The Ultimate Guide to Buying Your Dream Land: A 10-Step Process
This post aims to take my experience with buying land and convey it to you, hoping you avoid some of the indecision I faced due to surplus options.
Background
For years I've dreamt of buying land in the mountains. A place where I could be immersed in nature and free to raise animals, shoot guns, build with natural materials, and walk in the woods, all in my backyard. Along the way, I spoke of my plans with my friends and family, and many shared the same dream. We would be the New Pioneers, a group who realized there was a better way to live, and that freedom was more important than convenience and safety. The rules and regulations of cities and suburbia were suffocating, and we wanted out.
As I traveled the country over the years and visited wild places, I would picture what life would be like living there. With so many beautiful spaces in America, deciding on one would be tough. Over the years, I looked at land for sale, and the listings came and went. Even when I came across exceptional properties, the overwhelming number of choices left me unable to commit.
It wasn't until I narrowed my choices down to 2-3 areas in one state, that I finally committed and bought my dream property. Here's how I did it.
Pick A State
The first step in buying your property is figuring out what state you want to live in. What's important to you? Is being close to family a priority? What about geography and landscape, or the laws and taxes of the state? For most people, it will be a combination of all three, and you will have to weigh the pros and cons of each.
While I dreamed of living in the northern woods of Maine or New Hampshire, I couldn't get my wife on board with the cold winters and being 12 hours from family. Wanting to be close to family in Maryland also ruled out the big mountains in the West. These family considerations narrowed my choices to a few states containing the southern and middle Appalachian Mountains.
Once I solved for family and geography (the state had to have mountains), I could move on to taxes and laws. For a while, I went back and forth between VA, TN, and WV. I was looking at properties in all three states and not getting anywhere because I hadn't yet committed to one.
In evaluating which state would offer me the most freedom, I came across https://www.freedominthe50states.org/, a comprehensive guide that assigned each state an overall freedom ranking. The ranking is posted by how well a state's policies promote fiscal, regulatory, and personal freedom. WV was ranked #35, VA #13, and TN was in the top five at #4; we had a winner!
Narrow Down Location
Once you've settled on your state, you can narrow down specific locations. Break the state into thirds and decide if you want to live in the Western, Central, or Eastern portion of the state. When I looked at TN, I could immediately rule out the Western and Central parts of the state because I wanted to be near the Smokies and the National Forests.
How you might break up your state into thirds.
I separated the state's Eastern portion into thirds from North to South, isolating the areas around Chattanooga, Knoxville, and Johnson City. While I wasn't looking to live in these cities, they were good reference points. If you haven’t been to a particular area but are considering living there, you should plan a trip to explore in person.
Now, one of many people's most significant sticking points is wondering where they will work. I asked the same thing and realized there were only two options; I could find a job and then look for property or I could find a property and then look for a job. Your unique situation and risk tolerance will determine which one you choose. While I still have a career elsewhere, I was comfortable picking the property first and worrying about where I would work when I moved to the property full-time. You may want to do the opposite and make sure your industry is available in the area you purchase your property.
Example of my final search area.
With all previous considerations, you should be down to 1-3 areas in your desired state. These areas should be within 1-3 hours of each other and not across the entire state. Don't move on until you've accomplished this.
How Will You Pay
Now that you’re looking for your land, in a specific area, how will you pay for it? If you're paying cash - you’re further along than most. But, if you need to finance the land and there’s no home, you'll have to look at places other than your traditional bank. Most large banks and credit unions dealing mainly with home mortgages aren’t familiar with land loans and will try to charge you ridiculous interest rates for terms under ten years. When I learned this firsthand, I was almost discouraged from making the purchase I actually wanted, and began considering a much smaller property I could pay for in cash. Luckily, I found Rural1st.com, and was able to press forward.
Rural 1st specializes in loans on undeveloped land, offering fixed-rate mortgages at affordable interest rates and terms. They offer terms of 15, 20, and 25 years, requiring an equivalent down payment on each; 15% down on the 15-year loan, 20% on the 20, and 25% on the 25.
Rural 1st is a Co-op that requires you to buy in for $1,000, giving you one significant advantage. As a member of the Co-op, you can receive a new interest rate every 12 months if they move in your favor. If interest rates go up, nothing changes on your fixed loan. If interest rates drop, you can pay $500 and receive the new interest rate without refinancing or restarting the loan.
Generally, you can expect to pay a point more in interest above the going mortgage rate on a strictly land loan. If the current home mortgage rate is 6% for a 30-year fixed loan, expect your land loan to be at least 7%.
Find A Realtor
Finding a realtor isn’t necessary, but it carries plenty of advantages, especially if you’re buying from out of town. A realtor familiar with the area you’re looking at can answer questions regarding local restrictions and variances. For example, they may be able to tell you if a specific municipality has unique ordnances about how much road frontage is required per home you decide to build. Realtors can also react quickly to new listings and help you submit offers in a timely matter.
If you are buying from out of state or cannot look in person, your realtor can view properties for you and hop on a video call while they tour the property. Visit the area on your own, while you’re on the ground, ask around in the area at local businesses for realtor recommendations, or find a realtor online and carefully read their reviews.
Get Serious About Finding Your Land
Now that you have your area picked out, your pre-approval letter from the bank, and a realtor, it’s time to start looking for your property. I do not doubt that you looked at land online during this entire process, but now is when your search and ability to commit gets serious.
The sites I used the most to look for my land were landwatch.com and Zillow.com. These sites don’t immediately update, so when you find a property you’re interested in, have your realtor confirm it’s still available before you get your hopes up.
If you can plan a trip to look at the property in person, great, but properties are being bought and sold daily, and it’s not always feasible to make a trip to look at a property in time before it’s gone. This is where a good realtor who can view properties on your behalf is essential.
Considerations
How will you know when it’s time to put an offer in on a property? When looking at properties, make sure they’re suited for how you plan to use them. Some criteria I looked for in my property were a mixture of fields and woodland, a water source, and backed up to a national or state park or forest. My main concern was having access to wild places without the fear a subdivision would pop up in my backyard.
As with most things in life, you must be willing to compromise. While I was hoping for a stream on my property, I settled for a wet spring and a pond. However, I wouldn’t call it settling because I love all the property's other benefits.
Along with the property's physical features, ensure you can use the property as you plan. If you plan on raising farm animals, ensure the county your property is in allows that. If you want to build a house, make sure there aren’t any restrictions on building. You don’t need to have all the answers before you put an offer in, but you should have a good idea. When you submit your offer, there should be a contingency for you to walk away if you find out the property isn’t going to allow you to accomplish your goals. Other issues would be discovering whether someone has timber or mineral rights to the property. Those issues should be found by the lawyers handling the title search.
How Much Should You Pay
When you start looking at properties, you’ll notice that the prices are all over the place, and they don’t trend the same way home prices do. This is because while you can quantify a home's granite countertops and gold faucets, how do you assign a monetary value to a great view?
You may come across 200 acres for $400k, and then see another property that’s 20 acres for $400k. Upon further examination, you may notice that the 200-acre property is mostly a rocky mountainside while the 20-acre is mostly pastures suitable for farming. The ways in which people and banks assess the value of a particular property sometimes abide by a “standard,” but there are almost always a lot of variables. At the end of the day, the property is worth what someone is willing to pay for it.
Summary
1. Choose one state. Consider Family, Geography, Laws & Taxes.
2. Divide the state into Western, Central, and Eastern portions. Pick one.
3. Further divide that region into Northern, Central, and Southern portions. Pick one.
4. Can you find work in your industry there?
5. Choose 1-3 areas within 1-3 hours of each other within the regions you laid out.
6. Secure cash or financing for your purchase.
7. Connect with a realtor.
8. Search for a property on landwatch.com and Zillow.com
9. Consider property features and if they meet the requirements needed for your goals.
10. Evaluate the price and make an offer.
11. Walk around the property naked, shoot guns, buy alpacas, collect eggs, and live happily ever after.
Conclusion
Buying land can seem overwhelming when you consider all the different options and variables. Many people will watch properties come and go without taking action because they don’t know where to start. Time is against you in this kind of endeavor; the longer the wait, the less runway you have to comfortably afford what you want and make it your own. I hope you found this post and these steps helpful in laying out a process for making the purchase of your dream property a reality.
