How To Buy Land Without Debt

I hate debt, especially one of the biggest debt burdens people can carry- the mortgage. Did you know that “mortgage” means “death grip” or “death pledge”? (Google “word origins mortgage”) A rough economy and the ever-increasing likelihood of layoffs has every thinking person justifiably concerned. Banks have foreclosed on millions of homes since 2008, driving home values down and many families into the street.

I suggest that the concept of home ownership should be altered from buying the biggest home people can get based on the largest mortgage they can secure, to buying the most raw land a person can by without a bank loan and building a house by hand.

Understand this: it is a slower process to buy land and build your own home than moving into a ready made home and committing to large mortgage payments for 30 years or longer. But, if you lose your job, want to retire early, or would rather not give the bankers any more money (they got plenty from the bailouts, plus all the foreclosed-on properties to resell, that’s quite enough), buying raw land and building your own home is the way to go. Plus, you can build your home out of materials found on site, and build a truly sustainable, green home.

Buying land is a little different than buying land with a building on it already. The building often defines the purpose and the value of a property. So, the value of raw land is not entirely determined since there is no structure on it. At least, that’s how banks see things. If you wanted a mortgage for raw land, expect to have to have at least 50% of the purchase price as a down payment. Banks, however, are pretty picky with who they are lending money to these days, and really, a mortgage is usually not necessary.

If you are pressed to move and do not have the money outright, another lending option is to buy land with owner financing. We currently have a small mortgage that we pay to an individual, not a bank.We have less than 7 years left to go on a small, 10-year mortgage. My loathing of debt has become far more intense over the past couple of years. If we had to do it again, I probably wouldn’t even tolerate debt through a private mortgage, but if your goal is to opt out of the banking system (which is becoming more common), a private, owner-financed mortgage accomplishes that very nicely.

A land-only purchase can be really affordable.  Here are some things to keep in mind when buying a piece of land:

  • Look for small, rural towns. They generally do not offer many public services, but that also means that property taxes are usually much lower than cities or suburbs. Never pay more in taxes than is absolutely necessary!
  • Buy in bulk. When you buy multiple acres at a time, you can expect to pay about $1000 per acre in many places. You will pay much more per acre for two acres as opposed to ten. Certain features will drive the price up, such as having a stream, a nice view, or electrical lines already out to the property. Other factors can raise the price of land, such as proximity to hospitals, schools, highways, shopping, etc. Your property may be rural, but if the next town over is developed, expect the price per acre to skyrocket.
  • Know the area. Learn something about the local weather patterns and concerns. Shop for land when you know it will be at it’s worst. Example: if you know that the area where you are looking floods in the springtime from melting winter snow, go check it out in the spring. Come September, it might well look dry, but you’ll have a nasty surprise the following April.
  • Be prepared to move. Since most people live in cities and then suburbs, odds are you live in either a city or a suburb. If you saw my post on Friday, then you understand the value of moving to a less populated area. However,  finding the best piece of land with the most desirable features for the best price is almost guaranteed to involve relocating.  If you have a bigger budget, more time to look, don’t care about the view, would prefer to live completely off the grid and do not care about access to grid power lines, you will have more options about where to move.
  • Locate an income source. Consider what you will do for work in your area. Many small towns do not have many opportunities for employment. Can you keep your current job and telecommute? Do you have a business that you could take with you? Maybe it’s time to start a small business? What do you really enjoy doing, and how could you earn a living at it?

Here are some ideas on how to pay for your land and not carry debt:

  • Use your tax return to buy land. If you are part of the what was the lower-middle class which has now become the working poor and you get a sizable tax return, this might be exactly the best route for you to land ownership. A tax return between $5-$10K can get a nice, small lot, depending on the area, perhaps 2-4 acres. You can always sell it for more once you build a small cottage, cabin, or house and buy a larger plot later.
  • Log it. Buy a small, wooded lot with owner-financing, then have a logging company clear it for you. Depending on the type of trees, some companies will pay you big bucks to take them away for you. Use that money to pay off your mortgage.
  • Sell, sell, sell! Sell everything out of your house/apartment you possibly can. Not only does it make packing to move MUCH easier, you can earn quite a bit of cash depending on what you have. Sell your used books on Amazon. Get all those clothes out of the closet and bring them to a consignment store. Sell your nick-knacks on eBay or craigslist. Have a yard sale. Yes, someone really will buy those old earings, and someone really does want that cookie tin.
  • Start a part-time business. (Maybe one you can take with you when you move!) Try to pick one with very low overhead and start up costs.
  • Hold a yard sale. People buy stuff just to buy stuff at yard sales. People will even buy boxes of random stuff to look for treasure when they get home.
  • Swear off buying anything new. Except for underwear, shop consignment, second hand, and good will for odds and ends. Join a freecycle list. Join several! Learn how to make, sew, repair, and grow things.

Now, how do you find this perfect piece of land?  There are realtors who deal specifically with land, and many others that have land-only lots. You may find something that already has a small cabin on it already. We found our land by searching LandAndFarm.com. I found a 10 acre wooded lot for $14K in northern New England that I wanted to check out. When I contacted the realtor, she had an entire land list of about 25 properties, most had owner-financing available, and no credit checks. There was even a three acre lot for $6K, so buying land is completely do-able. We had also looked at another property that we found on Realtor.com that was 42 acres with a two bedroom cabin for $48K with a stream and a mountain view, but that was a bit out of our price range. But, if you have the time to look around, you will find a wide range properties and you WILL be able to find something you can afford without massive debt.

Tomorrow’s topic: Build a Home From Natural Materials Without Debt

7 Responses to “How To Buy Land Without Debt

  • I just wanted to add that if anyone is looking for land with a small structure on it they can also google “tinyhouseslistings com”. And yes these are just what it sounds like. There is a whole new concept going on across this country “Tiny Houses”.

    • I love the “tiny house” concept. Personally, I’d want to live in something much bigger long term. BUT- to get started? To be able to get land with no debt or minimal debt, and be able to build a livable home also without a mortgage- it’s a fantastic idea. The cabin we’ve been building hasn’t required a mortgage, and we adore it. 🙂

  • WEll for me, I love the tiny house thing but at the moment I am thinking that I need to try an RV till I can find a piece of land at a reasonable price and that is proving to be a tough thing to do.

    • RVs offer some amazing ways of storing a lot in a small space. And, I didn’t mean to imply that I don’t like the tiny house trend- some of those homes are so ingenious! The only thing I would need would be an outbuilding for all my “gear”. Some of it just plain large. 🙂

  • You are a woman after my own heart!

    I am looking for some land just like you’ve described. I want to relocate to Sandpoint, Idaho but I’m having an awful time finding a couple of acres that I can afford.

    • Hi Brie!

      I don’t know much about Idaho, but we found our property by searching http://www.landandfarm.com. We found a listing that sounded something like what we were looking for, and then the listing agent showed us other properties that she also had for sale. http://www.landwatch.com is another site with rural land posted. Keep looking, and contact realtors that have similar lots. They are there with boots on the ground, and often will know more about what’s for sale in that area.

      Hope that helps!!!

  • Angela Fry
    4 years ago

    I have found 4 acres outside of our town. It already has a barn and fencing for animals. We know the owner, but not sure if he will finance for us. It also has electric, water and sewer. What do you think, in your opinion, would be a good price for this. My family and I are SO ready to live off grid, and ready to get started. Any suggestions would be great! Thanks for your time and thank you for encouraging us!!!
    Mom in Ohio

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