Buying land has lately become an appealing alternative to homes, especially due to interest rates and several people selling land guides about flipping. Land has great value, no one's making more of it so it stands to be a great long-term hold. However, no matter what your goal is for the land, there's a lot more to this than just seeing some dirt online. When it comes to buying land online, this is the ultimate guide.
Due Diligence is Everything
It is so common to fall in love quickly with land, like a spontaneous moment where you see some land and buy it within minutes. Now, this does work out sometimes; we had land in Hawaii and it only lasted a few hours max on our site before it was sold. Only two fast spontaneous buyers were lucky enough to get them, and the rest got disappointed email responses. As for us, we priced it wrong and didn't do our due diligence. Those lots were worth substantially more. We always try to sell below market value to our customers, but we are talking about selling something $8k worth more around $50k-$60k.
So what happened? We saw a gate and didn't think it had access, but the land was stunning. Maybe someone would buy it and have to deal with some crazy person to give them access; we weren't sure and sold it as is. Even then there was no price to compare in the area as no recent sales happened. Well, one customer while we were doing his deed asked more questions about that gate. So while it's sold as-is and we even showed a picture of the gate, we did the polite thing and contacted someone who would know in the area. It was a monk monastery, very kind and responsive. His response, "yeah, we just put that gate up because no one was going there and we didn't want the road accessible. But if you own land and want to go, no problem, we will give you a key or even remove it".
A 5-minute phone call was the difference of us selling these roughly $40k more. Now they were fully accessible Hawaii lots with a road and even a gate for you. This is due diligence, finding land online and figuring out its secrets. With land, the seller doesn't always know the market price of the area, all the zoning options, new developments, and all sorts of stuff. We have even seen land priced so off we had to buy it; the seller didn't know what they were doing at all. So we buy it and still price it well below market value for quick sale and make a profit. This is land, this is the value you can find online.
Due diligence takes a trained eye with land and knowledge of the area. It will take time; and learning Google Earth is key, it's the best way to do this if you can't put feet on the ground. But don't be shy, you're going to want a phone too and a list of questions to ask the county.
Understanding Buyer, Seller, and Agent Responsibilities
With a home purchase, there are bank loans, inspections and all sorts of checks and balances. Way more people than you are inspecting that home due to the mortgage that's about to go on it. That bank wants to know every detail of that home incase you default and they have to take it. With land, no can really hold your hand though everything because of all the uniqueness to each persons goals. It's really up to you to make sure it suits your goals.
The seller will typically put what they know on the listing, the important stuff. Agents typically know nothing unless they only work with land, they learn homes in their course and land is unique. With a home, it's to live in, but land has so many use cases and is a blank canvas. No seller or agent can know all the options or if your goals will work there. The seller or agent has no idea about building codes or what happens when you try to get a building permit. They don't know if your plans to have 100 sheep is okay, if you can build an underground bunker or space rocket launch pad. We have no idea! And yes, we get questions like that all the time.
Due diligence, is the simple art of inspecting something to its fullest. If you have a particular goal in mind, that land MUST be zoned for that goal and have certain features. So, call the county building department, give them the APN of the land and talk about your goals. Just this 5 minute process will determine if this land will work for you or not. They are actually very helpful when it comes to buying land and they live there.
The Essentials: Where and What to Look For
Sites like ours, LandZero or major sites like Zillow, Facebook Marketplace and craigslist are a great start. Understand the business, with ours we don't have 3rd party sellers. This is a plus, you know the company you're buying from. On many land websites, anyone can put up a listing, they are not responsible for how the deal goes or if it's even real.
Land is very difficult to get loans for, sites like ours offer owner financing. So you don't have to break the bank to get started in Real Estate. Closing costs need to be determined as well, with an agent this can be really high and you have agent fees, we pay closing costs for you. If you're looking to get into real estate with land you can do this with as little as $200 a month. And, if you plan on holding a few years and flipping, get a 3 year term, pay $200 for three years and by the time you get it, it may be worth significantly more and ready to sell.
You can expect to pay a lot more using an agent or bank but if you're going for expensive land then it's the way. If you're spending $300k on land you shouldn't be buying it online. Sure you can look, they have tons of land in the millions on-line but you'll want someone representing you in this case.
Land is very different from homes, you will see some major price differences with land in the same area. You should study why, what makes the higher priced ones that way and if the price is justified. Some may have improvements but even just a slight change in location or better road access really is worth the higher price. It takes a good trained eye so go slow at this. It's good to set a price range, determine what you like and keep an eye on the area. It is never good to rush in, so give it some time. Also, it's very common now to buy land without even seeing it. With the tools we have today you can get the full visual without even standing on the land. We did a large article about this, using Google Earth to research land and what to look for. It's really the tool all online land buyers use, you can measure the land, see road access, what's around it and more.
Location, Zoning & Land Use
Land is funky, once you know your land use you should look at the site and most importantly the building restrictions. When buying homes, you see what you get because it is already there. But with land, you can be told by a real estate agent, this is a residential lot and you can build a home. However, yes it is considered R1 in the land description and supposedly build ready. But chances are they didn't call the building department to really know the land use restrictions. You could be on an area restricted to build, have a protected stream on your land, easement issue, too close to the road, flood zoned, environmental issue, unable to put in septic or well or many other things making the land blocked from building. You can cry, yell and complain all you want after but the sellers didn't know what you wanted. For all they know you wanted land for growing plants. There really is so many uses, many of our buyers don't buy to build a home. Some buy for shooting ranges and all sorts of stuff. Check your zoning, the location of the land, roads and it's use codes. Then call the county and verify with the APN of the land.
We would love to go over building restrictions and land use codes but it's impossible. Every single county is different and each parcel is very unique. What's on it now, how close to the street and even the shape.
The Basic Check List
Zoning Classification of the land and what it means
Does anything on this land block my zoning rights. For example, the road is too close or land is not big enough per the county so it is unbuildable
Check FEMA flood zone map to make sure your home won't be underwater one day.
Does the land have deed clouds, liens or any other encumbrances
Are there environmental issues not allowing septic, well or building foundations
Are there utilities available or not
Any road easements
What HOA restrictions are there if an HOA is present
Property Taxes and other dues, how much would the annual payments be
Do any of these issues above block the intended use for the land
Use these as a good starting point, you should really look in an area and study it for the visual part. But the elbow grease goes into the checklist above as these can make or break your investment.
Understanding Your Purchase & Finance Options
If you have a bank loan and agent, it is much different then closing with a land company or FSBO. Before buying read the contracts or disclaimers provided. Ask for all costs upfront, no surprises during closing. Land loans are supper hard to get and if you're looking at lower priced land it's not an option anyway. Your best bet is using owner financing from a company like ours or finding a private party you trust to sell it on terms. If you are going for some higher priced land and want to explore loan options, here are the most common.
5 Specific Traditional Options for Land Loans
USDA Rural Housing Site Loans – This is best for families with low to moderate income that want to build their primary house on a rural lot.
Local Financial Institution Land Loans – It is great for local buyers interested to buy a building lot, recreational land, or farmland.
SBA 504 Land Loan – This is great for business owners who plan to buy a land for their commercial enterprise.
Home Equity Loans – This suits buyers who already have equity in their personal homes and wish to use this to buy land.
Land Company Loans – It is a good option for buyers who purchase through land brokers for mid range priced land and prefer to use built-in financing.
Looking Forward - After Your Purchase
Deed Processing
Depending on your county it may take a while to transfer the name of ownership. Even more so getting you tax due notifications. Some counties can go years and not send this out to you. But they send it to the old owner and they don't care anymore. So learn how to pay online and save the date, it's your land and no one else will pay it. The same goes for HOA payment and utility holds. You don't want to lose your land in a tax sale.
Protect Your Property with Insurance
Are you worried about hazards on the land or someone getting hurt on it. You can get liability insurance on the land to prevent you getting sued. If you are planing to have a bunch of workers on the land, it would be best to do this. Most important thing with this is, if you get notification of a hazard you need to fix it. The legal issues start when you were notified and did nothing.
Monitoring Land: A Vital Task
Know if things change with your land as you might sell it one day. You can do this remotely sometimes or drive to your land if it is nearby. Sometimes power goes in, roads go in or any sort of thing that can happen to land when you don't watch it. For the most part you will never see anything bad happen and holding it will be out of mind. But if improvements happen you may get excited at it's potential and decide if you should sell for profit now or keep holding.
Adding Improvements
Improving your land will be a great thing and should increase the value. Things like adding gravel to a road, installing a septic or well, clearing the land are great additions. All these really improve the land but they won't effect your tax valuations. Building a home changes your classification, your land will be considered improved and increase your tax valuations.
Optimizing Building Loans
If you're planning on building on the lot, something like an airbnb and did your research you can look into construction. Building loans are different then getting a mortgage, they also have different requirements to get. Often things like paying 50% down are common agreements to get a building loan. You can look at other options like equity line of credit, personal loans or even deals with the builder.
The expenses of home building is really a subject one will tell you it's worth it and another would say it's more expensive then buying a home. There is so much that goes into determining that however.
There are a few things to know and research before you start to build
All Building restrictions, permits and requirements
Material Costs (wood, steal, AirCrete, interior costs...etc)
Environmental needs (Material vs Natural Disaster Problems in Area)
Construction company, friends or just you (who will build the home and what cost savings are there)
Building Company reviews and costs (shop around)
Costs + More (expect your calculated costs to be higher than expected due to unforeseen issues)
Maximizing Flipping & Selling Your Land
Clearing Land
Clearing your land can go a long way when selling your land, even if you didn't build on. It can be a bit of work, but for someone to visit a nicely groomed lot vs. a lot full of trees goes a long way. This may also include clearing roads to your lot, when there is no road at all to a lot, it may not be as attractive to others.
The Essential Role of Utilities
Utility needs are different for everyone, for the most part people want to live on the grid because it's easy. But, it isn't always possible depending on the area. Many people live off grid just fine and have a comfortable life, but it's not for everyone. So know your options when buying land because sometimes there are restrictions.
Water
Water options are pretty straight forward and overall set by your options available. You will either have on grid water options, well options, catchment tank, delivery or a combination of these.
City Water: In the cities, communities and HOAs.
Well Water: Used in more remote areas and farm lands. Requires drilling, depth of water table and maintenance. Can be done in deserts or even lush land.
Catchment Tank: Great for areas with a lot of rainfall like Hawaii, it is a system that connects to your roof to collect the rain for your use.
Delivery: Used with a catchment tank, a water delivery company will fill up the well when it is low. This is fairly low-cost but make sure a water company is near you first.
Know your filtration systems: There are many ways to make the water drinkable but you should look into the process, testing the water will help decide the filtering requirements.
Power
With power you have the options of being on grid, using solar and generator options. For city power your land may have a utility hold, meaning it is on your lot and you pay for access options already so ask before buying. Drawing power will take the help of the county, city and HOA if applicable. So ask about this cost because it may be expensive sometimes.
Solar is becoming very efficient and you can fill batteries to store the sun power. In the right areas you can live off solar quite well. A generator is not ideal but good to have for back up mostly, they are loud and require gas which can be expensive. So as a main source of energy it will be your last option.
Septic
Even you live in a nice community, have power and water. You may not have city sewer connections. So septic would be the normal system in your area, which can be a tank. With this being the case you have many septic options. Check with the county or HOA, because in some cases you have to use a particular one.
Types of Septic:
Conventional System
Recirculation Sand Filter
Chamber System
Aerobic Treatment System
Mound System
Cluster / Community And More
- Visit the (EPA) Environmental Protection Agency to view all the types of septic systems.
Preparing to Flip or Sell
When you are ready to sell, which may be many years, a year later or when you just need cash. Here we will go over getting you the highest amount for your land.
Pricing Strategies for Success
If you want to make the most money you can off your land, present it like you are proud of it. Nothing is worse than seeing these lots on sites like Zillow with a one sentence description and one picture of trees. People are not interested in seeing this or looking into it further. This will fix that.
Pictures: Everyone loves pictures, we are visual people but can't always travel to see the land in person. Putting many great pictures of your land is going to get way more interest than other listings. If you can't get out to your property, it is very easy to hire someone on craigslist to take pictures of the land. We usually pay about $60.00 each time, for this but we get flooded with people ready to go same day.
Descriptions: Unless you purchased your land with a ton of descriptions, you may have to do some serious research if you want to list a bunch of details with it. Listing details of the land has a great deal of potential to gain more interest as well. But more importantly it will be the right kind of interest because they already know what the land is without having questions. Here is an example of good descriptions. You can find these details by going on the county websites.
Where to List - You will have several options for this, some free and some may cost you. Going the free route seems just as productive, so unless you are selling multiple parcels, free websites will be enough. Here are some free options that work quite well for selling the land yourself. Zillow.com Forsalebyowner.com Craigslist.com Facebook.com (marketplace) Adlandpro.com
Agents / No Agents and Closing: You can sell land without agents to cut out middle man costs. However, it can be best to use an agent if you don't know what you are doing. You can push the agents costs on the buyer if you feel that your land is already priced well. An Agent will ease all closing, so there isn't much to explain with that. But closing FSBO is different and here are some ways to do it. - List the land your self on the above websites. - Be able to answer questions about your land and be responsive. - Find a title company or Lawyer who will write-up the closing paperwork and deed. (you do not need an agent to close a basic cash sale of land) - Sign a purchase agreement, use title company to escrow the money, sign the deed with witness and send the paperwork to the county.
Fire sale: Unfortunately with land the need to fire sale happens. Some land just doesn't go up in price for many years. You may think, crap no one will buy this land and I'm stuck with it. There are land buyers who will pay cash for it regardless of value. You won't get much for the land though, they will have to put in the time to sell an undesirable lot. It's okay, you avoid future tax payments, it's off your hands and you have cash now. They also close fast and without agents, getting you cash fast.
Avoid Losing Your Land, Liens or Making Deed Issues
With anything, if you don't pay for it, it will be taken away from you. You shouldn't take it lightly when you get a property tax bills. Pay them on time and keep records of it.
Tax Sales: In some states you will literally lose all ownership to your land if you don't pay your bill for a certain amount of years. California, if you are receiving your tax bill but ignore it you will not be happy later. After 5 years of non-payment your land will be put up for sale in a tax deed auction. That day, without warning, you will lose the land completely. Even if you wanted to get it back, most likely you can't. You would have to prove, using a lawyer, that you never received a tax bills and notifications and it was the states fault. Which is a rare and a difficult process. There are other options but consult a lawyer if it ever happens to you.
Liens: Allowing Liens on your land will make it almost impossible to sell. The IRS, bank or even a construction company can put a lien on your land. Which any land buyer will rarely take on, because then they are responsible and wouldn't be able to sell the land. Also, title insurance won't want to take part of any buys or sells on it till it is cleared.
Deeds: If you have a clear title, you need to maintain that. It is best to consult with an attorney for things like passing it down, giving to a family member, friend or putting it in a trust. Deeds are legal documents and you can type one up online incorrectly. A title company will questions the validity of ownership and block a sale. You will then need to get a lawyer and quiet the title, which is a pricy process. So, if you are passing it down or doing anything with a deed. Don't pull one-off line and do it yourself unless you know the process well. You will create a major headache for the person who it is passed to.
Maximizing Land Ownership: The Benefits of Out of Sight, Out of Mind
Probably the best part about owning land as a hold is the low stress. Having a hard asset that you almost don't think about much, doesn't happen with much else. You typically don't do anything but pay your annual dues. Land can usually sustains value during a down economy, has no maintenance cost like a home and you can cash out when you want. You can't say the same about many other investments out there.
Some Fun Reads Now
Is there free land in America?
Yes, there is free land in America but this is based on the county that chooses to offer it as an incentive. Some counties decide to offer free land as a way to increase their population and hopefully the towns value and attraction. The terms of free land often include building a home within a certain time frame, usually 1 to 3 years. Also, the home may have building requirements to make sure the home build is attractive for the county.
How big is 5 acres of land?
To get an idea of how big 5 acres of land is, a good way to visualize it is though football fields. A typical American football field is 57,600 square feet or 1.32 acres. While this is bigger than one acre, put 5 football fields together and picture it a tad bit smaller. That is still is a huge amount of space, but remember your land may also have different dimensions than a football field.
How much does 1 acre of land cost?
1 acre of land can range between around $1,000 to $100,000 plus. While this range is massive, this all depends on the value and location of the land. Raw land, such as a 1 acre of land in California, on the beach, you could image go for a huge amount. While at the same time in California, you could buy extremely remote desert land without roads for around $1,000.
Where is the cheapest land in California?
Surprisingly, you can find extremely cheap land in California. Typically cheap land in California will be located in the desert areas or some land in very heavily forested areas. You can actually find land in California for as cheap as $1,000, but be aware, the land may also be hard to access and not always feasible to build on.
Where can you build a tiny home?
You can build a tiny home in most all states, this is all dependent on county building laws where your property is located. Some counties and cities can have size requirements or utility requirements to obtain a building permit. So in all states, you would just have to research the county specifically and not the state. The states with the most tiny homes is Florida, Texas, Oregon and California.
Can you buy land for under $1,000?
Yes, you can actually buy land for under $1,000. Cheap land under $1,000 is usually located in more remote areas and requires you to avoid extra costs. Things like agent fees and title insurance can outweigh the cost of the land. Buying from a land specialized website can allow you to get a flat rate upfront and they cover all closing costs. As of lately it should
