What should someone know about buying land?

[zzzz]

Especially if they don't plan to build right away. i.e., a lot to build a home on later or a larger parcel for possible commercial development.

Do banks like to make loans for land? And how do things like the interest rate and the length of the loan typicaly deviate from what you might have with a home mortgage?

 

[jmrob93]

Financing can be similar-- 15- 30 yr notes

Interest rates tend to be a little lower

Depending on where and how much -- find out about mineral rights (including water rights)--typically you get 50% with the purchase-- in some cases you get 50% of 50%-- diluted based on how many times the land has changed hands

Since everything costs money-- a water well, electric set-up, a road, septic-- those could easily rack up 30K to get set up-- understand if those things are already set up or some of them--it's a big money saver down the road

Also find out about property taxes in the area, does the property have an ag exemption, hege tax decrease? you can lease it to a farmer potentially and get the ag exemption. Does it have a fence? Lots of things to weigh out as you look at different properties

 

[Holden]

1. Understanding of exactly what you are buying: surface interest only or the whole ball of wax including mineral interests.
2. Restrictions: minimum house size, animals allowed, biuld allowances, etc.
3. HOA structure: How much can they increase dues each year? Is there a ceiling? What are they there for?
4. Look at surrounding property outside of subdivision: What does the future hold for it?
5. Utilities? Water?

 

[TheRealBizHorn]

Agreed on the ag exemption. One landmine there, however, is the rollback. If there's currently an ag exemption and you lose that exemption then you're liable for the prior 5 years taxes as if no exemption was in place. Hopefully you or counsel will do the homework on this point; you don't want to buy the land and quickly incur a big liability.