What You Need to Know when Buying Land to Build a House
What do you look for when you want to build a house on land in an unincorporated area?
You’ve found a really pretty track of land and you would like to build a house. Today we are doing a brief overview of what to look for and study when you want to buy land to build a house in a more rural area that is outside of the city limits and not in an HOA. Hopefully, you will already have a builder in mind because once you find something you will need a builder’s help to navigate the process. I am a builder so I am speaking of my experience as a builder/owner of this house in Dripping Springs near Austin Texas.
What information do you need when you’re interested in a piece of property?
First and foremost, get a copy of the restrictions so you know what the regulations are. I know in looking for land, we were so surprised at the number of strict regulations that had been put on the land. A lot of the land we were looking at had been subdivided by owners that still neighbored and lived there and they had rules, just as an example, what kind of animals and how many you could have. What fencing you would be allowed to do etc. In my mind, in buying land, we wanted privacy and we wanted to be able to do whatever we wanted to do. Of course, within reason. I was looking for land that was the least restricted. The one thing that we came across in looking for land that was the hardest was that you would have to drive by some pretty bad shacks and trash to get there. We wanted a pretty drive to a minimally restricted plot of land. That can be hard to find but we finally found it! Once you find that property, get all the information from the listing agent. For example, any existing surveys, disclosures, and floodplain information.
What are the first things you need to do when you find the land you want to buy?
First off, work on getting it under contract. Once we made the offer, we put in a long option period of at least 2-3 weeks so we could learn as much as possible about the land. We ordered the survey right away. At about that same time, we ordered the title policy. Besides the restrictions, the survey is the most important part. The owner had an existing survey but it was not comprehensive on our lot. There was a pretty clear place of the best build site on the lot so that made it pretty easy. We ordered a topographic survey and a tree survey in the area we knew we wanted to build on. It is also important to look at the flood map and be sure that you are not building in or near a floodplain.
What sort of financing do you get when you build?
If you need a loan then you will need to get a construction loan in place. There is a straight construction loan or there is a construction to permanent loan. If you are just getting a construction loan, you will get that loan and then you need to refinance when the house is done. If you know you are going to live in the property, you might want to find a construction to perm loan so that you don’t have to refinance. In order to get the loan you will most likely need house plans. In our case, we really had to rush with the architect to get the floor plan and the elevation down so we could turn it into the lender. Ideally, if you can buy the land with cash and get the loan on the build, you will have more time to work on plans for the construction loan.
What do you look for when you get the survey back?
Make sure the square footage of the land matches what it is being marketed for. See where the utility easements and the drainage easements are and be sure you can still do what you want to do. Look for any encroachments. All was good on our survey, so we moved forward.
What do you do about utilities and how do you get them?
On the land we bought, there was no water or sewer but there was a power pole. I called a well company and they said they did the water on neighboring land and that there was plenty of water. We could have done a test and dug down. We felt confident since all the neighboring properties had well water but it is probably best practice to go ahead and do that test if you are unsure about water.
Next, we called PEC (Pedernales Electric) to see what it would take to get power to the house. Luckily the power pole was pretty close to the house. The electric company needed details about the house so they would know information about what size transformer to put on the pole.
Once we had the house plans we were able to send them to the septic designer to know where to put the tank, how big it needed to be, and design the drain fields.
Tell us more about your agricultural exemption…
We also found out there had been an Agricultural exemption on the land. We started working with a land management company so we could keep that in the purchase. The land had bees at the time but we switched to a Wildlife exemption. That is another podcast/video in itself.
What do you do right after closing?
We closed within 40 days. We worked on permitting and at the same time did a soil test. Once we got both of those back, we started building the house! We are so happy with the house and are glad we made it happen.