By Laura Mueller
There’s a lot that can be said for the benefits of investing in land. Like all investments, however, there is a cost factor to consider along with potential benefits. And when it comes to cheap land, you’ll want to be sure you’re doing your due diligence so that you don’t end up wasting money on what only seems to be a total steal.
Here’s what to know about cheap land, including what to look out for when you’re deciding whether a low-cost property is worth investing in.
Possible perils of cheap land
Some cheap land is priced low because of location. The price per acre in Arkansas, Tennessee, and West Virginia, for example tends to be the lowest in the nation, primarily due to supply and demand. But if you find cheap land being advertised in an area where the comps don’t support the listing price, it could be a sign that there’s something else going on.
Possible reasons why land might be listed uncharacteristically cheap include:
• It requires a big additional investment in order to be usable, such as needing to bring in costly utilities or access points
• It has setbacks, easements, building restrictions, and/or zoning regulations that severely limit how much of the land can go toward functional use
• It is located in a flood or fire zone (and has potentially seen damage in the past)
• The soil is unsuitable for building or agriculture
Fortunately, by doing your homework you should be able to identify any of these possible perils before you close the deal.
Quick tips for buying cheap land
Cheap land can be a worthwhile investment, but as with any land purchase, you’ll want to know exactly what you’re getting into. Follow these tips to ensure that you don’t get duped.
1. Work with an experienced local real estate agent. They’ll have the know-how to help you see through a too-good-to-be-true listing.
2. Find out what utilities are already provided for. Bringing in water, electricity, and a septic tank or sewer connection are all hugely expensive. And if you’re interested in cheap land for building on and it requires utility set-up, you’ll face a big bill before you even get the foundation down.
3. Check on road access points. Does the property have an access road? If not, you’ll end up spending a lot on excavation and laying one down.
4. Get the soil checked out. Soil testing will tell you what kind of soil is present on the property and whether it’s the right kind for what you plan to use the land for.
5. Gather relevant info from the town’s Building & Planning Department. This is the place to go to get information on any potential natural risks, zoning regulations, easements, or other restrictions—any of which can turn a seemingly good deal into a dud.
No investments are guaranteed to work out, regardless of how much you spend. But by being aware of the risks of cheap land and looking into all possible issues before committing, you can gain more confidence in your decision—and hopefully purchase land that’s ultimately worth what you paid for it, if not more.
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By Caroline Kirby
A tropical climate, thriving economy, safe and stable political atmosphere, incredible beaches — what other reason do you need to make buying property in Costa Rica a priority? Over the last decade, the beautiful national parks, incredible landscapes, and overall good vibes of one of the happiest and most peaceful countries on the globe have led to an increase in tourists looking to come back to Costa Rica as landowners.
Whether you’re looking for a place to settle into your laid-back lifestyle or simply want a home away from home that you can rent out from time to time, here’s why and how you should buy land in Costa Rica.
Buying property in paradise
Purchasing property in other countries than your own can seem to be overwhelming and inaccessible, but when it comes to buying land in Costa Rica, you’re in luck! The “Rich Coast” actually has pretty foreign-friendly and upfront property laws.
The first and perhaps best bit of news about purchasing a property in Costa Rican paradise is that foreigners have the same purchasing rights as locals do, meaning you can own a property outright either in your name or in your corporation’s name. The one exception? A beachfront concession property requires a local partner (Costa Rican national). However, let’s focus on the simple stuff for now. Check out the top benefits of buying property in Costa Rica as a foreigner:
• Costa Rica has a central land registry, and most property or land has likely already been titled and registered. This makes the process of confirming a clear title to your property much easier.
• Costa Rica also has low property taxes at 1/4 of 1% annually. So if you buy property priced at $200,000, your property taxes would only be $500.
• The process of purchasing land in Costa Rica is very similar to the process in the U.S. So if you’re an experienced investor, this process won’t be much different. You’ll work with a local real estate agent, who must be SUGEF certified, which is the public entity overseeing the stability of the national financial system.
• When you find the land you like, you and your agent will draft an offer and send it to the seller. If all goes well, you can expect to see closing happen between 30 and 60 days after signing contracts. It’s typically recommended that financing be done in your home country as rates are lower. However, if you need financing in Costa Rica, it is possible through owner financing.
• Of course, there are some legal exceptions, although they are very similar to restrictions you would find elsewhere in the world. One restriction is the 50-meter zone which means you cannot develop property in the first 50 meters inland from the high tide line as this is considered public property.
• The other restriction is the 150-meter zone, as this space is typically owned by the local municipality. However, there are also exceptions to the exceptions, and you may be able to lease by concession for up to 20 years. To own this land as a foreigner, a Costa Rican national must own over 50%.
Testing Out the Tropics
Are you about ready to pack your bags and move to Costa Rica? We don’t blame you! However, it’s understandable that you may be hesitant before purchasing international property. As we continue to move forward from the pandemic, Costa Rica is reviewing an exciting opportunity – the chance to enter the country on a special tourist visa for remote workers.
This new legislation which has been widely discussed for the last few month amongst Costa Rica’s top courts is called the “Law to Attract International Workers and Remote Service Providers”, or Law No. 22.215. As remote work becomes more and more common, the country is looking for safe ways to reopen and entice travelers to come, stay, and contribute to the economy by providing the means for them to stay in Costa Rica for longer periods of time.
Currently, any person who entered the country in 2020 can stay without penalty until June 2021, while that date is not far away many legal experts and tourism professionals are hopeful that the updated legislation will pass soon meaning you could make the move to Costa Rica and give the area a test run while you look for property.
Costa Rica is a hidden gem when it comes to property investment, and if you’re a foreigner looking for an attractive investment, don’t miss the chance! This is a safe and stable country with transparent and foreign-friendly purchasing opportunities. Have your own Costa Rica property you want to list? Advertise your land on LandHub.com!
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by Laura Mueller
It’s always important to ask the right questions when you’re buying a piece of real estate, and that’s as true for land as it is for anything else.
More information is always a good thing, especially when it comes to a big investment like a land purchase. And while your agent will be able to guide you through a lot of the ins-and-outs of what you’ll need to know, it never hurts to be as informed as possible regarding the various factors that will help you determine if a property is worth your time (and your money) or not.
With that in mind, here are eleven essential questions to ask when buying land—including some that might not be very obvious.
1. How is the property zoned? You’ll want to be well aware of what you can and can’t do on the property, especially if it’s raw or otherwise undeveloped land.
2. Are there any building restrictions? Similar to above, this tells you whether you’ll be restricted in what you can do on the land, particularly in terms of structural improvements.
3. What are the access rights? Make sure you know whether there’s an existing access road, as well as whether it’s publicly maintained and if anybody else has rights to it.
4. Are there any utilities and/or utility hook-ups? Figure out exactly what’s already available in terms of water, electricity, sewage, and other key utility systems—or if you’ll need to pay to put them in.
5. Are there any planned developments surrounding or near to the property? Find out in advance if there are any nearby updates that will affect your land use, your views, or your privacy.
6. Who are the neighbors? If possible, find out who owns the properties adjoining the piece of land and, most importantly, whether there are any ongoing issues with them over things like boundary lines or access rights.
7. Are there any easements on the land? You’ll want to know sooner rather than later if you’re going to have to share a portion of the land with neighbors, the public, a conservation group, or anyone else.
8. How much are the property taxes? Even vacant land is subject to property taxes. Get an estimate in advance of what the annual taxes are so that you can double check they fit in your budget.
9. Are there any tax exemptions on the land? Speaking of taxes, you should also ask about any possible tax exemptions, such as those for making certain agricultural or energy improvements on the land.
10. Is the seller offering financing? Land mortgages aren’t always as clear-cut as conventional real estate mortgages, and some sellers opt to provide their own financing instead in order to ensure a smoother deal. Ask if that’s the case, or if there are any other sort of seller finance expectations or concessions.
11. Is the title free and clear? A title check will tell you if the seller has the necessary title rights, but you can also ask in advance to save yourself some time later on.
Asking the right questions when you’re buying land isn’t just about convenience. While sellers do have mandatory disclosures that they have to make, knowing what questions to ask gives you more agency to advocate for yourself—and it’s also integral to protecting your rights and your resources as a land buyer.
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By Laura Mueller
We’re in the midst of a serious seller’s market, and if you’ve been thinking of listing your land, right now just might be the best time to do it.
All real estate markets ebb and flow between buyer’s markets and seller’s markets. In the former case, an influx of inventory puts buyers in the driver’s seat, providing them with more control over prices and contract terms. In a seller’s market, however, there are more buyers looking for properties than there are properties to sell—and that creates steep competition that savvy sellers can put to use to increase sale prices and close more lucrative deals.
The land market saw a surge of increase in 2020, with many buyers opting to ditch their small urban homes for private and expansive rural properties—a trend that’s been burgeoned by a sharp uptick in remote work opportunities. Combine that with record low interest rates on loans and it’s easy to see how the land market has quickly become the place to be if you’ve got property to sell.
So how can sellers take advantage? Here are three big ways that a land seller can benefit from today’s high demand, low inventory market.
1. They can sell for more
Low inventory helps sellers make more money in two ways. One, they can list properties for more, and two, they can often drive up the sale price even higher through competitive bidding.
Bidding wars are common in a seller’s market. And because the right piece of land can be even harder to come by than the right residential home, competition is even fiercer among new land buyers than it might be otherwise. That offers huge potential for sellers to make an impressive return on their initial investment, and is an opportunity that likely won’t stick around when the market eventually shifts.
2. They have less need to make improvements
The steeper the competition the less that buyers are willing to risk complicating a potential sale in post-offer negotiations. For sellers, this means a heightened ability to sell their land “as is,” without the need to make hefty (and often expensive) improvements in order to lure in more buyers.
Some improvements might make sense if you’re a seller trying to attract residential buyers—such as putting in utility lines and an access road, if you haven’t already. But they’re not necessarily going to make or break a deal, and you might even be able to skip them entirely if demand is high enough in your area.
3. They have more control over sale terms
Whoever runs the market holds more power over contract terms and conditions. This is good news for sellers, who in addition to raking in more cash on their investment also have a chance to create more attractive deals on their behalf. This could be financially based—such as putting the full burden of closing costs on the buyer—but it can also be more personal, for example, choosing to only sell to a buyer who promises to continue with native planting or conservation efforts or who won’t hunt on the land.
Such a great seller’s market won’t stick around forever. If you’re thinking of listing, now is the time to get on board—and fast. Call your local agent to learn more about selling potential in your area, and use our easy online listing platform to get more eyes—and more offers—on your property.
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by Laura Mueller
When it comes to financing your land purchase, getting the funds isn’t always quite as simple and straightforward as it would be if you were buying a property with a conventional mortgage. Traditional mortgage options are hard to come by for land loans, and lenders who do offer them tend to tack on higher interest rates and shorter pay-back periods—both of which could be tricky to manage, especially if you’re buying on a budget.
So, what are your next best options? Many borrowers use government or private loans to finance their purchases, which offer a bit more flexibility when the big banks aren’t a good fit. Which one is right for you will depend on your eligibility, where you’re buying, and what your current financial situation looks like, but here’s a quick look at what some of your available land loan options might be.
FSA loans– Individuals who are buying land for farming or ranching purposes may be eligible to receive a low-interest FSA loan through the USDA Farm Service Agency’s Farm Loan Program. These include both farm ownership loans for expanding existing properties and microloans for small and beginning farmers, plus targeted loans for minority and women farmers and ranchers.
USDA construction loans – If you’re buying land to live on in a rural area, then check to see if you qualify for a USDA Construction Loan, which will help you pay for both the land itself and the structure that you intend to build there. You’ll only be on the hook for interest payments while your residential property is being built, after which the loan will switch over to a more traditional home loan with both principal and interest payments due each month.
Federal and state grants – While not loans per se, it’s worth checking to see if you qualify for any federal or state grants for your land purchase. There are lots to go around, covering things like land conservation, improvements, and agriculture, and you may be able to find grants through private organizations as well.
Home equity loan – If you have equity through an existing conventional mortgage then you may be able to get favorable rates on a home equity line of credit—also known as a HELOC. From there, you can use the credit as you see fit, including for the purchase of land.
Seller financing – There’s a chance that your seller is open to working with you directly on financing by extending credit for your purchase. Keep in mind that this route usually demands the seller own the property outright, and you’ll definitely want a lawyer to look over the contract before you sign to ensure it’s air-tight.
What About Bank Loans?
Bank loans for land might not be as favorable as they are for traditional housing, but they are available. Types include:
• Raw land loans for completely undeveloped properties.
• Unimproved land loans for mostly undeveloped properties—i.e. those that are primarily raw but may have some utilities ready to go.
• Improved land loans for land that is good to go with utilities and access points.
In general, the more unimproved the land you want to buy, the riskier the loan and the higher the interest rates are going to be. Make sure to shop around, and extend your search to small banks, which may be more open to financing your land investment.
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by Laura Mueller
It can be tough out there for a land buyer, especially when inventory is low.
The real estate industry has been stuck in a stark seller’s market for months on end, and that applies to land as well. This past year saw many people ditching big cities and investing in rural land, a trend that was further intensified by the growing popularity of remote work. And with inventory down but plenty of buyers looking to make a purchase, that can mean a lot more competition than normal for buyers—plus a lot more urgency when you do find something that you like.
If you’re looking to buy and you’re feeling discouraged by the lack of properties for sale, you’re not alone, nor are you totally out of luck. Here are some quick tips for buying land in a seller’s market, with key takeaways that can help you manage the market without losing your mind.
1. Hire a great agent
To really compete in a low-inventory market, you need the right agent. This includes making sure that you’re not only working with an agent who has their fingers on the pulse of your local market and the ability to act fast on your behalf, but who you also communicate well with and can trust to be constantly on the lookout for properties that meet your needs.
If you’ve been on the hunt for a while, it could mean that it’s time for a change. Check in with your agent and ask them how it’s going from their perspective. You may want to consider switching to someone else if it means having an agent by your side who can really go to bat for you.
2. Get in on the search
Having the right agent is essential, but as the buyer you still have an important role to play too. Because inventory is so scarce, you want to have feelers out in as many direction as possible, which includes not just the traditional search channels that your agent is using but also within your own network. Do plenty of your own searching in addition to relying on your agent, and get involved in local social media groups so you can be the first to know when new properties become available.
3. Work out your financing in advance
With fierce competition comes the need to move as quickly as possible when you do find a property that you like. That leaves less time for working out the kinks in your financing. Ensure that you know exactly what you have to spend—including how much cash you have on hand and how you intend to finance the remainder—so that you have all of the information you need to put forward attractive and sound offers.
4. Make it personal
In real estate, buyers and sellers often get reduced to their on-paper presence, which takes the emotion out of the deal. Sometimes a personal connection can work in your favor though, especially when you’re trying to stand out from the pack. Consider writing a note along with your offer that speaks to what drew you to the property and why you love it so much. If it’s a private seller, that may be enough to sway them to your side.
All hope isn’t lost. Your perfect piece of land is out there, so get to work and make sure you snag it.
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