Should I purchase land right now?
To give a little background. I'm 25, a college graduate, I have a full time and a part time job, and I live rent free in a basement apartment. I have zero debt to my name, but I have never really owned anything. Some people would call it spoiled. I know that I'm blessed. I work hard and I have saved $5000 this year. I recently ran across some property on a rural dirt road. I have always wanted to build my own house and have some wooded land. I called about the land and the lady wants $9000 an acre and she has 28 acres up for sale. I was considering putting down an offer for 10 acres of land. I was wanting to know if this would be a good purchase for me and, for those of you that have experience, what kind of loan would I be looking at with a bank? Will I have to have a cosigner since I have never owned anything. I got a credit card with a $500 limit six months ago to establish credit and I have been paying it off at the first of every month. Also what questions should I ask about the property before I purchase it??
To clarify the plan I would have with this would be to put the money down, continue to live in my rent free basement and make $800 per month payments toward this land. In the future I would build on it. Maybe in the next 7 years or so. I love the area and I love the place where this is located.
- linkus86Lv 79 years ago
Your first stop should be with your lender to determine your borrowing power and whether or not you will need a co-signor, the lender is the best source for this information. This will also give you the opportunity to discuss getting a construction loan to build the house and how to best build your credit to qualify on your own. Your second stop should be with a Realtor who knows the area you are planning to buy within. The owner may want $9,000 an acre but the land may only be worth $5,000 per acre and the last thing you want to do is overpay. Also the Realtor can help you with the proper questions to ask the seller (like what the zoning is, road frontage vs recorded easements, etc)
All this aside I don't recommend you go forward with the purchase unless you are 100% positive you will build the house and live in it for at least 10 years after it is completed. Younger people tend to live lifestyles that allow them to move easily more often, but building a house is a commitment to put down some serious roots, especially if it is in a rural area. Rural homes are often harder to sell, so if you may have an idea to move elsewhere for a better job in a few years, or there is potential your present employer is going to transfer you, you might want to hold off on this idea for 10 years.
- BillLv 79 years ago
It is very difficult to finance raw land. Most people pay cash for the property or the owner carries the financing on it. Also the woman with the 28 acres may not be able to sell you just 10 unless she has already had the parcel subdivided. If it looks like it can be purchased you need to find out from the city or county how it is zoned and if there are utilities at or near the property and confirm that it is buildable land. You have to take into consideration what it will cost to bring electricity,water,gas and sewer to the proposed building site. If it is not near a sewer you need to have a perk test done to see if a septic tank will be approved etc. You should talk with a local builder in the area and he can give you more things you need to look into before buying the land Good Luck
- glennLv 79 years ago
I vote no.
Land does not produce income- it costs money in property taxes and liability and some care. It is also possible you are buying something with little or no value- this would certainly not be what I would suggest as someones very first real estate purchase.
Much better to buy some rental property or a place to live in- since you seem happy in the rent free basement- I would suggest rental property. It would produce an income that would make enough money to at least make the mortgage payments and insurance and taxes and repairs.