To buy land in Texas, you need money and imagination. Here are the typical steps involved with the process:
- Finding the right property
- Make an offer, and put the contract in writing
- Arrange financing from a bank or lender or pay cash. The most important thing to know about a land loan is that it typically lasts for a shorter period of time than a traditional 30-yr mortgage. It will usually have a briefer term—as little as a few years. A land loan will likely require a higher down payment because the LTV ratio is higher than with a traditional home loan; This is calculated by dividing the size of the loan by either the purchase price or estimated value of a property, whichever is the lowest.
- Title search reports, surveys, water tests, and appraisals are ordered to ensure the property is clear of liens or encumbrances (e.g., mortgages, judgments) and is titled to the seller.
- The final settlement: You pay the remaining amount, sign legal documents and pick up the deed
Tips for Buying Rural Land and Ranches in Texas
The Lone Star State. Land of cowboys, cattle, and oil wells. Home to the Alamo and the iconic Texas Longhorn.
You can practically feel the American spirit emanating from this vast expanse of land that physically encompasses more than 268,000 square miles (that’s bigger than France), but it is a sparsely populated state with only 25 million residents in total.
In Texas, it’s not uncommon to drive for hours along lonely highways without seeing any other cars, or to spot a friendly Texas Longhorn on the horizon. And while big cities like Houston and Dallas have their allures with things to do, shop and see; some of the best real estate buys are in rural areas.
After all, if you’re looking for wide open spaces and country living at its finest, the Lone Star State is one of the best places in America to buy rural land.
People are tired of living in the city and would like to get away from their HOA. They dream of moving out to a more simple way of living.
People are looking to leave the rat race, but they’d prefer not to move out of their state or give up a job in a major city. Texas is such a diverse state that people can get the best of both worlds. They can live in the city, but still have access to some beautiful rural areas with wide open spaces for privacy or recreational activities.
This article will discuss tips for buying rural land and ranches in Texas and how you can find great deals on properties.
For those thinking about buying rural property, these are a few considerations.
Property Exemptions
At least ten acres is preferable to maintain a property exemption. Each county will vary but it is a good general rule to consider at least 10 acres. Once you’ve decided which county you want to live in, call the county appraiser’s office. This will let them know that you are looking for property and they will be able to give you good leads on available land. Each county varies in the amount of property tax exemptions they allow. This could save you thousands of dollars on a personal property tax.
Rural lands are not assessed at the same value as urban areas, which means your payment could be much less once you get a rural exemption. The county appraisal office will be able to tell you the size requirements for your property. They’ll also know how to maintain exemptions. If you want to maintain your property’s exemption, it would be best to clarify the grass lease agreement in writing.
Livestock
If you want to raise livestock, it’s trickier than locating a plot of land. Your state may dictate what kind of livestock you can have, if you need a permit or license to own them, and even if they are allowed on the property you’re looking into. Before buying a plot of land with enough pasture for a few head of cattle or horses, consider what other prerequisites your property needs to meet.
Property Taxes
Property taxes in Texas vary from county to county, and typically are lower than other states, but make sure to check. The best counties for buying rural land and ranches are often found in small or mid size counties, not the major cities. Property taxes are offset in the cost of your taxes, so if you are in a major metropolitan area, the property taxes will be higher. Many times you may find the county has tax incentives for purchasing land to help offset your property tax initially.
Buying Land by Owner
Buying land from owner can be a good way to purchase a rural plot if you find someone who is willing to sell their property directly. Some counties have land selling websites and apps like TexasLandSales.com and LandAndFarm.
Property Use
Do you plan on building a house on your property? Are you looking for a place to fish or hunt? You need to consider what you will be using the property for and then find the land that will best accommodate your needs. Planning to have animals on the property?
I recommend paying close attention to what I said about exemptions the paragraph above. If you’re looking to buy a new house, you need to consider schools and how close you are to grocery stores, hardware stores, or feed stores. If you’re looking to buy rural land, make sure that you can use it the way you intended. Know if the property is debilitated by an encumbrance. Is the deed restricted? Find out what this means below.
Restricted or Unrestricted
Most people want to have unrestricted land because they don’t want anyone telling them what to do on their property. Many rural communities have light restrictions, which are designed to keep the area looking nice. Gorgeous spaces are good for resale and maintaining property values. This is why many people choose to live in rural communities.
Some rural communities have restrictive covenants, which are designed to keep things nice for the community. Here are some of them: Do not allow commercial use of property; you cannot rent or sell property to someone who wants to use the land for a commercial purpose (like a business). Do not allow portable buildings. Portable buildings are too unsightly for a broad area of land. Deed restrictions are a good thing because they help keep the peace, make the community look nice, and protect property values so I don’t have a negative opinion about them.
Exclusions
Exclusions are frequently found in Texas land sales agreements and can limit your rights for living on, using, or enjoying the premises.
Location
Is the land near a town or city? Is it in a rural area? Will there be any neighbors near by? The location of the property is an important consideration. You want to find a piece of land that is secluded and private or in a rural area.
Utilities
It is necessary to understand where your power derives from and who the provider is. If you plan to purchase hunting equipment as part of the sale, make sure your contract includes that it’s included in your purchase. It’s vital to be cognizant of what is included in and excluded from a transaction.
Leases
Properties with grass or hunting are common, or even leases from farms. In most cases, I do not recommend that someone else “take over” someone else’s lease. Prior to the close of the purchase, all leases should be terminated. You can negotiate an entirely new lease contract with the same person with your own terms.
Floodplains
It is likely that nearly all properties with a creek, river or lake have flood plains. If you’re looking for waterfront property, it typically comes with some type of flood zone. Some properties that are not technically in a floodplain right now can be totally flooded later. Hence, when scrutinizing FEMA images and mapping software programs, one can clearly identify high-risk floodplain regions.
At times, surveys reveal the floodplain but not always. If you want a floodplain included on your survey, make sure to request that beforehand. I recommend including it. Just be aware of the flood areas and make sure they don’t impact your build sites or interfere with your intended use of the property. With careful planning, it is possible to have a property with floodplain and not be adversely affected.
Other related costs associated with the purchase of land
The cost of the homesite itself is not all you will pay when buying Texas land, and, of course, process will vary depending on the size of the lot, the configuration, the setting, the topography, and the community in which the property is located. There are also a few additional costs related to preparing your land for construction:
Survey fees
In most cases, the seller of a property will reimburse you for the cost of a survey to confirm the property lines. But, in some instances, this is not necessary, so you may have to pay for it yourself. However, if you are buying land in Texas with a home already built on it, you don’t necessarily need to have a survey conducted before purchasing the land.
Permit Fees
It will be necessary to obtain a permit before building anything. It is important to note that some permits may be obtained for you. Depending on the builder and community, you may need a building permit or a demolition permit before construction can begin.
Lot preparation fees
You will also have to pay for landscaping, grading, and the installation of utilities. In some cases, you may have to install a water tank because there may not be a nearby water source. Additionally, if there are problems with any of the utilities, you will have to pay to get them fixed.
Restrictive Covenants
Restrictive covenants are usually attached to deeds and expressly forbid certain things from being done on your property.
Utility costs
Utility costs vary widely depending on the type of property you seek. Homes in rural areas often have to be connected to their own wells and septic systems, whereas city lots may require only a few utility connections; however, city lots may cost more per square foot than rural lots.
What homesite do you want?
Texas is a big state with many options. So, it can be tough to narrow down that perfect lot. Asking a few essential questions can help you narrow down your options:
- Are you looking for a home with a view or would you prefer to not have one?
- How much space do you need for your house and outdoor space?
- Are you going to grow anything, plant trees? If so, what types? Can they grow there?
- Do you want a certain amount of easy access and convenience or is privacy more important?
- Is the property title clear?
- Is title insurance available for this parcel?
- What is your overall budget for the land and needed construction?
- What is your timeline?
- How far in advance will you need to have your land purchased?
- Are you looking for a home-site with existing structures?
- Do you want a rural area or more city-friendly surroundings?
- Do you want to invest in agriculture? This could be cattle, horses, etc.
- Are you buying the land with the intent to build your own house or are you looking for a lot ready to go?
- How long will this home be in my family?
- Is this property a good investment?
Be sure to weigh your options and don’t rush into any decisions. The type of home and surroundings you want will determine the answers to many of these questions.