The first step in building a new home is finding the right land. While it all may seem like acres of dirt, each property can offer unique amenities and challenges. At the end of the day, you’ll need to find the balance of cost and consequence you can live with. For the purposes of this article, I will be discussing my experience finding property in Central Illinois. Other regions (e.g. coastal, or area with known geotechnical concerns) may require a different perspective.
The major parameters for a dirt patch are:
(1) In town or out of town?
(2) Are water, sewer, electricity available? Are they at the lot line or a block away?
(3) Is there internet available? Is it high speed?
(4) What is the cost of the land?
(5) How big is the property (i.e. in acres)
(6) How much of the lot is buildable? Does 90% of it consist of a cliff into a ravine?
(7) Are there any restrictions on the property? Is it included in an HOA?
(8) Is it part of a previously engineered subdivision or completely raw?
(9) How far is the property from work, school, or shopping (e.g. Walmart, local grocery store, etc.)
For us, we found a $34,000 lot with 0.8 acres just on the edge of town. The lot allegedly had city water, sewer, and power at the lot line. One portion of the lot contained a large detention pond (i.e. unbuildable) so we were further able to negotiate the price down to $18,500. After some investigation, we confirmed that the lot was not part of an HOA and that the limited covenants originally established had not been renewed and thus became invalidated. The property was much closer to Morgen’s work and only about 10 minutes further for me.
Let’s walk through how you might consider the dirt patch parameters listed above:
IN TOWN OR OUT-OF-TOWN
There are benefits to both. A property in town will generally have higher property taxes, but also offer amenities (e.g. sewer, water) that an out of town lot wouldn’t. Being in town may require you to connect to and use city utilities and the monthly bills associated with those utilities—some people may not like that.
Being in town also gives you neighbors, a tighter community, and a system of roads and sidewalks that make bike riding and walking to the store an option. Being in town also means you will probably only have access to smaller, although better developed patches of land. You’re probably not going to find 10 acres here.
WATER, SEWER, ELECTRICITY AVAILABLE
This was one of our primary concerns when picking a property. If electricity is not down the street, it may cost $100,000+ to get it to your property. The same goes for sewer and water.
In town, with water and sewer at the lot line, you are typically only on the hook for connection fees, usually around $1,000 for each utility. This cost is pretty fixed. You dig up the water or sewer stub, write a check, and you’re nearly guaranteed to never have sewer or water problems. The faucet will always turn on and the toilet will always flush.
Out of town, you’re going to need to dig a well and install a septic system. Both utilities add cost uncertainty to the equation. You may not hit water; you may need to go deep. Costs can explode. They probably won’t, but they could. Further, you are on the hook for maintaining these systems. If your well develops problems, you’ll be the one paying the fix it. The same goes for a septic system; however, a percolation soil test prior to purchase can give you some indication of whether or not your going to have problems installing a septic system. Sometimes you can get the owner to pay for this if you share the results with him/her.
As solar power becomes cheaper and more common, previously unbuildable lots without access to grid power may start to become buildable. You’ll see these lots on the market for ridiculously lower prices. A lot without hope of utility connection may cost $3,000, but with utilities at the lot line over $50,000. For now, make sure you take into account all the lifecycle costs associated with a solar system before going this route. How long do solar panels last (20 yrs)? How much will it cost to replace the battery bank in 10 years? For me, grid power is still a much safer (at least on a cost basis) and cheaper option.
INTERNET
This may be the biggest difference between city, country town, and out of town lots. In a big city, you are almost guaranteed to have access to high speed optical fiber connections. These can provide far more bandwidth (1,000 MB/s+) than you need at reasonable costs.
In smaller towns, you may be limited to DSL. This is what we have at our in-town duplex. Coming from Comcast broadband, it has not been an impediment for us. The neighborhood where we are building are home is installing fiber now, so we may be able to expect access to that in the future.
In the country, your options are limited. Do you need stable, high speed internet? Do you work from home? You may be able to form a co-op with your neighbors to bring internet to your area, but this is going to be an expensive endeavor. Much like solar power made previously unbuildable lots buildable, services like Starlink may bring high speed internet access to areas that previously would have nothing.
THE PURCHASE COST
This one is pretty self explanatory, but a helpful metric for sorting lots is cost per acre. In our area, a subdivided lot can range from $90,000 per acre to $180,000 per acre. If you find a lot with an extremely low cost per acre, check for obvious problems. Does the lot not have access to utilities? Is only 10% of the land actually buildable? Does the land have strict conversation covenants that prevent you from using it for what you want—like a residence?
LOT SIZE
Don’t trust the relator on this one. Go to the county GIS and confirm the property lines are where your relator says they are. We had one lot that was listed as 90′ across, but upon actually reviewing the county documents was split and they were only selling half (e.g. 45′)!
BUILDABLE AREA
Sometimes a lot will have a lot of land, but not a lot of buildable area. You may see a 5 acre lot in a subdivision for a suspiciously low price with only a fraction of that land being buildable. We have a lot of creeks and streams in our area, so often the property will back up to a deep ravine or cliff and include everything up to the centerline of the river. These generally appear as very narrow, but deep lots. This is usually easy enough to see on GIS.
RESTRICTIONS, COVENANTS, AND HOME OWNER ASSOCIATIONS (HOA)
Covenants and restrictions are rules that follow the deed of the land and determine what you can and can’t do with it. Personally, we excluded many lots due to restrictions. We want to do with our property what we want.
If you hire a lawyer to handle the purchase (and you probably should), they will be able to dig up a horribly scanned document like the following. It will contain pages of rules and restrictions. Read it carefully, and rule out the lot if you can’t live with the restrictions. Some of them can be absolutely ridiculous.
ENGINEERED OR RAW LAND
If you purchase in a subdivision, a geotechnical engineer will have likely been involved in the process of creating the neighborhood. This gives you some indication that you are less likely to have soil problems that prevent you from building a home on the lot.
If you build outside of town on undeveloped, raw land, there are no such assurances. You personally need to ensure that there are no deal breakers before purchasing the lot. You may start digging your foundation only to find that someone had used the property as a dump 40 years ago and all of the sudden you have to removed hundreds of yards of waste, backfill with engineered material, and start again!
DISTANCE
Distance is one of the bigger factors affecting the land area versus cost trade off. Often, you can buy a good chunk of land for a reasonable cost if you are willing to drive a little bit further every day. For us, we saw a couple 2 acre lots we could afford, but they were 30 minutes from anything—groceries or even a gas station. Ultimately, this did not work for us.
When you are trying to consider whether or not you can put up with the drive, actually do the drive. Drive out to the lot, and occasionally go from the lot to the grocery store, or to work. You will quickly get a feel for just how close these common trips are or are not.
A Valiant Effort 