There are many reasons that people buy land. Perhaps they’re looking to add additional fields to their farming operation, or maybe they want a dedicated hunting ground to escape to when deer season starts up. Of all the reasons that someone could purchase a property, buying land to build a home is certainly one of the most exciting and can also be challenging without knowledge and a good plan.

Designing and constructing a dream home and establishing a legacy for generations to come is often one of the largest projects a person will undertake in their lifetime, and it comes with its own kinds of challenges such as choosing the right location, planning out access to utilities, and more! 

On a recent episode of the National Land Podcast, Mathew Sterchi from Stonemill Log & Timber Homes spoke on the process of building a home and the things buyers should be taking into consideration before they buy land to build a home. Here are four important factors to think about when buying land to build a home.

Location

As with any real estate purchase, location is a very important factor in deciding if a piece of land is right to build a home on. While a tract could check all of the other boxes, it may not be worth it if it’s hours away from necessary amenities or friends and family. Here’s what Mathew had to say about choosing the right location when buying land to build a home.

“So there are several things that have to be taken into consideration, and some of these follow in line with a real estate contract, but not everything is unfortunately kept encapsulated in that. For an agent who is selling a vacant piece of land, they have to have experience and know what to tell a prospective buyer to look out for and some of the things that they need to take into consideration before actually going through that due diligence process and closing on that property. As a builder of log and timber frame homes exclusively, we try to help clients with the things that they need to take into consideration in that due diligence period.”

“Starting with your location and zoning, it’s important to consider location if you’re a client who might need certain services, but you’re 45 minutes to an hour from the nearest hospital or the nearest place for amenities or services. That’s something that we always talk to clients about, ‘How close do you want to be to the nearest hospital or to the nearest grocery store?’ In some of these rural areas that we work in, you might be 15 or 20 miles away, but it might take 30 to 45 minutes to drive anywhere with the topography, roads, and infrastructure. So you’ll want to take location into consideration.”

Zoning

Zoning is another important factor to think about before buying land to build a home. While zoning can be changed in some cases, doing so can be costly and significantly delay construction. Understanding how zoning works and the zoning requirements to complete construction is essential knowledge for anyone looking to buy land to build a home, as Mathew explains below.

“So specifically for our rental or our investment clients who are looking to buy rental properties, you want to make sure that your zoning is correct or set up to accommodate a rental. This is because if you’re in an area like East Tennessee where you’ve got a really high traffic VRBO area, and you go in and buy a piece of property in an area that is zoned R1 with no allowance for rentals or into a development that doesn’t allow for rentals, it’s important that you know that going in, because that may sway you on whether you close on that property.”

“Vice versa, if you’re a retiree and you want to get away from renters and you don’t want to deal with people, you might not want to be in an area that is zoned that allows for rentals. You may want to be in an area that does not allow for rentals. So zoning is important. Looking at covenants and restrictions, if you’re going into a development or if there are any restrictions on the property, it’s important to make sure you know what those are as far as square footage or what you are able to and not able to build. If you’re going into an area that’s got an Architectural Review Committee or a set of covenants and restrictions, you want to be privy to those to make sure that all of those covenants and restrictions allow for what you’re wanting to do. So that’s kind of the first really important thing to consider is the location and the zoning, then you start getting into some of your infrastructure and your utilities, which is what you were talking about earlier.”

(Mac Christian) I have seen situations where somebody wants to build something and they meet with an architect, they get the land, and it turns out there’s a restriction on the size of the house they can build. Now they have to go back and redo the whole process again. Or even somebody who wants to build out in the middle of nowhere because it’s lovely, and they don’t realize there’s a commercial zoning next door where somebody has a very, very loud enterprise next to their land, and it’s perfectly valid because it’s zoned for that. You need to do your homework before you pick up the land and make sure that it’s right for what your goals are.

Mathew also explains that insurability issues are often tied to problems with zoning. Be sure to check with insurance providers while planning to build a home, as properties not zoned for residence may be ill-equipped from an insurance perspective. For example, an insurance provider may take issue with a rural property being too far from a fire department or not having easy access to water or a fire hydrant in the event of a fire. Factors such as this could result in higher insurance costs, so it’s important to be aware of these potential issues before construction begins.

Infrastructure & Utilities

Thinking about access, both to the property itself as well as to surrounding utilities, is important when dealing with any kind of property, but especially so when buying land to build a home. It’s important to consider since utility access is typically not as readily available compared to more urban spaces and can be expensive to establish. Before signing any documents, here are a few things to consider regarding infrastructure and utilities.

“When you put an offer on a piece of property and the agent sets the due diligence period, you have a certain amount of days before you move out of that and into a kind of a closing phase, so you want to make sure you get kind of a general idea of how to access the property and where your utilities are coming from.”

“I’ve got a client out in California right now and they’re looking at a seven-acre tract in East Tennessee, not far from us but it is in a pretty rural community. There’s a shared easement to get into the property, and it’s a little farther away from where the utilities are located on the main road. So the questions that we’re going to try to answer next week are, “How far do we have to bring the driveway to the building site?” How far do we have to bring our water, if water is on the road? If water is not on the road, then where are we going to put a well? Is there a sewer? A lot of times in our area and most of the areas we go into, there isn’t a city sewer and it’s all septic. And then you get into the whole percolation issue, and does the property perc for the number of bedrooms that you want to build? So you’ll want to make sure a perc test has been done.”

“And then you want to look at that infrastructure and say, Okay, how far do we have to bring power? Water? How far do we have to bring the sewer? How far does the road have to come in? What does that cost structure look like? Because when you’re looking at a budget goal for a building project, you’re really looking at it in three parts: the land, improvements to the land, and the cost of building the home. So that infrastructure cost has to be somewhat defined, I mean, I’m not talking about getting down to the penny, but it has to be somewhat defined.”

“It’s important to make sure we can identify which utilities are going to be available, how far we have to bring them, and what that cost impact is going to be. When you talk about infrastructure and utilities, the four big ones are your road infrastructure, power, well or water, and then your sewer or septic system.”

And each one of those has its own complications too, right? Like roads, you might just think you have to knock trees down, but let’s say you have topsoil with water under that so you’ve got to build the land up. That can bring a drastic cost. It’s the same with running power out there. And then another one that I thought of was, is that land at risk of annexation? Is there a possibility you might have to annex that property into city limits within a certain amount of time? Because that’s $10,000 to $20,000 to hook things up, right? 

Another one is the wells. I don’t think y’all see that as much out East because you have more water than you know what to deal with, but out West, the big thing here is you can get land but then people will drill 1000 feet and still not have water.

“That’s a real issue here, too.”

That’s an expensive undertaking, especially if you start really going down there which can really cause the price to rise. And then the sewer and septic, you might think it’s fine. And like you were saying, if it’s set up for a three-bedroom house, and that’s all they’re going to approve, then you might be out of luck. Similarly, if you have a water source nearby and you have this septic there, that can cause real problems.

“Yeah, and the good thing is that there are options. If you’re buying a 100, 200, or 300-acre tract of land and you want to put the house in the middle of the property, and you’ve got utilities at the road, you don’t necessarily have to bring the water from the road and the sewer from the road. You could very easily decide to do a well and or septic system, making sure that you’ve got a perc test on to accommodate the number of bedrooms that you want to put in. So you do have options.”

If you’re curious about what else to look out for when buying land to build a home, then contact Stonemill Log & Timber Homes! And if you’re ready to start seeing some properties, give your local National Land Realty Land Professional a call and schedule a tour today!