This blog is for educational purposes only, not an offer of credit or advertisement for current loan terms. It does not provide legal advice. Refer to our loan web pages or consult professional advisors for specific information.
When you decide to build your dream house or your dedicated building for your company, it has to start with the right land location.
However, the perfect parcel of land for your home or business might not be a pristine vacant lot just waiting for construction to start.
The perfect lot for your project may often not be fully developed. That doesn’t mean you should stop there, but you should be familiar with the pros and cons of buying undeveloped land.
Purchasing undeveloped land has its ups and downs
Purchasing undeveloped land is a unique investment opportunity, but it always comes with challenges and rewards.
First off, you should start with the fundamental questions:
- What—exactly—is considered ‘undeveloped land?
- What are the pros and cons of buying undeveloped land?
- What are some tips to keep in mind when purchasing undeveloped land?
In this article, we’ll help investors and dream home builders like you decide whether this option aligns with your goals and financial situation.
Apply now with MIDFLORIDA Credit Union.
What is undeveloped land?
Undeveloped land refers to property that has not been prepared for immediate use.
Unlike developed land, it typically lacks essential infrastructure.
In general, that means:
- No roads
- No utilities are connected to the property
- No sewer systems
It may also require additional steps like zoning approval or environmental evaluations before being used.
Pros of buying undeveloped land
Purchasing undeveloped land offers unique advantages for savvy investors or home builders.
Cost savings
This is the big bonus—undeveloped land is often more affordable than developed properties.
A lower price point can make any land purchase more attractive for buyers looking to invest in real estate without the higher costs associated with fully prepared lots or existing structures.
Creative flexibility
Buying undeveloped land often means being able to tailor it to your specific needs.
Whether you are planning to build a custom home, establish a business, or develop agricultural operations, that kind of ‘blank canvas’ gives you complete creative control.
Potential for appreciation
The land is a finite resource, including where others want to develop.
Choosing undeveloped land in desirable locations has the potential to increase in value over time, hopefully yielding significant returns.
Lower carrying costs
Without existing structures to maintain, undeveloped land typically has lower ongoing expenses.
You won’t face the repair, renovation, or upkeep costs of developed properties until you’re ready to start construction.
Tax advantages
Depending on the location and use of the land, there may be tax benefits available to landowners (depending on location, state, or features), such as agricultural or conservation tax exemptions.
Cons of buying undeveloped land
Buying undeveloped land involves inherent risks, including potential financial burdens, regulatory hurdles, and environmental concerns.
Lack of infrastructure
Installing essential utilities like electricity, water, and sewer access can be expensive and time-consuming, requiring careful planning and coordination with utility companies.
Zoning and permitting challenges
Before you can develop the land, you may need to navigate zoning laws, environmental regulations, and building permits—it’s a process that can be complicated, especially if the land is not zoned for your intended use.
Financing difficulties
Securing financing for undeveloped land can be more challenging than for developed properties.
Undeveloped land is considered a higher-risk investment. Lenders often require Higher down payments and may charge higher interest rates.
Specialized loans, such as Lot Loans, may be necessary.
Additional costs for development
Transforming undeveloped land into usable property involves additional expenses, including:
- Clearing and grading the land
- Installing utilities and access roads
- Conducting soil testing and environmental assessments
- Costs like these can add up quickly, so budget accordingly.
Market volatility
The value of undeveloped land can be more susceptible to market fluctuations.
Factors like economic downturns, changes in zoning laws, or shifts in demand can impact its resale value.
Tips for buying undeveloped land
If you decide that buying undeveloped land is the right choice, following these tips can help you make a successful purchase.
Conduct thorough research
Understand the property’s zoning, topography, and surrounding area. Investigate local regulations and potential restrictions that may impact your plans for the land.
Evaluate infrastructure needs
Determine what infrastructure will need to be added, such as roads, utilities, or drainage systems. Get estimates for these costs to ensure they fit within your budget.
Consider accessibility
Ensure the land is accessible via public roads or private easements. Access issues can make developing or using the property as intended difficult.
Work with professionals
Hiring a land real estate agent, surveyor, or land-use attorney can provide valuable guidance and ensure you don’t overlook important details during the purchase process.
Secure appropriate financing
Explore financing options tailored to undeveloped land, such as Lot Loans. These specialized loans can make purchasing land and preparing it for development easier.
How to finance undeveloped land
Undeveloped land typically requires a different type of loan than standard mortgages, so understanding your financing options is very important.
Lot Loans are a popular choice for land purchases, providing flexible terms for buying property that isn’t ready for immediate development.
MIDFLORIDA offers competitive Lot Loans to meet your needs, with terms and rates tailored to help you secure your ideal property.
Why MIDFLORIDA is the right choice for your undeveloped land
Partnering with a trusted lender like MIDFLORIDA Credit Union can make financing undeveloped land smoother and more manageable.
Expertise in land loans
With years of experience in land loans and construction financing, MIDFLORIDA understands the unique needs of land buyers and can provide personalized support throughout the process.
Competitive rates and terms
MIDFLORIDA offers competitive rates and flexible terms that make purchasing undeveloped land more accessible.
Our team works with you to find a financing solution that aligns with your goals.
Local knowledge
As a community-focused credit union, MIDFLORIDA has extensive Florida real estate market knowledge, helping you make informed decisions about your land purchase.
Start your development journey today
Whether you’re building your dream home or investing in the future, buying undeveloped land can be a rewarding experience.
Learn more about Lot Loan options at MIDFLORIDA Credit Union or start your application today.
Let us help you turn your vision into reality!
