8 Things to Know About Rural Properties That You May Not Have Considered
Purchasing a rural property is far different from purchasing a residential home. There are plenty of things you should understand to ensure a smooth and hassle-free transition.
As with purchasing a residential unit, you will also need to conduct a pre-contract inspection both on the housing building and the land. By doing a full review of property conditions before you sign on for settlement, it is possible to protect yourself from the unknown and make an informed decision about your new home.
Rural properties are generally vast, so it is important to check that it is zoned. Zone lines determine where you can build, what kind of structures are allowed, and how much confidentiality there is around your home’s location. For example, “residential” only allows for homes, whereas “agriculture” permits an area dedicated to growing plants.
After determining that the property is zoned correctly for what your needs are, the next step is to look at the land. Getting an early survey will help mark boundaries of exactly where yours may be so no one else can come in and claim any part as theirs later on. This will also give you the opportunity to complete an appraisal to determine the land’s value.
Land and Mortgage
The land has a substantial effect on the mortgage qualification and the potential amount that you can borrow. As a matter of fact, lenders mortgage one house, one outbuilding, and up to 10 acres of land. In addition to the normal 5% down payment, you will need additional funding if you are purchasing a second building or extra land.
Sewage and Water
Homes in rural areas often have septic tanks for sewage and private wells that provide drinking water. It’s important to have an inspection done on these properties before you buy, as lenders may request portability tests. However, take note that the inspections may cost more due to the nature of the property, which may make it harder to do these tests.
Since rural properties are far from the city, you need to ensure insurance coverage. There are two types of insurance that you need to consider.
Home Insurance – Living in the country means paying a higher insurance rate for your home. This is because there are larger areas to cover, and it takes more time to get anywhere with fire trucks, and fire hydrants are also at a far distance.
Title Insurance – When purchasing rural land, it is essential to have title insurance as this provides protection from unforeseen issues with the deed. You will also learn whether the property was improperly used previously (such as being dumped for waste) through title insurance.
Chemical Residues, Livestock, and Plant Diseases
The use of chemicals in agriculture has been a common practice for many years now, but it isn’t without its consequences. Even though these substances may have been used safely in the old days, they can still pose risks to the environment if not properly handled or disposed of after use. If you are planning to use the land for growing crops, avoid properties with a history of chemical use.
If you’re looking to keep animals on your property, be aware that some diseases can stay latent and come back later. The protection zones around these areas might prohibit certain activities like farming or animal husbandry altogether if there is still a risk of infection present in the soil after an infestation has been solved
Prior to purchasing rural land, ensure that there is legal access to the property. It is possible that something that appears to be your access could actually be just an easement or a stock route that can be changed at any time by the actual landowner. This could hinder you from accessing your property when that time comes.
It is important to discuss the purchase of rural land with an experienced accountant before you make any decisions. You should be aware that there are tax implications for running your business in this type of environment, and what those might look like can depend on many factors, such as how much profit or loss results from certain activities.
The right advice can mean the difference between a successful purchase and an expensive mistake. If you’re considering buying property, make sure to get professional help before making any contracts or signing agreements with sellers that may be unfavorable for your future needs.
Our team of expert real estate professionals at Midwest Farm & Land Co. can provide you with an informed decision when planning to venture into real estate transactions. Contact us now.