How to Buy Land in 8 Steps: A Guide for Investors

Buying vacant land can be a wise investment with great returns if you plan carefully and understand what’s involved. While land can be a relatively cheap and low-effort investment compared to a house, making money from it might be trickier. This article breaks down seven steps to help you learn how to buy land—covering everything from the pros and cons to financing and closing the sale. Let’s get into it!

Step 1: Prepare Before Purchasing Land

When you’re thinking about buying land, getting prepped is essential. This prep work helps you score a great deal and dodge any potential hiccups. Whether you dream of building your perfect pad, starting a business, or investing for the future, with the right prep, you’ll be ready to make a solid move and confidently rock that land purchase.

• Set your budget: Know how deep your pockets are. Remember to include hidden fees and taxes—those sneaky little surprise costs can add up.
• Do your homework: Research the area like a detective. Check out zoning laws, future developments, and what the locals say. It helps to be in the know.
• Check access: Make sure you have legal access to the land. You don’t want to own a piece of paradise that you can’t even reach.
• Inspect the land: Take a stroll on the property—bring your favorite boots. Look for any red flags, such as weird terrain or pesky environmental issues.
• Connect with the community: Chat with the neighbors. They’ll spill the tea on the area, and who knows? They may be your new best buds.
• Hire a pro: Think about getting a real estate agent or a land assessor in your corner. They can help you navigate the nitty-gritty and spot potential hiccups.
• Think long-term: Picture your future. Consider what you want from this land—those vibes matter.

Pros & Cons of Buying Land

In addition to prepping, you need to consider the pros and cons before jumping into a purchase. Raw land can be a total hidden gem in real estate investing. Owning some land is appealing since it’s usually low-maintenance and cheaper than those fancy developed properties. But, hold up—there are some bummers you must consider, like those ongoing carrying costs and the fact that selling it quickly can be tricky. If you’re wondering how to purchase land, it’s worth trying despite the challenges.

Pros	Cons
Limited resource: Land isn’t reproducible—there is a fixed supply. Being a limited resource causes it to appreciate over time.	Doesn’t produce immediate income: Unless you lease or flip your land, it will not generate revenue quickly.
Inexpensive entry: Vacant land can be affordable to buy, and if you wait for it to appreciate, you can build equity.	Carrying costs: Land has costs without revenue, like property taxes and debt service if financed.
Hands-off investment: If you buy and hold the land without developing it, there’s not much to do but visit it occasionally.	Illiquid asset: Land isn’t always easy to resell since fewer buyers exist. In a financial emergency, your cash can be inaccessible for months or years.

Step 2: Consider the Essential Factors Before Purchasing Land

Buying land can be a great way to invest, but it’s super important to be smart about it, especially if it’s your first time. Some deals might look fantastic at first glance, but you don’t want to jump the gun. Take the time to research before you sign anything. If you end up with the wrong kind of land—like a lot you can’t build on or one that doesn’t fit your plans—you could lose a good chunk of money. So, just take it slow, get the info you need, and you’ll set yourself up for a better chance at success.

As part of your due diligence, here are some factors to explore when purchasing land. If you’re wondering how do you buy land, consider the following aspects:

Location

The spot you choose hinges on your investment goals and how you plan to profit from it. If you’re looking to sell individual residential lots or create a subdivision, you’ll want to find land in a residential area that’s properly zoned (we’ll talk about zoning soon). If you plan to buy and hold land in an area for commercial growth, check out traffic patterns, zoning, and population density to ensure the land is developable. Your location will dictate a lot about your plans for the land. 

Deed & Ownership History

A deed is a legal document that shows who owns a piece of land when it gets transferred from one person to another. Figuring out land ownership can be tricky, especially with vacant lots that might not have been measured or recorded properly, leading to boundary disputes. Multiple people might claim rights to a piece of land through inheritance, easements, or gifts. Unrecorded claims can pop up out of nowhere, but in the end, they need to be backed up with proof. 

When considering how to buy land, pay for a title examination and get title insurance through a title or escrow company or real estate lawyer. The search uncovers if anyone has claims to the property or liens against it. Title insurance protects your interest in the property in a dispute.

Property Taxes

Regarding real estate investments, owning land is often fresh air because it typically has fewer expenses. After you’ve purchased your land (aside from any mortgage payments), the main ongoing cost is just the annual property taxes. So, it’s a good idea to find out what those taxes are before you wrap things up. You can easily check online on your city’s tax collector website or just call them.

Zoning & Potential Zoning Issues

Every piece of land has a zoning designation specifying how to use the property. There are many zoning categories, depending on your area. The primary categories are:

• Residential: Allows for single-family homes
• Multifamily: Allows for single-family and multifamily homes, like duplexes, triplexes, fourplexes, and apartment buildings
• Commercial: Permits office buildings, retail, and sometimes hotels
• Industrial: Generally reserved for warehouses, factories, and light manufacturing
• Agricultural: For farms, orchards, ranches, and similar—single-family homes and small multiunits like duplexes are sometimes allowed with this zoning

These zoning designations can change (getting “rezoned”), which can solve or cause new problems. Land-buying must include researching existing and pending zoning changes to ensure they fit your plans.

Use Restrictions & Building Requirements

Zoning is not the only restriction that can limit what you can do with the land. Make sure to research potential restrictions and requirements, which frequently include:

• Building moratoriums: This legal restriction stops the construction of all building projects on a piece of land. Many construction projects nationwide have building moratoriums in place due to potential code violations or environmental concerns.
• Easements: An easement means that another party is legally permitted to use a piece of land, even when owned by someone else. Examples include wildlife and historic preservation easements that may prevent all future development, or a municipal water department may have a right-of-way through your land to access a water tower. 
• Inadequate size or shape: Consult a building professional to ensure the lot is large enough to build on. Also, consider road access, parking, and traffic.
• Setbacks: Many local areas have specifications about how far back a building must sit on a lot. Understand setbacks before starting a project.
• Covenants, conditions, and restrictions (CCRs): CCRs are set by local homeowner’s associations (HOAs) or local government and typically apply to land zoned for single-family homes. Make sure you know all the rules of your HOA before you move forward with any plans.

Physical Characteristics of the Parcel

If you’re not used to buying land, it might seem like most plots are different in size and terrain. But watch out! You could end up with a piece of land that isn’t worth much if you’re not careful. Here are some important physical characteristics to keep in mind:

• Accessibility: Your land purchase must have road access to be profitable. A landlocked parcel is surrounded by other properties with no road or driveway access, making it nearly impossible to profit from or sell.
• Flood zones: Many pieces of land remain undeveloped because they are in a flood zone. You may never be able to build on these land parcels or may be unable to insure any structures.
• Environmental issues: There is a wide range of possible environmental concerns, like environmentally sensitive areas, including wetlands, habitats, wildlife zones, tribal lands, or national parks. Contact the U.S. Environmental Protection Agency (EPA) or the local conservation commission.
• Topography: Flat land can be easier to build on, but the substrate must also be considered. It could be ledge, wet, or sandy. Hilly and rocky areas also produce challenges. It is possible to build on most places, but clearing and building up land for development can be costly.
• Soil type: You may be required to do a soil test to get a permit before building. Therefore, it’s necessary to have that information before buying the land.

Property Survey & Plat Maps

Plat maps show all the land parcels with lot lines, measurements, zoning designations, topographic and geographic features, and what they are adjacent to. These maps and surveys may be available online or at your county surveyor’s office.

Accessibility to Utilities

Utilities like gas and electricity might be nearby, but you could end up needing to bring them to your property line, which can add up in costs. If you’re still figuring out how to buy land, check out what utilities you need, how easy they are to get to, and what it’ll cost to have them set up on your land. Look for the following: 

• Water: If municipal water has not been run, investigate whether drilling a well is possible. If not, a lot without water is generally unbuildable.
• Sewer: If municipal sewer is unavailable, you must run a percolation (perc) test to see if the parcel can have a septic tank. If it doesn’t perc, you will probably be unable to get a building permit.
• Electricity: Electricity is one of the most accessible utilities to run to a lot if it’s nearby. If there isn’t an existing line, check with your local electric utility to estimate the cost of running one.
• Gas (optional): Fortunately, if a lot has electricity, it doesn’t necessarily need gas. However, if gas is the custom in the area, you will want to check with the gas provider to investigate the cost of running a line to the lot. You may be able to substitute with propane.
• Phone, communication, and internet: The lack of telephone, cable TV, or internet will not prevent you from developing, but it will be unacceptable for anyone planning on living or working on the land you develop.

Step 3: Decide the Type of Land to Purchase

Many new investors usually know about common land deals, like buying a rural property, farmland, or empty residential lots. But there’s a lot more land out there that you can invest in and find creative ways to make a profit. How you can use vacant land can change depending on your location, landscape, climate, and job opportunities nearby. That’s why it’s super important to dig into the different types of land available in your area; you might discover some surprising options for investment or resale.

Consider some lesser-known land types and uses:

• Residential: Used to build individual homes for the owner or for home builders to develop into neighborhoods.
• Commercial: Intended to generate a profit, such as building warehouses, hotels, office buildings, medical centers, or shopping centers.
• Industrial: Warehouses for storage, discount wholesale stores, lumber yards, or factories.
• Agricultural: Row crop farmland, livestock-raising land, vegetable farmland, vineyards, and orchards.
• Recreational: For outdoor activities, whether paid or free, including parks, golf courses, campsites, lodging, or swimming pools.
• Timberland: Forest lands that produce wood products.
• Transportation: Building roads, railroads, or bike paths.
• Parking lots: Valuable for various business types, like consumer-facing stores and service providers, transportation companies, and mobile home parks.

If you’re searching for land to buy, a great place to start is with real estate websites like Zillow. They make it easy to filter your search by selecting “land” and choosing your preferred location, price range, lot size, and whether you want to buy directly from an owner or through an agent. When you browse the listings, you can check out useful details like how long the land has been on the market, its purchase history, tax info, and the type of land available.

Step 4: Find Land to Purchase

A good plan for finding properties is vital when making real estate investments. If you’re wondering how to find land to buy, there are plenty of ways to do so, and a mix of strategies can help. Consider teaming up with real estate agents or land brokers, checking out government-owned land, and exploring websites that list land for sale.

• Land brokers: Many real estate agents aren’t as familiar with land sales, but land brokers, especially those in rural and agricultural areas, really know their stuff. They will help you find the perfect parcel, understand your needs, and research all the unique features of the lot you’re considering. Land brokers typically charge a commission of around 7% to 10% of the sale. Selling land can be trickier than selling other property types, so they factor that extra work into their fees.
• For sale by owner sites (FSBO): Have you noticed that many land parcels are listed directly by their owners? This makes online FSBO sites great sources of lots, developable parcels, and rural land. One of the most efficient and resourceful platforms for discovering FSBO and foreclosure properties is FSBO.com. This website lists properties sold directly by owners and offers a range of real estate contract templates.
• Real estate agents: Real estate brokerages and their agents have access to the most significant number of properties for sale, including raw land. Not all real estate agents have experience with land sales, so it’s important to find one who specializes in that area.
• Government-owned land: Many government agencies have land up for grabs, usually from two places. First, there’s surplus land—stuff that local, state, or federal agencies own but don’t need anymore. The second source is when property owners don’t pay their annual taxes, and that land gets sold off at tax lien and tax deed sales or auctions. To learn more about land auctions, check out your state’s surplus property division or look for surplus sales on the usa.gov website.
• Auction sites: Land is one of those property types that pops up at auctions pretty often. The cool thing about auctions is that they cut out the back-and-forth negotiations and speed up the closing process. Plus, many of these auctions are local or in-person, so you can search for terms like “Chicago auctions” or “Chicago land auctions” to find some near you.
• Land for sale sites: Searching for land parcels online is the most efficient method to find properties for sale. Many land-for-sale sites, including Zillow, the largest real estate marketplace for all properties, make searching easy. Other land marketplaces, like Crexi and LoopNet, provide real estate investors with more extensive and relevant property details. Another great benefit of using land-for-sale sites is that all of them are free to browse.

Step 5: Get a Pre-approval & Arrange Financing

Many folks are curious about how to buy land without dropping a ton of cash. While there’s no one-size-fits-all playbook for buying land, the scoop on financing an investment property is similar whether you’re looking at land, a cozy pad, or a commercial spot. When funding your next big buy, you have two main routes: shelling out some green or scoring some financing. The most common land financing includes:

• Paying cash: Because prices for raw land are generally lower than those of existing buildings, it’s common for buyers to pay cash. Banks also view raw land as riskier, making financing more difficult.
• Conventional loans: Most conventional lenders offer long-term mortgages for land purchases. The loan-to-value (LTV) is generally relatively low, so be prepared for loan options covering as little as 50% of the purchase price.
• Land and lot loans: Many lenders specialize in land or lot loans. Often, these are savings and loan institutions in more rural areas. Land loans tend to be shorter terms of 10 years or less, typically higher than the market rate, and require 20% to 50% down.
• Owner financing: Owner financing is more prevalent with raw land than developed parcels. Vacant land is typically more challenging to sell than developed properties and is more commonly owned outright, making owner financing easier.
• Hard money: Hard money loans are short-term financing methods, usually set for under 18 months. They can be funded in a matter of days, which allows you to compete with cash buyers in competitive markets. However, you must have a solid plan to generate an ROI to cover the payment quickly, along with the higher interest rates.

Step 6: Create a Profit Plan

Consider how you want to make money from your land investment and when you’ll need the cash. It’s wise to draft a business plan for your investment property before you buy. This way, you’ll stay focused and keep yourself on track with your long-term goals. The most common methods of profiting from a land purchase include:

• Holding it long-term: The most basic land investment strategy is to buy and hold, reselling when the property appreciates. If new development is moving to the location of your land, upward price pressure will apply. The closer development gets, the more valuable your land becomes, even if you don’t touch it.
• Improve the lot: You can naturally increase the value of the lot by building on it or making minor changes like running utilities and sewer, clearing land, or adding a driveway.
• Get the property rezoned for higher use: Land can be made more valuable by changing its zoning and what it can be used for. For example, land zoned for agricultural use that gets rezoned for residential development may significantly increase the value without any physical changes.
• Lease the land: This is an often-overlooked option for land purchases. Mobile home parks are structured around leased lots, and farmers can lease rural land to cultivate or graze livestock.
• Flip the land purchase: While land flipping is not nearly as common as flipping houses, it is possible to acquire a lot at a below-market price and resell it quickly at a higher price. One route to take is to offer owner financing to the first-time buyer. This can make land purchases more attractive, and you can earn a profit from the resale and collect periodic interest.

Step 7: Go Through the Purchase Process

With financing ready, a great piece of land picked out, and a solid game plan, buying investment land is like any other real estate deal. Start by making an offer that includes your financing details, price, and any necessary conditions—like environmental tests or permits.

The landowner might accept, reject, or counter your offer, and then it’s time to negotiate. Once you agree, closing timelines depend on your financing: conventional loans take 30 to 60 days, while hard money lenders can cash you out in days. You can relax if you’re working with a real estate agent or land broker. They’ll handle the legal paperwork and guide you through the process, including scheduling inspections and tests before you close the deal.

Step 8: Move Forward With Your Profit Plan

Now that you’ve got your land, it’s time to roll up your sleeves and put your plan into action to see some returns! After diving into all that property research, you should understand any restrictions and income opportunities. While it’s great to have your real estate investing business plan before closing the deal, now’s the time to start making it happen.

Your first steps will differ based on your profit plan. For instance, if you’re looking to flip the property, you might keep the land as is. Instead, you’ll kick off the marketing hustle to get some potential buyers as soon as the land is in your name. But if your game plan is to build a residential or commercial spot, your first moves will be all about getting permits, crafting a killer blueprint, and lining up a contractor or home builder.

Make sure you carefully go through each step and chat with a few architects and contractors before you seal the deal. Rushing the process can backfire and lead to hiring a sketchy contractor or an unprofitable piece of land, which could waste months and a boatload of cash down the road. So, take your time and make smart moves!

FAQs

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Bringing It All Together

Buying land for investment can be a seriously sweet and chill long-term gig for newbies and seasoned pros. But here’s the kicker: your success totally hinges on doing your homework and whipping up a killer game plan to cash in on your land hustle. So, roll up your sleeves, stay savvy, and get ready to score big!

Are you considering buying land? Tell us where you are on your journey!