When it comes to purchasing a home, there are so many things to consider like the location, your budget, the age of the house and necessary updates that might need to be made, your own ability to get a loan and what kind. Then, after all of this, you have to go through the process of finding available properties, putting in offers, and going through the negotiation process. It might be possible that this process is not right for you, and, instead, you are considering purchasing a vacant lot to either invest in or build on. There are several pros and cons to both of these options, but here are a few things to consider when trying to decide if you want to purchase land.
Access to Utilities
When you are purchasing an existing home, you don’t have to wonder if you will be able to have access to electrical and water because…well…it probably already has those things. However, when you are purchasing land, you need to confirm whether or not those are readily available to you. If not, you will want to get a quote from the city on how much it’s going to cot to get those things run out to your location. This is especially true for less populated areas.
Your loan requirements for an existing structure and vacant land will likely not be the same. Often times, you can get a loan on a house with as little as 3.5% or even less for a down payment depending on your type of loan. For a land purchase, this will not be the case. While the type of loan will vary whether you are buying a smaller lot to build a new house or a large stretch of property, you should expect to need anywhere from 20-50% in cash for your down payment.
Avoid Consulting Neighbors
While it might be wise to try and get to know the neighbors when you are purchasing a home, you might want to avoid this if you are planning on building in an open lot in a neighborhood. Especially if the lot is in an area that has historically been unoccupied, you might get a little push back that you weren’t expecting from the locals. It’s hard enough to get everything you need in the way of titles, permits, and the like, you definitely do not want the folks across the street pestering your every move as well. They might put up a couple of road blocks before you even get started, so wait until you are moved in to make cookies for your new neighbors!
Consider Run Down Homes
If you are dead set on building your dream home but can’t seem to find the right open lot or maybe are having trouble with the loan, consider checking out “tear down” properties. You might even get lucky and find a structure for sale that is less than the value of the land it is sitting on. Obviously, there are still hoops to jump through with this option such as zoning, demolition permits, and building loans, but whether you are either building or buying a home, the best thing you can do for yourself is to keep your options open and weigh the many pros and cons!