If you’re looking for a place to build your dream home, consider acquiring real estate in Texas.
It’s an ideal state for those who seek the vast outdoors and room to roam. Not only does this beautiful state boast more than 268,000 square miles of land – that’s three times the size of the UK! – but it also offers affordable property prices and is plenty of land available.
There’s a lot of space in Texas for you to stake your claim, but where should you start looking? This step-by-step guide will explain to you how to buy land in Texas.
First and foremost, knowing your budget is critical!
You might think you have a good idea how much you want to spend on a tract of land, but if you haven’t talked to a lender and don’t have the cash in the bank, then you don’t know for sure.
Getting a pre-qualification is the first step to buying land for your homestead.
This is a simple step that is often overlooked and results in a disappointed buyer finding the land they want but can’t get the loan.
Save the sorrow and get the pre-qualification upfront. It takes 5 minutes (with a suitable, local lender), and you’ll be on your way to finding your dream acreage.
Find the perfect acreage for your homestead.
When you start the hunt for the land, you have to have a general idea of what you want to do with it. Is the property for building your forever home? Perhaps it’s just for hunting. Maybe you don’t know what to do with it, but you want it later in life.
You have three types of land to look for when you’re trying to find the perfect tract. These include raw, unimproved, and improved land.
- Raw land. Exactly as it sounds, there is nothing on the land. No water, power, or any other utility. This land is without any improvement. However, it’s cheaper but harder to get financed.
- Unimproved land. This land is just a step up from raw land. You may have a water main running through the land or even a power line, but you still have to have the meters installed.
- Improved land. This land is ready to build. There is water on-site, power, and even road access. It’s typically more expensive than raw or unimproved land (you’re paying for the improvements), but financing is a bit easier.
Now that you have an idea of the options let’s discuss what you need to do to own your slice of Texas.
Get a real estate agent that knows how to find the tract for you.
Having a Realtor on your side throughout the land buying process will help you find the perfect lot and get the best deal possible. The agent works on your behalf, so they’re going to help you in any way possible.
Many people browse Zillow or Trulia for acreage, but there isn’t much of a selection. A real estate agent has access to the MLS and can find properties you might not be able to find elsewhere.
This agent is on your team; they’re going to hunt for properties that match your criteria and take you out to walk the land so you can decide whether or not you want to put in an offer.
Once you’re under contract, they’ll even work on your behalf to get you through to closing.
Keep looking because land comes and goes quickly.
If you come across a piece of land that looks like a great deal and it’s everything you’ve been looking for, someone else feels the same way.
When you find that gem, you have to strike. Call your real estate agent and schedule a time to walk the land, and be prepared to put in an offer that day.
If it’s a good deal, then someone else is probably getting ready to put an offer on it, so don’t hesitate. Like I say about houses, you can sleep on it or sleep in it, but you can’t do both. This is true about land as well. I’ve seen so many properties go under contract because buyers want to sleep on it.
Buyer beware: do your research!
All too often, I’ve seen buyers get their pre-qualification and find the perfect plot of land in the area they’ve been looking at – then they find out there are deed restrictions or other major headaches that impede their dreams.
Be sure to do thorough research on the land you want to put an offer on before pulling the trigger.
- What are the taxes on the land? Is it ag-exempt? Taxes vary from county to county, so be sure to check with the local CAD. Check to see if there are any exemptions in place or if you qualify for special exemptions such as 100% disabled veteran status.
- Are there any deed restrictions or covenants? Most rules I’ve encountered are minor, but they might be a deal-breaker for you. Usually, they consist of no swine, no trailer homes, maximum livestock, etc.
- Where’s the water? Is there well water or city water on the land? Having city water is not always a necessity, but this can be a costly endeavor to drop a well in, depending on where you’re at.
- Is there nearby power that can connect to the land? Sure, there are solar and wind options, but most people want reliable power. If the power company has to throw up power lines to get power to your property, they’re going to charge you for it – and that gets expensive.
- Are there any flood zones on the property? This goes with any property; however, if there is no house on the property, the seller might not know as they never needed it. Be sure to check FEMA’s website to see if it’s on a flood plain.
- Depending on your plans for the property, hows is the soil? A consideration if you plan on planting crops, but even for a home build, you’re going to want to know how stable the earth is and if you’re going to have to cut through rock for a foundation.
These are just a few starter questions to get you to think about before you make the leap and drop an offer on a property. There are many more, and this list is not exhaustive, but they should get you started. Everyone’s situation is different, so some of these may or may not apply.
You don’t want to buy a piece of property with problems you weren’t anticipating. So be sure to do your due diligence before purchasing.
How much does an acre of land cost in Texas?
The average cost of land in Texas is $2,972 per acre. Keep in mind that Texas is a massive state with several regions. The price per acre varies based on the location of the land and the attributes of the land.
Whether the acreage has a water source such as a pond or lake will significantly affect the price. Is the land accessible? Considerations such as these will dramatically affect the cost of the land.
Of course, your real estate agent will be able to give you a better idea of the cost of an acre in your area. They usually know the area better than anyone else and understand what land is going for around them.
Financing options to buy your land in Texas.
Just like any home you purchase, there are multiple options for financing when purchasing land in Texas.
From my experience, most land is bought using what I call the traditional way. Sure, there are other options, but they’re generally hard to get.
The traditional way of buying land.
I call this the traditional way, but it involves getting a specific land loan, then getting the construction loan, then wrapping it all together into a mortgage.
This is probably the easiest way to do it, but it’s costly. You have three closings which all have their closing costs associated with them.
First, find the land you want to buy. You get a smaller mortgage on just the land. Next, you get a mortgage on the construction of the home you want. Last, when the house is complete and ready to move in, you get a single loan that wraps the land loan and construction loan into a single, traditional mortgage.
USDA construction loans are fantastic but hard to find.
The US Department of Agriculture backs these mortgages. You didn’t know the USDA was into the housing market, right?
These USDA loans are outstanding because they’re all-in-one loans. This means the land, construction, and final mortgage can be wrapped into a single loan with a one-time closing. They don’t require a down payment; the rates are usually better than most, and mortgage insurance isn’t that expensive.
The downside to this type of loan is that they’re scarce. It may not be easy to find a lender that provides these. And if you’re able to find a lender, there are many restrictions on the property and location.
Seller financing, if they’re willing to finance you.
I consider seller-financing the last option. If you can’t find a lender to go through with a USDA loan and land loans aren’t an option, then find a seller that’s willing to bet on you.
This is rare as well, but worth a shot.
Typically you’ll find that the interest rates are higher, there’s a larger down payment required, and the loan isn’t as long as a traditional mortgage. This might be a turn-off for some, but for others, it’s the only option.
Enjoy your new land.
Of everything, this is the most essential step in the process.
At this point, you’ve invested in the land. You’ve dropped an offer on it, your real estate agent worked with the seller to get everything together, and you signed the heap of documents at closing.
Maybe you build a dream home; perhaps you don’t. Regardless, take a moment to think about how far you’ve come. The quest to buy your piece of land is over. Sit back, relax, and enjoy the beautiful Texas sunsets from your new chunk of this planet.
Whether you’re looking to buy land to build your dream home or just for hunting wild game, I can walk you through how to buy land in Texas. I’ve got a massive selection of land and can take you out to show you all that Central Texas has to offer.
Additionally, I have personal experience in buying land both for my family and for my buyers.
Give me a call or drop me a note, and I’ll be happy to help you out with all your land needs.