Well, you are that far. You have some money laid aside or a scheme in your head, and you are hung up on a mighty big question. Shall I take a ready-made house, Or up out of the dust? The decision between buying land vs property is a decision that every real estate purchaser must experience at least one time in his/her life.
Other individuals desire a house today in order to have it tomorrow so that they can get their furniture in. Others would like to have uncultivated land as their future or that of their children. And many simply want to know whether or not buying land vs a house is a good financial decision.
This guide will dissect it all. No real estate lingo. No sugar coating. All you need is a simple, straight up comparison between buying land vs buying property so that you can make a decision that would better suit your life at this moment, your financials, and your tolerance level.
Understanding the basics of land vs house
Let’s keep it simple right from the start.
When we talk about a house, we mean a fully developed piece of real estate. It has walls, a roof, plumbing, power, an address, a driveway, and a mailbox. You turn the key, walk in, and go to sleep that night. It is shelter that is ready to use on day one.
When we talk about land, it is usually raw or vacant. No pipes, no wires, no driveways, just the natural ground. It might have trees, it might be desert, but it is a blank canvas.
The absolute biggest difference when comparing land vs house is time. A house is ready for you today. Land requires patience and vision. If you are comparing buy land vs house, you have to sit down and ask yourself how much patience you actually have. Are you in a rush to live somewhere, or do you have time to wait?
Breaking down the cost of land vs cost of house
Upfront, yes. Buying land vs house needs much less cash on day one when you are merely purchasing the dirt. On CommonLots you can have a beautiful and a large acreage in states such as Arkansas or Nevada, at a price that would not even make a down payment on a small city house.
But you must see the big picture. In case you purchase a house, the price will cover both the land and the physical construction. All this is rolled up in a single large figure. When you purchase land, you only see the price tag as the first step.
You also need to pay to have raw land cleared of trees or brush and the dirt flattened, drilled a well of water in case there is no city hookup in the neighborhood, have power lines of some sort brought into the yard which is costly in a very short time, have a decent septic system installed, and have a dirt driveway paved or graded, just so you can park.
So when comparing buying land vs buying house using only the listing price of the property you are going to have a huge jump scare in the future. It is expensive to prepare raw land. It can be lots of money at times. You must consider such development costs in your overall budget before you sign anywhere.
The big debate: buying land and building a house vs buying a house
It is here that the majority of people become trapped in their minds. They look for buying a land and building a house vs buying a house since constructing your own residence sounds like a dream come true. You have it your own way. No quaint tiles of the former occupant. No layout issues. You determine the location of the kitchen, as well as the size of the windows.
But to buy land and build house vs buy house is a choice between convenience and control.
Buying a house vs buying land and building means dealing with contractors. It means getting county permits for every little thing which can sometimes take months and in rare cases, a year or two to actually move in.
If you are seriously looking for buying land and building vs buying a house, you need to be sure that you have the patience for construction. If you do, then building can be very rewarding for you as it gives you a custom life on your own terms. But if not, then buying a house vs buying land is the better move where you buy the ready made house to skip the contractor headache.
Financing realities: mortgage for land vs house
Banks do not treat land and houses the same way at all. If you walk into a traditional bank wanting a mortgage for land vs house, you will see a big difference fast.
Banks love houses. Houses are safe to them. If you stop paying your mortgage, the bank can foreclose and sell the house easily to someone else who needs a place to live.
Banks do not like raw land. It is seen as risky to them. There is no house on it, no rental income coming in, and no guarantee you will actually ever build anything. So getting a bank loan for land is much harder. They usually want huge down payments. Sometimes 30% to 50% upfront in cash. The interest rates are higher. The repayment terms are shorter.
This is where owner financing comes into play. It has been very popular among realtors, so when you’re searching for buying house vs buying land, keep it in mind that you can skip the strict banks completely. Owner financing a land is a method where you pay the seller directly in monthly installments for the land.
- Approval is flexible and credit checks are often skipped entirely
- Terms are clear, simple, fixed
- You completely avoid the heavy bank paperwork and waiting periods
This method makes the process of buying land much easier for the people who don’t want to empty their bank accounts all at once.
The investment perspective: investing in land vs house
A lot of folks aren’t looking to live on the property at all. They just want to put their hard-earned money somewhere safe and watch it grow over time. So they look heavily into investing in land vs house.
Here is the honest truth about land vs house investment. Buying land vs house for investment is a completely different game with different rules.
Houses produce immediate income. That is why people look at buying land vs rental property. A rental property pays you every single month. You get cash flow from tenants. But you also get broken toilets at 2 am. You get bad tenants who damage the hardwood floors. You have to fix leaky roofs and replace water heaters when they blow up. Being a landlord is an active, tiring, hands-on job.
Land just sits there. It is quiet. It doesn’t complain. You don’t get a monthly rent check from raw vacant land. But you also don’t get phone calls about a leaking pipe in the middle of winter.
Many people prefer buying land vs buying property because land is a hands-off investment. You buy it, you pay the small taxes, and you wait. Those who want immediate cash flow go for houses, but those who want a long term hold without the headache prefer the dirt.
Taxes and holding costs
Speaking of taxes, this is a huge win for land ownership. Property tax on land vs house is not even close.
Houses are taxed based on the structure and the improvements. The nicer the house, the bigger the square footage, the higher the tax bill from the county. Land is taxed just as land. It is usually very cheap. Sometimes just a few dollars or a couple hundred bucks a year depending on the state and county you are in.
If you are holding an investment for 10 or 20 years, the holding costs matter a lot. Cheap property taxes make land a very stress-free investment compared to a house that needs constant money for taxes and maintenance every year.
Appreciation and value: land vs house value
People get confused about land vs house value. But what most people don’t focus on is that houses lose their value over time while land appreciates. A 30-year-old house needs a new roof, new floors, new appliances, new paint, and the physical structure loses value and durability as time passes if money isn’t put into maintaining it constantly.
When people compare how to find out land value vs house value, they mostly see that over the years, land is what actually got the prices up in certain areas and not the old houses. This makes land the truest, ever growing asset.
How to make your final choice
Buying land vs property makes perfect sense if: l you want a long term, low stress investment for the future l you want to build a custom home later when you retire l you want a place for recreation, hunting, or camping right now l you want to use owner financing to buy without a traditional bank l you want privacy and space between you and your neighbors
Buying a house vs buying land makes more sense if: l you need a place to live right now, this month l you want immediate rental income from tenants l you don’t want to deal with permits, wells, and contractors l you want a traditional 30-year mortgage and have the credit score for it
Using CommonLots to explore your options
If you lean toward land, you are in the right place. CommonLots has listings across multiple states like Nevada, Arkansas, Florida, California, and Tennessee.
You can browse land for sale and see owner financing options right there. You don’t have to guess about the monthly payments or the down payments. When comparing buying land vs buying a house, the best thing you can do is look at the numbers and see what’s the actual cost of land around you or in an area that you want it in.
Take your time. Land is not going anywhere. Ask questions, check the legal access, and make a decision that feels right for your life without rushing into anything.
FAQs
How realistic is it to buy a mobile home and land vs house?
Very realistic and very common amongst low-end buyers. Purchasing land and installing a mobile home on the land is much cheaper than purchasing a conventional house in the majority of locations. Zoning is the greatest obstacle. Before you purchase a piece of land, you need to ensure that the particular piece of land can accommodate mobile homes. After zoning is removed then it is one of the most viable means of accomplishing homeownership without a huge mortgage looming over your head.
How to find out land value vs house value?
The county tax assessor has a site that you can look at to see the value of the land as compared to the house on a developed property. They tend to divide the value that is assessed into two: “land value” and “improvement value” (which is the physical house). This provides you with a transparent, above board view of the value of the dirt in comparison to the building constructed over the dirt.
What value is house vs land?
The physical house is also depreciated by the passage of time as the materials become worn and they require replacement. The land itself, as there is a limited space and an increase in population, values over time. The value of the property in most of the high cost housing markets is composed primarily of the value of the land on which the house is built and is merely an addition to the land value.
Which is best to buy, land or house?
The best option is not one, it depends on your needs. A house is a good option when you require instant shelter or instant rental income. Land is preferable when you are interested in low maintenance long term investment or when you wish to have a place to build in future without having to pay a lot of money as is the case with a home.
Why is land the best investment?
Land is the ideal investment to many investors since it is a non-renewable resource. It is non-contact, that is, nothing can break, spill or even burn the house down the way a house can. There are very low property taxes, you can maintain it all but day and night, and hold it for decades with minimal worry as the natural value increases.