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Home Buying

How to Buy Land

Do you dream of owning land? A lot of people have that fantasy. Maybe you want to build your dream home surrounded by natural beauty and away from the hustle and bustle of the city—not to mention those noisy neighbors whose car alarm seems to go off at 2 a.m. every night.

Maybe you’ve always wanted to try farming or ranching, and now is the time to jump right in. Or you could be looking to invest in undeveloped land just outside of a booming area. Heck, maybe you just want to tear around on the four-wheelers once in a while without disturbing the neighbors.

Whatever the reason, a lot of people are interested in land ownership. It’s the American dream. But how do you buy land?

How to Find the Land for Sale

If you’ve bought a home in the past, you’ll pretty much know the process for how to find land for sale. You can look in your local newspaper’s classifieds, search popular land listing sites like or, or use a local real estate agent (which is what we’d do). A solid real estate agent has extensive networks and a pulse on the community. They know which properties are on the market, coming soon, or have recently expired the listing timeframe without selling—not to mention they will help you figure out the legal nitty-gritty of buying land.

Find expert agents to help you buy your home.

Now, when you’re looking at properties, you want to be sure you get your money’s worth. When it comes to real estate, always buy property that will grow in value over time. That can be really tricky. Remember: No matter how good the deal looks, don’t buy a crappy piece of land in a horrible location just to get a bargain. Quality counts.

If you’re buying a pre-made plot in a new construction subdivision, the decisions are relatively simple. But when you buy land outside a subdivision, you have to investigate all the things a developer or builder would normally look at. Do your homework before dropping that dough and look for these seven things:

1. Location

The three most important things in real estate are location, location and location. While you may enjoy living completely off the grid, remember that buying land is still an investment of sorts. If it takes more than an hour to reach the nearest signs of civilization—like grocery stores and gas stations—then future buyers might balk! Figure out which schools you’re zoned for, the property’s proximity to highways and stores, and distance from emergency services.

2. Zoning

Check with your city, county and state zoning ordinances to see if it’s even possible to build a home on the land you’re looking at. Examine any future plans the government may have that could impact the land value like new highways or powerplants. It’s common for problems like this to pop up, so watch for red flags. You might need certain fees or permits that cost money also.

3. Topography

Unless you’re a farmer or geologist, this is an easy feature to overlook. But it’s very important! Consider the type of soil, the number of trees, and the elevation or flatness of the terrain. Those are all things that will affect where you can build a home and how much it’ll cost. For instance: Hard, rocky soil may mean no basement. And if you buy property in the wetlands, you'll have to deal with tough regulations and pay for an expensive septic system.

4. Environmental Concerns

This will pop up when you look at zoning regulations and topography, but it needs its own category. It refers to any environmental dangers that could affect your home’s safety, as well as any endangered plants or animals living on your property. If you buy in a wooded area, check to see how many trees you're allowed to clear.

5. Road Access

When you buy land, you need to be able to get to it easily, right? That means you need to know if the roads leading to your land are someone else's private property. If so, you’ll have to obtain legal permission (the official term is easement) to use them. Baking cookies for your neighbor won’t cut it. Legal permission to get road access may come with a fee and agreement that you’ll share road maintenance costs. Yes, it’s a hassle. But it’s incredibly important to think about before you commit. If you don’t have an easement, then you can’t get to your property. So you may as well not even buy it.

6. Utility Services

The land might not come with access to city water, electricity, cable lines and city sewage systems. Check the city limits to see if you’ll have to invest time and money into building your own septic system, water well or electricity access. In this day and age, you’ll also want to check your cell service when you visit your potential purchase.

7. How Quickly You Can Start Building

Undeveloped land may need a lot of work before you can build anything on it. Will you need to clear trees or fill in ravines? If the land has an existing structure that needs demolition, that’s even more time and money to include in your budget.

How to Buy Land and Build a House

Once you’ve sniffed out the options and found the ground you want to make your own, there are a few things to figure out before signing a sales agreement—especially if you want to buy the land and build a house. The process for buying land is very similar to buying a house, but here are some specifics you’ll want to consider:

  • Check the local zoning laws. Imagine buying land with dreams about the grand estate you’re going to build, only to find out your plot isn’t zoned in a residential area. Save yourself the heartbreak and check the zoning laws first.
  • Investigate the CCRs. CCRs stands for covenants, conditions and restrictions. These are rules imposed by an HOA or local government that could affect what you want to do with your property. The land may be perfect for your flamingo farm, but if the CCRs restrict the breeding of pink birds for some reason, you’ll need to look elsewhere.  
  • Wrangle together a team. By the time you’re ready to think about building a house, you’ll ideally already have an amazing real estate agent who’s guided you up until that point. In addition, hire an architect, a contractor or project manager, and a builder for the next phase of the project. You’ll need permits on pretty much everything to start building, so have your team get the ball rolling on acquiring those.
  • Secure your financing. We’re always advocates of paying in cash, and it’s definitely a good idea when it comes to buying land. Land loans typically have higher interest rates, shorter loan terms and higher down payment requirements because the lender considers them riskier. So the bank will be strict with your land loan, but they’ll offer you all kinds of dumb mortgage options for your house. Just say no and stick with a 15-year fixed-rate mortgage where you put at least 10–20% down. And if you have to finance your land and home, make sure your monthly payment is no more than 25% of your take-home pay.

Make Sure You Have the Money

Speaking of financing, there are some things you need to get out of the way before buying land is a wise move for you. Make sure:

  • You’re debt-free. You’ve paid off all your debt including credit cards, car notes and student loans.
  • You have a fully funded emergency fund that will cover at least 3–6 months of expenses.
  • You have a down payment for a home of at least 10–20% on a 15-year fixed-rate mortgage.
  • Your payments will be no more than 25% of your take-home income.

Again, the smartest way to purchase land is with cash. But if you’re also going to build a house and plan to finance both the land purchase and the construction, there may be some complications. Talk to our friends at Churchill Mortgage about getting the best mortgage for your situation.

Get Help From a Real Estate Expert

Buying land is complicated, so get someone who can help you do it properly! Our Ramsey-trusted Endorsed Local Providers (ELPs) real estate agents are there to help you through your search. They provide rock-star customer service, and they’re experts in their local communities. They have the heart of a teacher, which means they’ll take you through all of the ins and outs of how to buy land with patience and grace.

Find a trusted ELP today!

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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