Wondering what to look for when buying land to build a home on?
You’ve heard it before; when it comes to the value of your home, it’s all about location, location, location. But being next to your favorite patch of woods or a beautiful lake doesn’t mean that spot is the perfect place for your new home. There are a multitude of other factors to consider when looking to buy land to build on, and in this post, we’re going to give you the rundown.
Yes, location does matter — a lot in fact. When you’re building a new home from scratch, you should have the mindset that the house you build will be your forever home. Or at least your home until you move to your dream home in the tropics after retirement.
When you are purchasing land, the first main decision will be between buying vacant land or raw land. Vacant land is simply an unoccupied lot with no building, when raw land is completely undeveloped (no utilities, excavating, etc.).
Once you decide on vacant vs. raw land, now it is time to take a look at the general area. If this is going to be your dream home, you will probably want it to be around a nice community with a variety of shops near by. It is good to consider where you are in relation to restaurants, biking trails, coffee shops, bars, movie theaters, and other spots where you find yourself spending a lot of time. Many new home builders want to keep sustainability in mind, and so making sure that they are within walking, biking, or short driving distances to their favorite stores and restaurants is a top priority.
Going along with the location of the land, many home builders look for a unique, distinctive feature to separate it from other homes. For example, a body of water such as a creek or lake, or a private wooded area are two features that many modern home builders seek out.
Finding that unique feature will make your new home all the more special.
It’s important that you undergo a soil test before starting to build on a plot of land. Ideally, this would be done before your land purchase. A soil test will make sure that the land is safe enough to build on and to see if there are any soil constraints, like peat. Peat, also known as turf, is an accumulation of partially decayed vegetation or organic matter. It’s essential that you make sure that you have a solid enough foundation for a building.
Keep in mind that even if you do find that your plot of land is located on top of peat, then you can still build there. However, it will require a more technical and expensive base for your home to ensure that it doesn’t turn into a money pit by sinking into the ground. This is a good tidbit to understand, especially if you have the perfect plot of land for your home but the soil isn’t great.
Similar to the quality of the soil, you can still build a home even if the landscape conditions aren’t perfect. Once again, it will cost you extra funds to make it work. A good example of this is when someone wants to build their home on a hill. The benefits to building on a slant are that you can have some great modern designs with spectacular views, but it is much more difficult to build on this type of landscape, and there are specific challenges that you will encounter every time. It can certainly be done, but it may take longer, and you may run into more setbacks compared to building on flat land.
Questions to Ask When Buying Land to Build a Home
As you start to look at different lots either with a real estate agent or on your own, it’s going to be important that you not only know what you’re looking for but also that you know what questions to ask when it comes to getting the right piece of land for your home. Here are three important questions that you should understand before you decide to purchase a piece of land.
How is it Zoned?
Before you decide to make an offer on a parcel of land, be sure that you’ll have the ability to build on the land by checking the zoning laws. Make sure to do the due diligence to review any and all zoning restrictions when buying vacant land.
Make sure to check on any rules and regulation placed by the development around the types of buildings that are allowed. While this can add some required setbacks, they can be nice as these types of rules prevent your neighbors from building an ugly shed or painting their house an obnoxious color.
It would also be wise to get an environmental assessment to ensure there are no contaminants of any kind on site. While this is rare, there are cases where there are chemical contaminants of some kind that require clean up costs that can be fairly expensive.
Are There Utility Hookups?
Utility access such as power, water, and sewage will be essential for your home. If you’re located in a more remote area, there’s a chance that you will be too far away from municipal utilities and won’t have any one of the three hookups. In that case, you’ll have to get your own septic system, well, and electric. While this will cost some money, there is really no way around it.
If you’re in this boat, make sure to contact the local utility company as well as the city before you move forward. They can help you learn whether or not getting utilities into your lot is possible and how much it will cost to do so. The good news is, you could use this to negotiate the price of the land.
For city lots, this problem might not be as common or complicated, but it’s good to know what’s out there and what can, in some cases, be difficult.
How Much Preparation Will the Lot Need?
It’s always good to ask yourself how much preparation a lot will need before you start bidding on it. Sometimes you’ll need to remove multiple trees, clean out rocks and weeds from the places where you want your yard.
You might even need to level the ground where you want your home to be built, and thus you’ll need to pay an excavation company to move some of the first for you. If you are in a rural area, you might not have road access, which will add to the cost. At least you won’t have to worry about neighbors!
Financing the Purchase of Land and the Construction
After you’ve found the right piece of property for your home to be built on, you’ll need to make some decisions on how you’ll undergo financing both the land and the construction. There are three different types of loans that you can get for a piece of property that you’re going to build a future home on.
Land or Lot Loan
A lot loan is for a piece of property that is set up to be built on already. These loans are essentially the same as land loans but have some different specifications because of the utilities or access to them that are likely located on the lot.
Note that land loans and lot loans often have higher interest rates than construction or home loans because they have a higher default rate due to the fact that it’s harder to sell land that hasn’t been built on. However, that doesn’t mean that it would not be a good investment as you would most likely be able to get the lot for a lower cost which could increase in value over time if it is placed in a desirable area.
Construction loans are short, likely 1-2 year loans specifically to fund your construction project’s budget. The loan is often paid out in stages as the construction project goes. After the construction is finished, it will have to be converted into a more permanent loan.
Construction to Permanent Loans
After the home is complete, construction to a permanent loan will be rolled into a mortgage. In order to roll it over, you’ll need to pay interest from the construction portion of the loan, and then it will become a regular mortgage for your home.
Finding a Builder and Designer to Work With
You won’t be able to start on your construction project until you find a builder to work with. There’s a number of builders on the market, but the best way to find the right one is to look at their previous projects, style, and reviews.
For instance, at Sustainable 9, we have a projects page where you can learn about each of the projects that we’ve completed over the past few years. Additionally, you can find our reviews on Google and see more pictures of our builds on Instagram and Pinterest.
Ensure that You Have All the Right Permits
Before you get too far into the project, you’ll need to contact the city and possibly the county to get all of the permits for the project that you’re completing. This can be a simple or extensive process depending on how busy the organization is and how big your project is.
In many cases, your builder can take care of all of the permits for you so that you, as the home builder, don’t have to worry about making sure you have the right permits.
Clearing the Land for Building
Last up; you’ll need to clear the land and make sure it’s ready for building. Ultimately we say that the best way to do this is to partner with your builder and have them refer a company or take care of the management of that part of the project.
We wish you the best in your design and build process! We’d love to work with you if you’re interested in building a home somewhere in Minnesota. Reach out to us today!
Overall, Be Picky
As previously mentioned, this new home should be your forever home. So, when it comes to looking for the right location, don’t be afraid to be a little picky. If you don’t absolutely love the location and characteristics of the land, then odds are you won’t completely love your home either. Deciding where to build your home is a big decision and one that shouldn’t be taken lightly.
At Sustainable 9, we can help you find the perfect plot of land for your new living space. We know a thing or two about what makes a home special, and one of those details is the location of the home. Ultimately, the decision is your own, but we will be with you every step of the way to collaborate not just on the location of your home, but every small detail that will make your house special.
If you’re looking to build a new, modern, and sustainable home that will last a lifetime, give us a call at (612) 540-0871 or send us a message to let us know how we can help you get started on crafting the perfect home for you.