5 Tips on Buying Land to Build a House
Do you ever daydream about designing and building your own home?
Most people do.
You have probably envisioned the pillars on the front porch, the big windows, the beautiful landscaping, and the patio in the backyard.
But, before you start building you have to buy a lot to build on, which often feels overwhelming.
There are so many things to take into account - location, size, utility convenience, zoning, permits - the list goes on. Overlooking details like these can result in buying a useless piece of land.
At Design Tech Homes, we understand that you want to make a smart, informed decision, but you may not know how.
That’s why we put together this article with tips and steps for buying land in Texas to build on.
Ready to take the first step toward building your dream home?
Let’s get started!
5 Steps to Buying Land
The task of buying land to build a house on can feel daunting!
The key is to break it down into small steps so it doesn’t feel so big. Then take it one step at a time.
Let’s look at step number one.
Determine your budget and financing options
Determining Land and House Budget
Before you start searching for land, you need to know what you can afford.
When determining your budget for land, you should keep in mind your budget for your house, because you want to make sure there is an appropriate relationship between the two values. If you have a good land-value to home-value ratio, it maximizes the value of both.
Some say that, as a rule of thumb, your land should cost 20% - 30% of your finished home value. But the ideal percent may vary depending on your situation.
When determining your budget for your home, you should think about the value of homes surrounding your lot. Your home should be of a similar value. It’s not a good idea to build a super cheap home in an expensive neighborhood or vice versa.
So what happens if you don’t have the money to pay for a lot at once?
If you don’t have funds to pay for the land at once, (as most people can’t) you may have to apply for a loan.
You may also need a loan to finance your home construction. If you plan to start your home construction right after buying your land, you may be able to get a single loan for both.
For instance, Colonia National Mortgage offers a single close loan that could cover both your land and construction costs, as long as the house is your primary residence. When your house is finished, the loan converts to a permanent mortgage loan.
This type of loan is convenient both for you and your home builder.
If you aren’t sure about your financing options, discuss your plans with a qualified loan officer and learn about the options that best meet your needs.
Determine your preferred location
The next step is to figure out a general location for your land.
You may already know the general area where you would like to build in the great state of Texas. But if you don’t, you can figure it out by asking yourself some simple questions:
- Do you prefer city living, suburban living, or country living?
- How far of a commute are you willing to tolerate? Unless you are building a retirement home, you should strongly consider your daily commutes to work. At first, a long commute may not seem too bad, but it might get old after a few months.
- What about schools? If you have (or plan to have) school-aged children, it’s a good idea to learn about the area’s schools before you buy a lot to build a house on.
- Does an area fit your lifestyle? The area you choose should have the resources you need to support your lifestyle. Do you want upscale shopping and dining venues? Or would you rather have nice hiking trails? Is the idea of living by a golf course appealing to you?
Make a list of features your ideal property would have and mark them as essential and non-essential. This will give you an idea of what location you might want to choose.
Determine how much land you need
Consider what is important to you in terms of space:
Do you want wide acres to roam?
Or do you want a low-maintenance property with just an acre or two?
Do you want plenty of space and privacy between you and your neighbors? (Keep in mind that a one or two-acre lot with plenty of trees and bushes provides much more privacy than a larger lot with no trees or bushes.)
Or would you like to interact with your neighbors and be close to city activities?
You should also think about how large a custom home you would like to build and how much space you would like for outdoor recreation. Maybe you want a little cottage with a small backyard. On the other hand, you might want a large ranch house with space to pasture animals.
Your lifestyle is the biggest factor that comes into play when deciding how much land you need to build on.
Begin you search
Once you have an idea of your budget, general location, and size, it’s time to start looking for options!
Most people begin online. Search for something like “residential lots for sale in Houston, TX,” or “land for sale in San Antonio.” You may get lucky and find something that way.
You can also talk to your builder. Builders often work with realtors specializing in land searches. Your builder may have ideas for you or be able to put you in contact with a good realtor.
If you have a specific area in mind, drive through the area and look for “for sale” signs. Write down the contact information for any lot that catches your eye.
You can also go directly to a realtor who specializes in land searches. They can let you know as soon as anything comes on the market.
Select your lot
It may take a little while for you to find a lot that suits you. If nothing is available right away, you might even have to wait for something new to come on the market.
That’s ok, though, because you want to be sure you are happy with the land you buy.
But what things might cause you to be unhappy with your land?
That’s coming right up!
In the next section we will go over 6 things you should watch for when you are making your selection.
EXTRA: Once you’ve purchased a lot of land, you still have more work to do. Check out our blog 14 Things To Know When Building On Your Lot In Texas for more information.
6 Things To Watch Out For When Selecting Your Texas Lot
What is a land-buyer’s #1 fear?
Buying a useless piece of land.
Looking out for these 6 things helps you not to buy a piece of land that ends up being useless.
Zoning is the local authorities’ determination of how you can use a particular piece of land. Land could be zoned as agricultural, residential, industrial, or otherwise. A zoning ordinance may also put some restrictions on things like the size and location of buildings on the property.
Be sure to check how a piece of land is zoned before you buy it. It might not be residential, or it may have some building restrictions!
You may be thinking, “Why can’t I buy a piece of land and then just get it rezoned to fit my purposes?”
It can be tough to get land rezoned, and there is no guarantee you will be able to get it rezoned at all. It’s best to take this into account before you make any binding agreements.
Quality deed restrictions
Similar to zoning ordinances, deed restrictions also limit what you can do on your land.
A deed restriction could limit various things such as:
- Home placement
- Home design
- Number of trees on your property
- Number or type of vehicles you can have in your driveway
- Types of animals you can have on your property
It could limit things as random as whether you are allowed to paint your door or use your home as a business.
In theory, deed restrictions create the greatest amount of good for the greatest amount of people in the neighborhood. They attempt to avoid things like houses that obstruct beautiful views, overwhelmed septic and water systems, and garish, unsightly homes.
However, deed restrictions can be a bear to work with!
Deed restrictions are hard to change (it usually takes a judicial ruling), and they limit what you can do with your property. Watch out for them when buying land to build a house on.
Some lots may be beautiful, scenic, and private.
But are they convenient when it comes to utilities?
If a lot is far off main roads, it may be hard and expensive to service it with electricity. It may also require a long driveway, which will be costly as well.
Some rural or forest areas may not have good internet or cell phone service - very inconvenient!
If crucial utility connections aren’t directly present, you’ll need to determine how much it will cost to run them to your house or install them.
Flood plain locations
Even if it’s not near a large body of water or in the Texas highlands, a property may still be in a flood zone. Texas has plenty of coastal land, lakes, and rivers, that can cause flooding during rain and hurricane seasons.
This is not something you want!
An easy way to tell if a property is in a flood zone is to enter the address in the FEMA Flood Zone Map.
The Flood Zone Map will tell you how at-risk a property is for flooding. If a property is in a flood zone, your mortgage company may require flood insurance.
Properties near the coast are at the highest flood risk, but low-lying, poorly drained properties or lots near rivers and streams are also at risk.
Keep in mind that just part of a property could be in a flood zone. The part where you want to build your house may be safer.
However, flooding causes some of the messiest and most expensive damage of all natural disasters, and as little as one inch of water can cause more than $25,000 worth of damage. You want to stay as far away from flooding as you can!
Let us say it this way:
Standing water on a property is never a good thing, and you’ll want to think about this before you buy land to build your house on.
Wetlands are cool habitats for wildlife.
But you don’t want your property to be a wetland!
Before you buy, consider: Is the lot at the low point in the neighborhood?
Does it slope downwards toward the place you would like to put your house?
Is the soil a type that drains well? Is it loose and sandy or mostly clay? Sandy soil drains much better than tightly packed clay.
Is your geographical location wet and stormy?
Standing water on a property is never a good thing, and you’ll want to think about this before you buy a property with bad drainage.
If the lot you are looking at is in an approved development, the developer probably already performed environmental testing on it.
But if the lot is rural, or has been vacant for a long time, it’s a different story.
If the lot used to be a gas station, farmyard or such, the soil may be polluted. Polluted soil might prevent you from getting a building permit or pose health hazards to your family down the road.
It’s good to get an expert to test the soil before you commit to a piece of land to build on.
Buying land and building a home is not a task for the faint of heart.
If you want to start this undertaking, we hope this article helps you take your first steps.
We here at Design Tech Homes are cheering you on!
It’s easy to work with us:
- Visit us
- Design and build your custom home
- Move in!
From selecting land to financing to building your dream home, we will do all we can to help make your journey easy and painless.
We look forward to working with you.