Raw land might seem like just another type of real estate. And because of its simple appearance, you may assume buying raw land is a simple process. But you’d be wrong. In many cases, purchasing raw land in San Antonio can be more challenging than buying a property that already has a house on it. So before you dive into the process, it’s helpful to get your bearings.
Why Buy Raw Land?
There are any number of reasons to buy raw or vacant land. (We use these terms to describe land that doesn’t currently have a structure in place.) Here are a few of the most common ones we see with local San Antonio buyers and investors:
- To build a house. For many San Antonians, building a house is the ultimate dream. It provides an opportunity to control every detail of the process and construct a house that fits all of your needs, wants, and design preferences. And to build a house, you have to start with some land. You can either buy your own land or secure a lot from a builder who already has a development in place.
- Long-term investment. In some cases, land is purchased as a long-term investment. People often buy land as a way of diversifying their investment portfolio (rather than putting everything in traditional vehicles like stocks, bonds, and insurance products). Because land is a finite asset, you can almost guarantee that it’ll be worth more in the future. As the population of San Antonio increases and real estate prices rise, so will the value of a smart land investment.
- Income-producing. When we use the term “income-producing property,” we’re typically referring to a rental property – like a house, condo, or duplex. But did you know that land can also be an income-producing property?
Most people purchase raw land for one of these three reasons, but it’s possible that you fall into another category. Regardless, it’s a good idea to do your research and be prepared before getting too far along in the process.
4 Tips to Consider
When buying raw land, we recommend San Antonio buyers and investors consider the following:
1. Get Your Finances in Order
When you buy a piece of real estate, you need to make sure your finances are in order. Otherwise, you could have a hard time getting the proper financing needed.
Typically, individuals use something called a land loan when buying raw or vacant land. And depending on what you’re planning on doing with the land, you may be able to roll the construction of the home or structure into the loan as well. But either way, it’s imperative that you get your finances squared away before starting the process.
Land loans tend to be very strict (especially if you don’t have plans to build on the land right away). Lenders are justifiably cautious about lending large amounts of money, since it’s much harder to liquidate raw land if you default. By getting your finances in order, you can put lenders at ease and improve your chances of getting favorable loan offers.
For best results, we recommend fixing your credit score, paying off bad debt, avoiding new debt, and piling up as much cash as you can.
2. Consider These Important Factors
Raw land can come with plenty of idiosyncrasies. If you aren’t careful, you may end up purchasing something that appears to be much different than what it actually is. In other words, be very careful to research a property prior to purchase to ensure it’s able to be used in the capacity that you plan on using it. This means researching and getting familiar with things like:
- Zoning. How is the land currently zoned? (Residential, commercial, agricultural, etc.) If you’re buying a lot that’s already been subdivided by a builder, then it’s going to be fine for residential construction. But if you’re purchasing your own tract of raw land, it’s wise to do your own research.
- Environmental details. Depending on where the property is located in San Antonio, it’s possible that a plot contains protected wildlife species and plants. The U.S. Fish and Wildlife Service has maps that show where protected areas are located. Reference these resources to ensure you aren’t purchasing land that can’t be easily used.
- Regulatory issues. Though rare – particularly if buying a large pot of raw land outside of town – there are certain historical districts and regulations on some properties that may require very strict permits in order to build or alter the land. Again, it’s better to check now than end up with a complicated issue later down the road.
- Utility hookups. Don’t assume that a property has utilities already in place. Electricity, water, and sewer are all important if you plan to build a home. If these hookups aren’t already present, get an estimate to see how much it’ll cost to bring them in.
3. Never Make Assumptions
Never assume a seller is presenting the property accurately or truthfully. A seller can put anything on a listing – you’ll want to verify that the information is true.
For example, read the deed carefully to see if anyone currently owns mineral or logging rights to the land. This could give someone else the ability to cut down trees or drill for oil.
It’s also a smart idea to get the land surveyed. The seller might think they own 40 acres, but it could actually be 36 acres. Learning this may save you thousands of dollars and prevent a legal battle.
4. Don’t DIY
As you now know, purchasing raw land isn’t as simple or straightforward as it may seem. There are plenty of important details to consider. So instead of doing it yourself and trying to account for all of these caveats and exceptions, we recommend just hiring a real estate agent. Remember, you don’t actually have to pay the buyer’s agent. In most cases, this burden falls on the seller. So you might as well get an experienced San Antonio real estate agent on your team!
Work With Green Residential
At Green Residential, we take real estate seriously. Whether you’re buying a single-family home in the burbs, a loft in the middle of downtown San Antonio, or a tract of raw land on the edge of town, we have the experience, skill, and local knowledge to assist. Contact us today and we’d be happy to discuss your situation in further detail!