Buyers sometimes become infatuated with the idea of buying raw land then building their dream home. However, many don't have a clue how much goes into the process. So here are a few pointers that may give you something to think about:
First, you would need to consider how you will buy the land. If you're not paying for the land in cash then you're going to need to buy using a land loan. Not all banks loan out money for raw land but those that do usually require 20-50% down with a higher interest rate due to the risk of one owning undeveloped land.
Secondly, you will need to know if the land will perk for water. Can you drill a well? Is it near city or counter water and sewer? How much does it cost to attach to those services? These are just a few cost you're going to need to factor into your purchase.
Is the land zoned for residential? You can't build a house on land that's not zoned for homes. But you also might want to know what the zoning restrictions are for the land surrounding your subject property. You certainly wouldn't want to build next to a location that will have a Wal-Mart.
Who will build it and how much will it cost? Every builder is not the same. You need to know what kind of reputation the builder has and how long they've been in business. You also want to have a thorough understanding of the construction loan. A construction loan is what you use when you're building a home but not buying directly from a builder. They can carry high interest rates and require that you put down at least 20%.
Buying land then building can be exciting but also quite overwhelming especially when you've never done it before. Be sure you clearly understand the details before you take the leap.