How to Buy Land in Florida

Investing in land and buying land is not a well-understood concept. Most people don’t know for sure how land buying works. One day, you’ll be reading about a college graduate who’s just bought an acre of land for $200,000 and the next day you’ll read how someone else has bought property for a song.

Buying Land Process Overview

1. Do your research (size of property, zoning, property access, etc.)
2. Plan your financing (pay cash or secure a loan pre-approval or use seller financing)
3. Find the land parcel using “for sale by owner” sites or contact an agent to help you
4. Make an offer
5. Do your due diligence on the property (eg survey, title search)
6. Close on the property using a title company or real estate closing attorney

What Questions to Ask When Buying Land in Florida

What is the cost of rural land in Florida?

Prices vary widely in different parts of the state. For example, land in the low-cost southwest Florida area is about $25,000 per acre. It is usually cheaper closer to big cities or along river systems. Rural land in high-cost locations such as West Palm Beach, Sarasota or Naples will cost upwards of $300,000.

How long does the process take to purchase land in Florida?

This varies based on what kind of property you purchase and from whom. Usually, there are no title issues with the seller. You decide how you are going to finance the property and determine your closing date. For convenience sake, it is best to use a FSBO (for sale by owner) or an FSBO attorney as opposed to a real estate agent, as this saves a lot of time and money. A real estate agent is not required in all cases.

What is the process to get utilities and properties to my rural parcel?

You usually have to get water from a well. This is easy to do, but it does require some knowledge and permits. Utilities are complicated and expensive to install, but if you can connect them, it is very nice. Again, knowledge and permits are required for this kind of project. If you don’t know how to do this, there are people who can help you with this kind of thing.

We will begin with electricity.

The first step is to locate out who the energy company is in your area. To find the name of the electrical company, you can ask your agent, the seller or look for it on a nearby pole.

Once you know which company to apply to, contact them for a quote.
The company will charge you for every foot of power they need to run it to your home. This may affect where you decide to build your house.

If your home is in a rural area, you may need to buy easements from neighbors for access to their electrical poles.

How do I set up and access drinking water?

The simplest way to get drinking water on your property is a dug well. Many people don’t like this idea, for reasons such as the cost and the need to get a permit.

There are two other ways to get drinking water. The first is if you are lucky enough to be located beside a river or a canal where there is fresh water. These supplies will never run out—as they are fed by rainwater as opposed to well-water. Different counties will charge different rates to dig a well. It’s not as expensive in Florida because they don’t have to dig as deep.

The second way is to get water from the city. You have to have a line run to your property, which can be expensive. It will cost thousands of dollars for them to bring it out there. If you decide to use a well for your drinking water, you will need a filtration and purification system for your water as well. You should also get the water tested as recommended by the Center for Disease Control.

Ways to Finance the purchase of the land in Florida

Land can be financed in different ways depending on the buyer’s circumstances.

Leverage, cash and lease-to-own

First of all, there is cash-out refinancing your current mortgage. This is a profitable use of equity generated by your property’s appreciation. It allows you to borrow money against the value of your property in exchange for additional interest. There are a number of limitations and caveats to this approach, so consult a professional first.

Line of credit or equity loan

Some banks offer a line of credit or equity loan where you can draw on any amount, up to your total equity. This is an easy way to do it, and the interest rate is usually low. Drawbacks to this approach are that when you go in for a line of credit, the bank checks the value of your property and this may affect your ability to borrow money from them in the future.

Lease-to-own

Here, you lease the land from the seller. This is a good alternative for people who do not want to burden themselves with debt or who are unable to afford a purchase outright.

The buyer and seller agree on a fixed monthly payment that covers all property expenses including realtor fees, property taxes and insurance. The buyer can begin making payments without spending any money up front. The seller draws up a lease document with an agreed purchase price and set ending date to close the deal. When the buyer decides to buy, they can apply their lease payments towards the purchase and take ownership with no out-of-pocket expenses. During this time, the seller also takes care of all maintenance and repairs.

The advantage of this system is that you do not have to pay anything up front for the land. The disadvantages are that when buying your home, you can usually make a bigger down payment and get a better interest rate with conventional financing.

Most land buyers turn to small banks and farm credit institutions for land loans or land/construction (aka land/home) loans. In addition, they use a variety of private lenders for financing.

There are many types of financing available for Florida real estate, in particular. It is important to choose a loan that matches your credit profile and financial situation. You should also carefully consider the loan terms, calculate the total cost of the loan over its life span and examine the current rate environment to ensure you will get the best available deal.

Other Important Land Parcel Related Questions

1. What is the title of the property? The Chain of Title is an abstract representation of the ownership and transfer of land or property. It begins with an original deed and proceeds through a series of conveyances, mortgages, judgments and other instruments to the present owner.
2. How about Potential Deliquent Taxes? Property Back Taxes is a tax that is collected by the State and County governments. This tax is imposed on the assessed value of real property, which will include residential and commercial properties as well as industrial or agricultural land. The next step is to figure out if the property has any liens or debts. If so, you’ll need to decide whether you want to pay those off when purchasing the property.
3. Is there any HOA or POA? Home Owners Association is an organization or group formed to promote more effective management of a subdivision. This group may have a declaration of restrictions, covenants and restrictions (CC&Rs), which is legally binding on the homeowners and ultimately dictates what can and cannot be done to the property. These rules will often control how you use your property, the type of landscaping that can be installed, exterior paint colors, and so forth.  The purpose of a Planned Unit Development (PUD) may be to control future growth in a subdivision, but it also serves to minimize traffic problems and disturbances within the neighborhood. Also consider and find out if there is annual fee associated with the HOA or POA.
4. How about the Improvements The term “improvements” refers to any improvements done in construction and landscaping to a particular piece of land, including buildings. Improvements are also known as real property, and while they do not meet the legal definition of real property, improvements can be sold along with land. These are normally specified by the owner during negotiation and purchase
5. Property zoning is a concept that defines what type of building a lot in a given area can house. For example, if the zone does not permit commercial buildings, it will be impossible to build one. What is and what is not permitted in a given zone is decided by the local government, which often has rules about setbacks, height and other aspects. What other structure might be constructed on the land adjacent? What additional zoning restrictions might apply? What is the current zoning for this property? Can a variance be requested for a structure in the rear yard that would tower above a neighbor’s home? What will encroach on a neighboring property if permitted? What are the setbacks? A setback in construction refers to the distance from a property line to either the structure or the centerline of a street (or alley). It may be required, for example, that no part of a building project can be located closer than two feet to a property line. What other construction is planned or possible on the surrounding land? Is this property agricultural, residential or commercial?
6. What Can You Use the Land For? According to the United States Code, Title 43: Public lands are defined as land that has been reserved or acquired for any of the following purposes: Schools, churches, roads, military bases or parks. One of the biggest issues with agricultural land is that it may only be used for farming. Agricultural zoning requires farmers to grow “clean” crops in an area. This means that no pesticides are allowed. Can you build a residence on the land? Is it commercial land?
7. What property tax do you need to pay? Property Tax is a levy on the value of property that is dependent upon the jurisdiction where the property is located. In Florida, there are three types of taxes: real property tax (the tax on land), tangible personal property tax (an ad valorem tax on certain personal and movable tangible assets used in business, such as machinery and inventory) and documentary stamp taxes (a form of ad valorem taxation on documents).
8. How about Common Facilities? Common Facilities refers to facilities that are ordinarily used by all of the owners of a common interest development or condominium project. These may include swimming pools, tennis courts and particularly parks. Does it require maintenance on your part?
9. Are RVs allowed on the property? If so, is it a temporary stay or year round? RV’s are popular in Florida because of the number of lakes there.
10. What type of Property Access is available? There are several ways to get onto and off of a property. Common types include: “a public road that is maintained by the public authority that has jurisdiction over it,” a private way which is used as a right of way for utilities and contains no structures, an easement which is an interest in land owned by another for the purpose of using and benefiting from it, or some combination of these. Rural property is great, and a lot of people really value the privacy it offers. However, there are some disadvantages. It may be difficult to find, or at least expensive to get access to transportation that can take you to places outside of the property. It can also be difficult to receive emergency services in certain remote locations. What type of access is available? Is it possible to get utilities like water, sewers and electricity onto the property?
11. Can I obtain insurance on the land? In addition to home insurance policies that cover items inside your home, you may need to consider those that are specific to your land as well. For example, some types of natural disasters often render land unbuildable—forever.But sometimes, these properties don’t have legal road access. That means you would technically have to trespass on a neighbor’s lot or on a private access route to get to your land.

What is the wetlands situation on and near the property?

Land buyers and investors generally don’t care for wetlands.

What about property size?

It is crucial to comprehend the size and shape of the parcel. The area should be measured in feet square or acres, and it is essential to know if the property is 100% legally accessible. The dimensions of the property should be evaluated prior to purchasing, as some properties may not be accessible on foot.

How about the property line?

It is important to know the boundary lines of a particular property, because if the property line includes areas that are not in possession of the owner, it is not wise to include them in any acreage calculations.

Are there nearby Conservation Easements?

A conservation easement is a legal agreement between a landowner and a land trust that limits the future use of the property. Conservation easements are an excellent way to protect natural resources, including forestland, wetlands, and other lands.

Consider the Mineral Rights to the Property?

Mineral rights to your property are still owned by the original owner, and unless you purchase those rights from them, you can’t prevent anyone from drilling. The US Army Corps of Engineers (COE) provides easement and permitting services for oil drilling operations. They also help maintain navigable waterways. Mineral rights are a very complicated topic so please consult with a specialized attorney if it is of interest to you.

Are There Any Water Features?

A potential buyer will need to know if there are any lakes, streams or other water bodies on the property. For more information about these features and how they may impact your property and development options, contact a surveyor.

Be aware of potential Conservation Easement that would restrict the Use of the Property?

A conservation easement is a legal agreement between a landowner and a land trust that limits the future use of the property. Conservation easements are an excellent way to protect natural resources, including forestland, wetlands, and other lands.

If you had to sell this property again in a year, is it desirable to other potential buyers? If not, make sure that you know exactly why the parcel works for you.