I often see rural land "ranch properties" for sale at bargain prices. The one I am currently looking into has 36 acres for sale for $16,000. They have sent me a brochure on "what to look out for", but I'd like to hear it from an independent source.
Is there a catch? It seems too good to be true.
There are tons of things you need to watch for! I am from Montana. There are lots of people stuck in Montana with nothing who are scammed into buying "dream acreage." They sell everything, quit their jobs and then find out there is no water, no access, no jobs, no electricity, no phone, and an oil well sitting on it.
Please don't be tricked! Definitely find a professional to assist you, but also be sure to visit it in person. Talk to multiple people in the area about the economy, the neighbors, the funny smell, etc.
Cheap real estate is usually just that. If you are interested, be sure to go to the property and check it out before placing an offer. Consider the following:
Location! Location! Location! It depends upon the location of the property in regard to the location of the nearest shopping facilities and the needs of everyday life like groceries, fuel, simple clothing etc. Sometimes these seem great, but in reality they are really secluded and hard to access. There also may be a problem with easements that have not been put into place for
access to the property. Think about it! I am a licensed real estate broker and this is just some of the pitfalls that you can come across.
Eight years ago I was routinely looking at the ads for rural properties in order to fulfill a dream of both my husband and myself. When I saw the ad for an old church on two acres about 45 minutes from our city I thought they must have left a zero off the price! We went and looked and my husband, a carpenter, said yes it was doable. So we were able to pay cash for the place. We have spent the last eight years basically building a house in a box, that is, completely renovating. Many months we have spent the same on repairs and renovations as we would have on a mortgage in the city. But my main reason for wanting to own somewhere outright was because my husband works construction and layoffs are very standard at anytime. When the money stops coming in you simply stop renovating.
Some things to look for:
Lastly, it's great. I would do it again. We recently had our place appraised for $129,000. That's about 1000% increase over eight years. The bad news is that here is where that old saying "location, location, location" comes in. No matter what else we do to this place it can't increase it's value on the real estate market. We were planning on putting a basement under this year. The real estate agent told us it wouldn't add one red cent to the listing price because of location.
Living in a rural area myself, I have a few suggestions that might help as the "catch" can be very expensive and often a big surprise for the first time buyer.
Rural land is typically undeveloped, i.e., no utilities, no water source and sometimes no water rights to secondary water. The buyer must be very thorough when checking out these details:
We have friends who spent over $22,000 digging a well, and still didn't hit water. Utilities (electricity and gas) cost over $70,000 to be brought up to their property. And worst of all, they had no secondary water rights with the property, so they couldn't even farm their land. Take heed to that old saying: "Buyer Beware"!
I just finished reading the book The 16% Solution by Joel S. Moskowitz, J.D. It is a book about buying tax lien certificates. Much of what he says could apply to your situation:
Raw land needs an especially careful evaluation. First you want to check the zoning laws to be sure you are allowed to build on it. Some properties have strict limitations such as being designated wetland, or the property may not perk in the winter, making it impossible to install a septic system. Also check to see if the county has a general plan that designates what the uses of the surrounding land are projected to be or if the zoning is due to change. Be sure the property is not in a designated flood plain, and that there is a year-round water supply.
Mr. Moskowitz also gives details on checking to see if hazardous materials have ever been made/stored on the property. If they have, you as the owner may be required to bear the (enormous) cost of cleanup.
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