s important to weigh the pros and cons.
What is vacant land, exactly?
A vacant land is an undeveloped piece of real estate that could be the perfect space to build your dream home. It’s more commonly found in rural areas such as off-country roads and can be used for many other purposes, such as a farm, storage unit, vacation rental, and other recreational uses.
Pros of Buying Vacant Land
Buying vacant land will give you the freedom and flexibility to build whatever you want on your land. You can build a home, start a business, or just use it for recreational purposes. The sky’s the limit as long as it’s legal and you follow your town’s zoning rules and building rules. This is perfect for anyone who’s looking to build their dream home from scratch as they will be free to create their design and follow their preferences.
2. Less competition
When buying vacant land, you’ll have less competition compared to buying manufactured homes. Most people nowadays are opting to buy properties that they can move in right away and the competition can be challenging. Building a house from scratch is not everyone’s cup of tea, especially since it takes more effort and more time. With the fluctuations of the housing market, buying vacant land is an excellent choice to avoid intense competition as well as overpaying for a property.
3. Low Maintenance
Unlike a home or other property, vacant land requires very little maintenance. When owning a home, maintenance and repairs can add up to 1%-3% of the purchase price. If you are looking for a low-maintenance investment, buying a vacant land is perfect for you. A vacant land can benefit you if you don’t have the time or resources to take care of a more complex property.
4. Great investment opportunity
Buying vacant land is a good investment opportunity. Whether you decide to build something on your land or just wait for its value to appreciate over time, it can be a great way to make a profit if you decide to sell the land in the future, especially if your property is located in an area that’s growing in popularity.
Cons of Buying Vacant Land
1. More tedious process
Unlike when buying a house, the process of buying vacant land requires more research. You might even experience difficulty in loan approval. For lenders, land is considered a riskier investment than a house. So, some lenders will require a better credit score and debt-to-income ratio, and down payments and interest rates may also be higher. In some cases, they might not even provide land loans.
Also, boundary disputes are a common problem when buying vacant land. It is a must to always get a land survey to confirm that the surface area listed is the same as what you are buying.
2. Fewer options
When looking for vacant land, you might notice that there are fewer options downtown as this area is most likely developed already. With this, you might find more options in rural areas. This is not entirely a problem, especially if you are working remotely. But if your office is far from the rural area and if there aren’t enough local amenities to support your lifestyle, buying rural land may not be a good idea for you.
3. Zoning restrictions
Depending on your location, different zoning laws dictate how certain pieces of land can be used, which could limit your intended purpose for it. Make sure to do your research on the area’s zoning laws. While you’re at it, check the needed permits for building a property and how much they cost. There are several permits that you may need to build a house on undeveloped land, so it is best to know them beforehand to allow you to prepare for them and include them in your budget.
If you are hoping to move into your new home soon, buying land might not be the best option for you. You will need to consider the timeline if you plan on building on your raw land. And even if you already know what type of house you’d like to build, you still need more time to secure permits, find contractors, prep the land, and gain access to install utilities. So if you don’t have a lot of time to spare and can’t put in too much effort for your new property, reevaluate your options.
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