How to buy and build on rural land
Dreaming of the perfect country getaway? Here's how to be sure you don't get taken.
By Gerri Willis, for MONEY Magazine

NEW YORK (MONEY Magazine) - I'm willing to bet that most real estate investors have a blind spot. Call it a prejudice. You focus on buying close to large population centers, big employers and the best schools.

The sticks, you probably think, are for hicks. But you could be missing a big opportunity. Fully 97 percent of this country is rural land, and some of it is experiencing a resurgence in value.

"I grew up in the flat hills of Kansas, and that land -- pasture land -- as recently as three years ago was selling at $400 to $500 an acre; now you pay $1,000," says Jack Odle, editor-in-chief of Progressive Farmer magazine. "What we're seeing is a significant trend of people moving to the country."

You don't have to trek to the middle of the United States to find hot rural properties. People are migrating to places like Hill Country in Texas, the Blue Ridge foothills of northeast Georgia and the craggy islands of San Juan County in Washington State for a slice of what we all hope will never disappear -- the beauty of rural America.

Some folks use the hinterlands for recreation, such as hunting or riding ATVs; others buy with the idea that they'll make a bundle one day when the suburbs encroach on their back 40.

But for many of us, the ultimate plan is to build a weekend or retirement home.

Whatever your dream, you need to stay wide awake and think like an experienced developer. That means not overpaying in the first place -- and making the right upgrades at the right price.

Indeed, land and land prep should account for about 25 percent to 30 percent of your total buy-and-build project's costs, judging by National Association of Home Builders data. Think it'll be easy to control your expenses? Ha.

The land mines, so to speak, are everywhere.

1. The further away from civilization, the more expensive it can be to build.

Lugging all that sheetrock miles from the metropolis can easily add 10 percent to 20 percent to your costs. (Plus, suppliers in some areas are now adding energy surcharges.)

Be especially thorough when checking out utilities. Clearly, you've got to have access to water, but unlike when you buy a suburban tract home, there's no guarantee that water lines will run to your property.

Wells can run $5,000 or more to install in some spots. Find out how deep you'll have to go to get water. And be aware that prices may escalate: If the water tastes sulfurous, for instance, you'll have to line the well or install a filter for water that's palatable. Ka-ching, ka-ching.

If there is no sewer (and there likely won't be), determine whether the land can support a septic tank. The county health department or a local engineering firm can test the soil's "perk rate" to find out how fast water moves through it.

Likewise, you'll need to know whether there are adequate electricity hookups. And if you're really roughing it, you can forget using cell phones: There aren't all that many towers in the boondocks.

One way to learn about a market is to hire your own appraiser. Check out the American Society of Farm Managers and Rural Appraisers' Web site at

And don't forget to check with the local bureaucracies to find out whether there's any master plan for the area you're buying in. That way you'll know if the foundation for your at-one-with-nature getaway will be a few yards from a future industrial park.

2. You can count on extra costs for things you never dreamed of.

Ever hear about the city bumpkins who buy their dream country property atop a leafy hill, only to find they can't even afford to build a driveway to the place?

Grading might not be all that expensive, but you may have to hire a forester to tell you which trees to cut or remove and sell to make way for your abode. You may even have to fence the property to protect it -- and all your other assets -- from illegal dumpers or from trespassing hunters who shoot themselves in the foot on your highly liable land.

After six ATVs were stolen from Henry Long's property outside Montgomery, he put in his own makeshift security system: a shipping container to stash his rec vehicles in, out of reach of vandals.

Then there's maintaining basic access to your site. Heavy rains, for instance, can wash out unpaved roads you've put in to get to remote parts of your property. You'll also need an environmental audit, ideally conducted by a seasoned pro.

"It was common on these ranches years ago that a rancher had a pit where he dumped his trash, including chemical cans or old oil cans or car batteries," says Sam Middleton, a third-generation land broker in Lubbock, Texas.

These days, though, you can require the seller to clean up the mess before you buy. (The good thing about rural land purchases is that buyers and sellers often negotiate 90-day periods to work through such contingencies before closing a deal.)

3. Finding the best lender could be harder than you think.

If you go to the bank where you got your primary mortgage, chances are you'll be charged a higher rate for your loan -- and must put more money down -- because it's not considered a primary home.

Progressive Farmer's Odle suggests hooking into the Farm Credit System, a nationwide network of borrower-owned financial institutions and service organizations that lends billions each year to rural homeowners and farmers through local farm credit banks. (Congress started the network in 1916 to make sure farmers could get credit at a fair rate of interest.)

A more contemporary option: the Web. Eager Internet banks like Indymac are worth checking out.

Five Rural Hot Spots

  • Flagler County, Fla.

Where: Between Daytona Beach and St. Augustine

Why it's hot: Beaches to the east, lakes to the west

Where to buy: Five acres of farmland west of U.S. Highway 1 (only 20 minutes from the beach) sells for $100,000.

  • White County, Ga.

Where: An hour N.E. of Atlanta

Why it's hot: Blue Ridge Mountains, Chattahoochee River, temperate climate

Where to buy: Sites start at $35,000, but check the county's development restrictions first.

  • Burnet County, Texas

Where: An hour N.W. of Austin

Why it's hot: Hills and valleys, woods and water. Property tax breaks for agricultural uses.

Where to buy: Three- to four acre "view" lots near the town of Burnet start at $100,000; head east to Bertram or Oatmeal, and they're $25,000.

  • Taney County, Mo.

Where: South of Springfield

Why it's hot: The Ozarks, plus Branson, Mo.'s music scene

Where to buy: Most anywhere: $10,000 gets you two acres on a lake; $2,000 puts you on a ridge with a view. But rocky terrain adds to building costs.

  • San Juan County, Wash.

Where: Off state's N.W. coast

Why it's hot: Unspoiled coastline, unlimited boating

Where to buy: Just five of its 172 islands get public ferries, and space is scarce there. Land for less than $100,000 is a deal; anything by the water is at least $250,000. Top of page