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Shopping for rural land can be tough. You’re dreaming about building your perfect homestead from scratch. You’ve been saving house plans, garden layouts, and homestead info on Pinterest. You have big visions and big dreams for what you want your life to look like.
But as you search and search for your perfect property you keep coming up empty. Or there are too many issues with the parcels you can actually afford.
You’re getting frustrated and discouraged.
I get it. Because that was us too.
It took us months of searching and many more months of negotiations to actually purchase our homesteading land. And even then, it’s not “perfect”.
Here’s what you need to know as you’re shopping.
3 Hard Truths About Finding Your Perfect Homesteading Land
1. There is no such thing as the “perfect” piece of land.
SO MANY PEOPLE over on our Facebook page said this same thing when I asked what their biggest challenge was with finding land. In many places, parcels of land are becoming scarcer and therefore come at a premium. Many larger tracts are often sold off to build subdivisions. And when you do find something in your price range? Often, it’s too far away from where you might work, or it’s all on a steep wooded hillside, or it’s right next to a landfill.
Yeah. We found a lot of those.
So while you probably have a list of things to look for in your perfect parcel (definitely check out our list here) you have to accept that you’re likely not going to get every little thing you want on the property you purchase.
2. Paying for your land can be tricky.
You might have already thought a bit about this, but it’s easy to start browsing your local real estate listings for land without having a real idea of what you can ACTUALLY afford.
If you’re planning to pay for your land with cash, you might be able to make it through the purchase negotiations in better shape than someone who is financing through a lender, but on the flip side, you’ll have to have a HUGE NEST EGG of money saved up.
See, you won’t just be purchasing the land – that’s only the beginning. After you get your land, you’ll set about the hard work of prepping it and then actually building something on it. Perhaps that’s your home, but it could also be a barn, a workshop, studio, sheds, or even a tiny house.
Clearing your land and preparing for building, even if you do the work yourself, will almost certainly cost you money in some form. Make that nest egg at least double what you think it needs to be.
Finding a lender to give you a loan for raw land can be difficult. Many banks or credit unions won’t lend on parcels over 2-5 acres because there is nothing to use as collateral. If you default on your loan, then the bank is left with an empty plot of land.
There are a few solutions at your disposal.
Farm Credit and Rural Lenders
The first and probably least risky is to find rural/farm credit lenders in your area. We used Farm Credit Mid-America since they service our area, and no, we don’t have a farm. You can find Farm Credit lenders for your area here.
Getting a mortgage for your land has its own pitfalls, chiefly that they often require a higher credit score and a much larger downpayment (typically anywhere from 20-50%).
The next option is to pursue a USDA site loan. The income requirements and documentation are stringent. Also, the speed at which you are required to build your house (within 180 days) may be prohibitive for you. BUT if you qualify it might be one of your best options. You can get info here and here.
Land Contracts/Land Leases (Seller Financing)
The last and riskiest option is to pursue a land lease or land contract. These are types of seller financing that are advantageous for people who can’t pursue traditional financing. BUT there are huge risks if these contracts aren’t done carefully. You can read more about these types of seller financing here.
3. It will take a LOT longer than you think.
Say you have your financing all squared away, you find the perfect plot of land, and you’re ready to buy.
The process of actually purchasing the land will take what feels like forever. First, you have to make your offer and the seller has to review it. There may then be some sticking points that have to be handled before you can continue.
For example, we ran into a mineral rights issue from when a previous owner sold the rights away. That issue took weeks to resolve and included back and forth communication between the seller, the lender, our real estate agent, and land rights lawyers. We were able to get it resolved before the contract date expired, but it was hell to get to that point and we almost lost the parcel in the process.
And even once you have any outstanding issues taken care of, you’re moving at the speed of bureaucracy. The time it takes for you to gather up all of your financial documents (and they’ll require quite a bit, from previous tax returns to pay stubs to bank account statements and more), process everything, gather up title documents, property tax documents, complete surveys, soil perc tests, and more, it can be weeks to months between your initial offer and closing.
So how do you navigate a land purchase successfully?
Every buyer is so unique. The kind of land you want, your financial situation, and the buying options available to you makes your path to purchase one of a kind. But, there is some easy advice to get you started:
1. Seek out professional advice.
I know you might be thinking that you don’t need an agent if you’re the buyer, but when it comes to land purchases there are too many potential issues to NOT use a professional’s help. Unless you yourself are well versed in property law and real estate transactions, do yourself a favor and enlist a trustworthy real estate agent to help you make the purchase. Don’t be afraid to consult legal and financial professionals along the way as needed.
2. Know your budget inside and out.
We did a lot of “hypothetical budgets” when we were looking for land. Whenever we found a parcel we liked, we used a mortgage calculator to figure up how much the monthly payment might be. OR if the price was low enough we figured up how many months it might take us to save up the purchase price. We would then plug that number into a hypothetical “future budget” of what our money situation could look like if we bought that particular piece of property.
3. Manage expectations.
Like I said at the beginning, it’s going to be nearly impossible to get every little thing you want in a piece of property. BUT if you look hard and make compromises, you might find that there are ways to get what you want in the future. For example, our property doesn’t have a water source close to the house. Solution: we could possibly dig a pond at some point. Problem: your property might not have an open southern exposure for good solar panel positioning. Solution: perhaps there are some trees you could clear to open it up a bit, or compromise with panels on the east and west sides instead.
There are lots of ways to create the space you’re dreaming of if you can let go of rigid expectations and embrace the possibilities.
Are you interested in making the most of your land purchase?
As of this writing, I am in the process of putting together a book with practical advice and worksheets to help you make the best land purchase for you and your family. After browsing all of the land buying books on Amazon and checking out all the books about it at our local library, I haven’t found anything that even comes close to helping you do this in a real and practical way, so I’m creating a resource to fill that void.
If you would like to get on the waitlist for the book AND get a FREE worksheet from the book enter your name and email in the form below. We’ll put you on the waitlist and send you a free PDF to help you get started!
In the meantime, check out these other posts about buying land:
We bought 16 acres of raw land and built an off-grid cordwood house from scratch! You can learn more about it here.
If you haven’t already, go follow us on Facebook, Instagram, and Pinterest for more inspiration that doesn’t necessarily make it to the blog. Thanks for reading!