So you’re thinking about building a custom home in North Texas? Consider that one attractive option is to buy a piece of rural land for your new home, rather than build in a subdivision or in populated areas.
There are literally millions of acres of land available to purchase in and around the DFW metroplex, located within a 1-hour or 2-hour drive from either Dallas or Fort Worth. Easy commuting distance.
Whether for your primary residence or for a weekend retreat, or even as an investment property, if you’re going to build on rural land in Texas be aware of the following considerations when buying that land:
- Choose your location before choosing your custom home builder – Custom home builders are often limited by their working relationships and the limitations of their trades. They tend to prefer building in a limited geographic area because it is where they know their trade partners are reliable (which is largely what protects a custom home builder’s reputation and success). With so much land around and available to purchase in North Texas, you don’t want to limit your choices.
- Property use – If you only intend to use the property to build a residence, then your requirements are fairly simple. However, if you have intentions to do anything in addition to that, such as farming, ranching, hunting or fishing, then each of these activities dictate different features needed in the land you buy. Think carefully about what you might wish to do with the property, both now and in the future. For example:
- Farming requires relatively flat land with access to water, great drainage, located outside any flood plains.
- Ranching requires soil conducive to growing good feed as well as water resources for the livestock.
- Hunting/fishing requires specific resources such as lakes or running water, abundant wildlife, and that you take into consideration other people, animals and structures located near your property, as well as any local laws or environmental regulations that may be in effect.
- Property size – 5 acres may be suitable for a home, but if you want to hunt, farm or ranch you need much more land. Buy with the future in mind, not only with today’s conditions in mind.
- Easements – Property easements have to do with accessing the property from the public road, and can have a significant effect on a property’s value. Property will either have a “Fee Simple” title, meaning you have direct access to a public road from the property, or may instead have a “Deeded Easement” which means the land is accessed by crossing another property. You should work with your lender or real estate agent to understand what type of easements a property has if it does not come with a “Fee Simple” title.
- Amenities – Amenities are valuable and come in many shapes and forms. Anything that is already in place such as fencing, stock-tanks, barns or other existing structures, roads and any other type of infrastructures can significantly add to a property’s value.
- Utilities – Not every rural property has all the necessary utilities for a home, and you must anticipate additional costs that may be needed to bring electricity, gas, sewer and water to the property if it does not have any of these already. When accurately anticipated, these costs can be rolled into the financing provided by most lenders. For example:
- Is there a septic tank already, or must you have one built?
- Is there access to a water line at the road, or will you have to drill a water well?
- Is access to electricity nearby, or how much will you have to pay to bring it to the property?
- Same with access to natural gas, or cost to add a propane tank if necessary?
- Property values – Many factors can influence the price of a property. Features such as access to water and utilities, attractive topography, tree cover, etc. all add up to make a piece of land more valuable. Be aware that some properties can also be influenced by their potential for other uses, such as recreational or even commercial ventures. Make sure you are not paying for features that are not relevant to you. Compare the price of the property you are considering to other rural properties around your desired areas, to ensure it is not being inflated by nearby businesses or population centers which might use it or other nearby land for commercial purposes, or which might encroach on your property or affect your quality of life.
- Deed restrictions – Investigate these to ensure you won’t be prohibited from any desired activities. General deed restrictions may include items such as no feedlots, no subdividing the property, no raising of poultry or swine, no mobile homes allowed, etc. It is important to work with your lender, realtor, builder and/or the local appraisal district to educate yourself on those activities that are and are not allowed.
- Agricultural property tax exemptions – Commonly called “Ag exemptions”, these are widely used and can save landowners many thousands and even hundreds of thousands of dollars in taxes over time. Some common agricultural exemptions include:
- Owning cattle or other livestock on the property
- Leasing the property to another for their livestock use
- Raising honeybees
- Adding various types of wildlife
If the property does not already have an Ag exemption, be aware it will take you 5 years to be granted one (so start inquiring now).
10. Environmental regulations – Check for endangered species in the area which may prevent you from subdividing or developing or building on the property. Also check for abandoned chemicals or hazardous waste on the property, as it is very common for rural Texas lands to have old trash dumps or burn pits which may contain any variety of chemicals or contaminants. Should you have to remove such hazards it may be extremely costly due to environmental regulations.