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Buying Land to Build On vs. Buying an Existing Home: A Guide to Help You Decide

Posted by admin on March 23, 2021
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Lands For Sale

Among the highlights of an individual’s life is the moment property ownership becomes a reality.

In today’s hot market, you’re sure to find great opportunities for realizing your vision of land ownership. But in a competitive market like this one, buyers might be asking themselves what makes the most sense — whether to buy land to build on or to purchase an existing home for you and your family. 

While it’s a great time for buyers to invest in real estate, we’ll explore some of the reasons to consider purchasing land, and help answer some common questions about the process. 

The Difference Between Buying Land for Building a Home and Buying a House 

When the time comes for you to decide in which direction to move forward, one of the biggest factors in making a decision should be the structure of the loan. 

Mortgages offer a range of options to suit needs and budget, however, land loans may offer a lower down payment even if the buyer doesn’t have a great credit score. In instances where an individual’s credit score may not meet a bank or traditional lender’s standards, prospective land buyers can take advantage of seller financing – also known as owner financing. 

Seller financing is structured like a mortgage, but rather than borrowing money from a lender or bank to purchase real estate, the buyer makes payments directly to the property owner, or seller, until the note is paid in full. 

The benefit to buyers is that owner/seller financing eliminates the need to secure funding through traditional lending institutions if their credit isn’t perfect. Plus, with more flexible terms and room for negotiation, seller financing is a great way to bypass the need to look at your credit score as a qualifier for ownership. 

Another great motivator for buying land is that if a buyer is in a position to do so, purchasing land with cash offers the chance for the land to be used as a down payment toward a construction loan should you decide to build. 

When deciding to move forward, it makes sense to speak with a land specialist to assist you in evaluating your options, and a financial advisor can be consulted to address asset liquidation or arrange financing options. 

It’s a Great Time to Buy Land in South Texas

What 2021 has shown so far is that the market is hot and buyers are competitive. Homes are selling at a fever pitch, and new construction homes are snatched up before builders are even finished building. For many, an older home may not sound appealing given some of the problems that arise from older construction. 

When you evaluate all this, it makes the most sense to consider purchasing land, which offers a greater possibility for ultimately developing the home of your dreams. South Texas is an ideal location for those interested in buying a rural property.

Other incentives to buying land include increased privacy, as well as avoiding the restrictions from neighborhood homeowners associations. Buying land also means more space to build your dream home. 

Other benefits of purchasing property vs. a home include:

  • Low entry price (i.e. buyers enjoy the benefit of buying vacant land at a less expensive price than an improved lot)
  • Greater flexibility
  • Minimal carrying costs
  • Long-term appreciation
  • Significant appreciation potential 

Things to Consider If You’re Buying Land

The most important factor to consider when buying land is assessing your budget. Factoring in construction costs and additional costs including permits, fees, land adjustments, and if needed, the cost of running water, sewage, and utility lines to the home. 

Relying on the guidance of a land expert will help you gain a better sense of how to take the right steps forward, and will help you make a wise financial decision.

Santa Cruz Properties Offers Affordable Land Options to Make Your Dream a Reality

If you’re considering investing in land to build on, Santa Cruz Properties is a trusted partner to help you make that dream into a reality. Offering lots in Edinburg and its surrounding communities, we also provide owner-financed properties to make the process easy and efficient.

Learn more about our easy owner-financing options and our affordable lots for sale across Texas.

Contact Us Today

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