Buying your own plot of land and building a home on it is a big, exciting move. But unlike buying an existing house, purchasing undeveloped land comes with extra layers of complexity: zoning rules, utility access, surveys, soil and more. Skip the homework and your dream lot could quickly become a money pit.
Table of Contents
- Find a location suitable for your lifestyle
- Consider access to roads and utility lines
- Look into zoning and building restrictions
- Verify plot boundaries with a survey
- Factor in the soil quality and topography
- Be wary of local natural disasters
- Assess your budget and explore financing options
Find a location suitable for your lifestyle
Before you start viewing any pieces of land, step back and think about your day-to-day life. How long are you willing to commute? Do you want a home tucked away in the quiet countryside, or would you prefer being close to shops, schools and healthcare services? Some people enjoy the remote life and rarely need to travel. Others need proximity to civilization for work, kids or socializing.
There are other things to consider too such as noise, light pollution and future developments. You may not mind putting up with disturbances like traffic or construction if you’re coming from a chaotic city, however those used to peace and quiet may find it a nightmare.
Consider access to roads and utility lines
A lot can look perfect on paper, but it gets expensive fast once you realize what it takes to reach it and service it.
Start by checking whether the property has legal and physical access via a public road or easement. Some plots of land are landlocked – meaning that you cannot access them by car without getting permission to build a road on someone else’s land (which won’t be easy).
For utilities, check whether nearby power lines are accessible or if you’ll need an off-grid solar system. If you can’t connect to municipal water and sewer, you may need to drill a well and install a septic tank. All of this can cost thousands of dollars. Plots that already have utility connections from a previous development could save you a lot of money.
Look into zoning and building restrictions
Zoning determines what you can legally do with your land. First, confirm that your chosen plot is zoned as ‘residential’. Then look into setback requirements (how far structures must be from the boundaries) and height limits.
Some areas restrict tree removal or mandate specific architectural styles, so you may need approval before finalizing your design. A home builder can typically handle inspections and permit applications on your behalf to confirm your vision is feasible.
Verify plot boundaries with a survey
The boundaries of your piece of land may not always be obvious. Don’t assume that fences and hedges are the borders – it’s possible that the boundary may fall short or extend beyond this. There may also be cases where a path running through your plot of land is technically owned by someone else.
An official land survey will clear things up and prevent future disputes. Surveys are often required when applying for a land loan, but you should still get one done if you’re buying with cash.
Factor in the soil quality and topography
Soil conditions are easy to overlook, but they directly determine what kind of home you can build. Soft soils like clay and peat are notoriously difficult to build on. You’ll need specialized (expensive) foundations, and there will be limits on how heavy the structure can be. Run a soil test before committing to any lot. A perc test is also necessary if you plan to install a septic system.
Topography matters too. The slope and shape of the land affect drainage and may require excavation or elevation work. Uneven terrain can be a chance to get creative with your home’s design, but it will almost certainly cost more.
Be wary of local natural disasters
Don’t forget to look into the risk of local natural disasters. This can include flooding, earthquakes, wildfires, landslides and hurricanes. While it’s possible to still build properties in high-risk areas, you will need to design them to withstand potential disasters and you may have to deal with higher insurance rates. Getting a self-build loan may even be harder if there’s a high risk of damage to any building on the land.
The best way to determine whether disasters are likely is to talk to neighbors and local officials. Sometimes a property near a river or lake might be deemed high-risk, but neighbors may tell you that they’ve never experienced a problem.
Assess your budget and explore financing options
Then there’s the money side. Raw land can cost tens of thousands of dollars, and you’ll face additional expenses for site prep, permits and surveys before construction even begins. Budget for the full picture, not just the purchase price.
You’ll likely need to take out a land loan. These work similarly to a mortgage but often require a larger down payment and carry higher interest rates. After that, a separate construction loan covers the build itself. All-in-one land-and-construction loans do exist, and a home builder can often help you apply while providing the lender with an accurate cost breakdown.
