Thinking of Buying Undeveloped Land?
Sunday Feb 05th, 2023
What Is Undeveloped Land? Undeveloped land, often called raw land, is a vacant area without any public utilities, buildings or even driveways. Often, undeveloped land is in rural areas found off county roads and could be the place to build your forever home.
Thinking of buying undeveloped land? Take these precautions first:
1. Talk to your local government about your plans - Before you think about financing contractors or countertops it is imperative to make contact with your local government to better understand what you can and cannot do with the land your are thinking to purchase. Some of the vital information they will provide is how much of your land you are actually allowed to build on and limitations to what your structure can look like.
2. Budget for a healthy overrun in costs and time - Tim Syrianos, owner of REMAX Ultimate Realty in Toronto, says you should at least 15 per cent to 20 per cent to your budget to account fo the cost overruns in the process of building a home. Typically, there will also be a 15 to 20 per cent overrun in the amount of time it takes to build a home. Building a home is a complicated process with lots of moving parts. Any unforeseen challenges such as delays in lining up contractors, rising costs of materials and issues with the land itself can quickly add up.
3. Prepare for a lengthy mortgage process - The financing process for a home building project can make a basic home purchase seem like child's play. Mr. Syrianos says the first hurdle is that appraisers are usually much more conservative when evaluating land compared with a home. That means you will likely be required to have more cash to put toward the property to make up for any discrepancy.
4. Expect costs related to land engineering, permitting, setting up hydro - It is likely you will be buying land that does not already have services connected, especially in more rural areas. The cost of servicing your home should not be over looked, and could be much more expensive in remote locations.
5. Be aware of the logistical challenges - In the Toronto area, Mr. Syrianos says the average person building their home is definitely not a first time home buyer. They are generally in the 40s or 50s, and have stable finances that allow them to deal with the uncertainty that comes with such an involved project.
Building a dream home is not for the faint of heart, especially in today's market where the supply chain has made materials difficult to access and the flow of people into more rural areas has created a shortage of contractors.
Be sure to always consult with a real estate professional, lawyer and a reputable builder prior to taking the first steps into purchasing land. We are very happy to offer these services. We have associates and necessary relationships to help you create success.
Source: This posts content was sourced from the Globe and Mail. Original article written by Salmaan Farooqui.