Have you ever wondered what it takes to purchase a plot of land? Whether you want to use it to build a homestead or set up a survival bunker, it’s important to understand land acquisition and how the process works.
Regardless of your plans for the property, buying land is a major undertaking and just the first step in your scheme for off-grid living and personal security. Along the way, you’ll likely deal with everything from zoning regulations to foreign owners to sticker shock. Acquiring land isn’t for the faint of heart or the unprepared.
That’s why you must anticipate potential challenges and pitfalls and plan accordingly. Below, you’ll find just a few common issues you might encounter and how to prepare for them, regardless of the outcome.
Land Rights and the Homestead Act
Land has been the center of virtually every interaction between natives and non-natives since the earliest days of contact. From wars to genocide, colonists and early explorers began wiping out native populations from the very start. Others were more conniving and killed hoards of wild animals to eliminate the tribes’ food source.
In 1862, the Homestead Act was signed into law, which complicated matters further. This act offered Americans the opportunity to claim parcels of land in exchange for five years of occupancy and efforts to improve the property. By 1912, homesteaders had acquired and developed more than 5% of the total acreage of the United States, dispossessing millions of Indigenous people in their wake.
Now, many tribes have sovereignty over their land and a newly passed government act is helping them invest in economic development. The Helping Expedite and Advance Responsible Tribal Homeownership Act gives participating tribes the chance to lease land for residential or business purposes. That means you might have to request permission and abide by tribal law if they do allow you to build on the land.
You might also face backlash, disapproval, or complete denial of your request to live in Indigenous country. Tribal courts and those living on reservations have the right to turn away homesteaders, regardless of race or ethnicity. With outsiders having taken the majority of the land already, it’s up to them whether to share more of it, so they tend to handle requests on a case-by-case basis.
Foreign-Owned Land
The United States holds just 56.2 million acres in a trust for various native tribes. Meanwhile, foreign entities own a whopping 897 million acres of land. Most of these entities are overseas companies that run under the names of LLCs or large corporations. They buy farmland and forested areas to harvest resources, construct housing and businesses, or cultivate crops.
Meanwhile, Americans who want to purchase land and farm it are unable to do so. Because foreign owners have already laid claim to so much land, there’s little left for individual preppers and homesteaders to choose from. It’s slim pickings and the properties that are left are expensive. Investors from Germany, Canada, the United Kingdom, China, and elsewhere are paying farmers millions for their land, which is driving up property prices everywhere.
In Iowa, for instance, the cost of farmland has increased sixfold in the past 32 years. That means you’ll pay an average of about $5,000 per acre. In other states, like New Jersey, an acre of land costs over twice as much. However, some states are beginning to fight back. In Iowa, for instance, new laws ban selling farmland to foreign entities. Minnesota, Mississippi, North Dakota, Oklahoma, and Hawaii have enacted similar bans.
Unfortunately, most of these rules and regulations include exceptions, leaving loopholes for corporations to swoop in and snatch up more acreage. Land will only get more sparse, especially since most states don’t have foreign ownership laws. That’s why it’s important to purchase land as soon as possible if you’re serious about doing so. Otherwise, inflation and foreign buyers could push you out of the price bracket indefinitely.
High Demand for Land
Foreign entities aren’t the only ones driving up prices. Individual purchasers have contributed to the increase in demand too, and, consequently, the increase in cost. Farmers are just one of many demographics to contribute to high demand. After receiving large government payments in 2020 and strong commodity prices arrived, many felt more financially secure and ready to purchase more land. Thus, much of the land that was on the market in 2019 now belongs to someone else, leaving little else for aspiring preppers and homesteaders.
Millennials have also contributed to price fluctuations in recent years. Even before the pandemic, a growing number of young people were returning to the land. Now, the homesteading lifestyle has an appeal that many millennials simply cannot resist. In an effort to live more authentically – and sustainably – they’re moving to rural areas in droves and building their own homes.
Some of these plots they build to be self-sufficient, which can certainly offset costs in the long run. However, very few millennials can afford the price of land outright, which is why many of them begin their journey in an apartment or subdivision. Here, they can start composting, gardening, and even raising livestock like chickens or ducks. The latter options may include special licenses, so remember to check local and state regulations before keeping any animals, especially in the suburbs.
Zoning and Easement Issues
The basic purpose of zoning is to divide municipalities into different districts or zones, which may include land set aside for residential, commercial, and industrial purposes. Whether you want to purchase land in a rural or urban environment, zoning laws will determine how you can use and develop your property. It’s good practice to research these rules in your desired location before making a final decision. That way you don’t get stuck with an unusable property and sky-high mortgage along with it.
How might zoning laws render land unusable? Well, depending on your reason for purchasing the property, you may or may not be able to do with it as you please. Many ordinances include specific requirements outlining utility line locations, the type of buildings allowed, and the number of rooms in each one. Lot frontage, minimum lot area, side yards, and off-street parking may also come into play. Unless you’re aware of these regulations, you may run into issues when you start building.
Depending on who you buy from, the owners may also impose restrictions through easement agreements. This arrangement allows two parties to share the same property. Typically, the current owners allow the second party to use a portion of the property for a specific, predetermined purpose. In some cases, this option may prove more affordable in the short term. However, it can also limit your potential as a homesteader or prepper and cost you more money in the long run.
For instance, if you have livestock, you may be used to letting them roam freely and graze on open pastures. Once you enter into an easement, however, the property owners may require that you put up a fence to contain your animals and reduce liability. Then, you’ll have to scrounge up the cash to cover materials, labor, and design costs.
Other clauses may forbid you from cultivating certain areas of earth, which may then require you to clear new land and spend even more money.
Getting a Raw Land Loan
Buying land also comes with a different set of rules in regard to financing. Unlike the process of buying a house, purchasing property with the intention to build will entail applying for and receiving a raw land loan. This loan raises more problems than a standard mortgage, especially if you lack a solid plan or want to wait before beginning construction on a homestead or bunker.
Interest rates and down payment amounts hinge on the land’s intended use. The less of a plan you have, the riskier your purchase will seem to lenders. Empty land provides no immediate collateral, so the entire process will inevitably be more expensive. In some cases, you may even have to make a down payment of up to 50%, especially when speculative investment is involved.
Meanwhile, those who want to purchase unimproved lots will often make a 15-25% down payment, depending on the sale price. That’s because these buyers plan to start construction right away and, thus, provide nearly immediate collateral for lenders.
Of course, there are still a number of things that could go wrong with a build-ready lot, including unexpected costs and a lengthier timeline. However, banks often deem these risks less of a threat to their investment. Despite these and other common hiccups, your timetable is still manageable in lenders’ eyes. Subsequently, lenders are typically more willing to work with borrowers who intend to build right away.
One Step at a Time
Acquiring land for a home is a long, arduous process that involves dozens of steps, all with varying degrees of difficulty. It requires a lot of time, effort, and patience to score a good deal on even a small slice of land.
So, while prices may be going up, it’s important to take one step at a time and work at your own pace. After all, the best time to make a large purchase is whenever you’re ready, so there’s no need to jump the gun. It’ll all happen in due time.
That isn’t to say you should take a passive approach to saving and preparing. After all, you’ll still have to build a house and perhaps even clear more land after you buy it. Both responsibilities can drain you dry if you’re unprepared for them. That’s why it’s best to take a proactive approach and start saving as soon as possible.
Get your personal finances in order by reorganizing your budget and tracking both your saving and spending. Take note of any bad habits or trends that might help or hinder your journey towards earning a plot of land.
Use the data to weed out anything that doesn’t serve you. Perhaps that means investing in an espresso maker to save money on coffee or only eating take-out once a month or not at all. Create goals and stick to them to watch your savings – and confidence – grow.
Finding Funding Alternatives
If you’re unable to secure a raw land loan, you might assume your dreams of owning an off-grid establishment are over. Yet, there are many alternative funding options available, some of which come at no cost to you.
For instance, the federal government gives away billions of dollars every year in the form of direct grants. While most of the cash goes to state and local governments, a portion does go to supporting individuals and small businesses like independent farming operations.
The best way to secure a federal grant is to set yourself apart from the rest and use organic techniques or innovative growing methods. The U.S. Department of Agriculture even offers conservation innovation grants worth up to $50,000 to help pay for land, equipment, and construction. Private foundation grants are viable options, too, as they typically grant some funding to small farmers each year.
Whether you find grants to fund your endeavors or save up every single cent yourself, it’s important to cut costs when necessary. If you plan to purchase a little more land than is necessary for your operations, consider inviting a close family member to join you on the journey. Perhaps you can share ownership of the lands and split the mortgage. This idea is ideal if they’re just as interested in homesteading or prepping as you are.
Making Your Move
Sometimes, homesteaders and preppers will get caught in the perfect storm. Every element aligns in their favor and they score a great deal on beautiful land at the best time. However, not everyone has such a seamless land-buying experience.
In fact, even if you do everything right, you may still run into mishaps and delays along the way. That’s why it’s important to know yourself, prepare the best you can, and then make your move. By the time you do, you should feel confident enough to go all in and give it your all, which is a recipe for success if you know what you’re doing.
Author Bio:
Jane is the editor-in-chief of Environment.co. She is passionate about sustainability, gardening and homesteading.
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