Have you ever dreamed about buying land to build a home, garden, and a peaceful live off the grid? Such aspirations may be better off as daydreams. Buying land when you don’t know what you’re doing could quickly become a financial and emotional black hole.
The average acre of land in the United States is worth $3,800. The average landowner owns about 10,800 square feet of land.
Owning land sounds great, but what would you do with it?
Do you know that private corporations, and local, city, and state governments could have permission to access your land and take resources without your consent? Your land might not be hooked up to the local sewer line and you might have to spend tens of thousands to get hooked up.
You could buy land located in a flood zone and only find out afterward. Your new neighbors might have waged a tense boundary-line feud with the person who sold you the land, and now you fully understand why you got the land so cheap.
If there is a protected species law protecting animals, plants, or trees on your property, then you have to coexist with the protected species without harming it under penalty of fines or possible incarceration.
Buying land is not the same as buying a house, so it is very hard to get a loan and sellers want to be paid in cash. You also need to have a lot of money on hand to build on the land and be prepared for any surprises.
Don’t buy land on your own. If you have the money to buy land, then hire a lawyer and a real estate to help you. There is so much that you don’t know about land-based laws, zoning rules and restrictions that could have you ruing the day you decided to buy land.
Here are five things you should know before trying to buy land.
Physically Assess The Property
Would you buy a car sight unseen or without a test drive? Many potential land buyers get so enamored of pictures of land that they see online that they will send money for land they have never seen in person or physically stepped foot on.
Buying land is an awesome responsibility and a significant financial burden to bear if anything goes wrong. Schedule several visits to walk and tour the property. Don’t just visit the land in question on sunny days with birds chirping in trees either; keep track of the weather and visit the land when it raining or cloudy.
Rain and inclement weather forces bugs, animals, and wildlife to look for shelter. Giant floods or flash floods might occur during rain storms. You want to visually see what can go wrong during bad storms on your land, so don’t find out after money changes hands.
Get Land Surveys
Don’t take the seller’s word for it that they own the land or that the land has been surveyed and all the boundaries have been demarcated. Get your own independent land survey and find out where your property ends and where the boundary with the neighbor starts.
Your property might have access roads that are shared with the neighbors or local governments. Find out all of that before you make a deal.
Find Out Who Has Logging, Mineral, and Excavation Rights on Your Property
It sounds like something out of a Franz Kafka story, but there could be a corporation, or several, that negotiated the right to dig for resources, process, the land, cut trees, or excavate resources from your land long before you bought. It could be legal for such companies to come onto your land, without your consent, and do whatever they want.
If they find resources of value, like oil, they could extract it for their own benefit and not share it with it. It happens all of the time – read this story about three households in Virginia fighting an oil company that has the legal right to build oil pipelines on and under their lands and property.
Research the Historical Importance of the Land
Have you ever seen a news story about an endangered bird species, or tree, or the discovery of an ancient burial site that gained legal protection status from the government and considered it silly?
Imagine buying land and learning that some endangered snail or duck has a habitat on it. Or imagine digging on your land and unearthing an ancient burial ground.
Check if anything on your property might have government protection status. You will have to coexist with such things without harming or removing them. What you want won’t matter to local authorities – you won’t be able to cut down that tree or relocate that family of ducks and its your land! An endangered species on your property might have more power than you and be able to walk around your property, with no interference from you, as if they owned the property.
Check If There Are Hidden and Unpaid Debts, Liens, and Taxes Against the Property, and Buy Title Insurance
The seller might be hiding hidden and unpaid debts or taxes or liens against the property that you’ll learn about after the sale.
Someones, the title or deed might not be entirely accurate and there could be an unknown owner who knocks on your door one day.
You can get title insurance which is an insurance policy that can protect you in the event that you inherit an unforeseen financial problem connected to the title of the property.
Conclusion
These are just a few of the problems that you might encounter trying to buy land. Don’t do it on your own. Consult the help of a lawyer who specializes in land deals and a real estate agent.
A good lawyer and real estate agent will help you learn everything you don’t know about the land and guide you on what questions you need to ask.
Most banks do not extend loans for land buys to individuals, and people selling land prefer being paid in cash.
Read More
How Much Interest Will I Earn on $1 Million?
Millionaire Next Door Formula for Wealth
5 Jobs That Will Become Obsolete to AI, How to Protect Yourself and Your Pay
Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.