Thinking About Buying Land in Maryland?: Here’s What You Need to Know
Maryland’s Eastern Shore is an exceptional and beautiful place to live. It sits on the eastern side of the Chesapeake Bay, offering unstoppable views day and night.
It includes 9 counties, and just under 8% of Maryland’s population lives there. The area offers a 30 block boardwalk, ocean and bay views, and great boating and fishing.
Buying land in Maryland is a great goal. Considering a home or vacation rental on the eastern shore is even better.
And there’s still land available for those who want to start from scratch. But you need to know a few things about purchasing land before you start.
Buying Land in Maryland: What to Know
Here are some ways to prepare yourself to buy land. The more you learn, the easier the process is.
1. Know Your Purpose
Are you looking to build a beautiful vacation home to enjoy during your days off? How about a rental property to cash in on during tourist season? Or, you desire a place to settle into and live your best life?
Knowing what you want upfront can help you decide where to search for land. Here are some questions to help you determine what you want:
- How often do you plan to be there?
- What kind of views do you want?
- Do you plan to host visitors or entertain?
- Are you looking for neighbors or solitude?
- What kind of maintenance are you prepared to do?
- Can you live with the weather patterns?
Sort out the details before you start looking. It helps narrow down the search.
2. Know the Rules
There are rules to follow on most pieces of property. Ask yourself: how do you plan to use this land? The answer to that question has a serious impact on the land you can actually buy.
Ask yourself: how do you plan to use this land? The answer to that question has a serious impact on the land you can actually buy.
Residential zoning is for homes only. Some towns and cities allow for combined zones, so check for options in the area.
If you plan to use it for anything commercial, you’ll need to make sure the land has zoning for it. Most cities and townships do not allow commercial business in residential zones unless approved by special exception.
Check with the city planner to be sure. They will have a long range use plan for the entire area. They can tell you exactly what is required. To find out more information, visit the Maryland Department of Planning.
Planning to live on your property or rent it out? You’ll need access to utilities. If it doesn’t have them, you’re expected to front the cash to connect them.
Hooking up utilities can be expensive. Include these expenses in your financial plan. You may need a loan to help.
Get insight into average utility costs across the Eastern Shore with this free & handy tool. It tells you how any home stacks up to its neighbors, and which upgrade projects can save the most money, energy, and water.
Covenants and Restrictions
Some properties are in areas controlled by homeowners associations. They include rules and restrictions you’ll need to follow.
This can affect whether you can rent out your home. If you have plans to do so, check the homeowner’s rules before you buy.
They have strict rules for how your property’s appearance. Some even dictate what you can build on your plot. Including extra buildings, like sheds and carports.
Check the listing for details. Request a rules and bylaws document. You need to know if you can live with the rules before you buy your new home.
3. Know the Process
Here’s what you can expect when buying land on Maryland’s Eastern Shore.
Prepare Your Finances
You’ll need more money up front. Most loans for land need a larger down payment and conventional loan terms. You won’t be able to use government subsidized loans when buying land.
Make sure you can afford a loan payment. Not only for the land, but also for the home you intend to build, too. Costs can add up.
You’ll go through a series of evaluations during the process of buying land in Maryland. Some are for environmental information and safety. Others establish property value.
One is a soil evaluation known as the Perc Test. It establishes the water table and topographic information about your land. It’s required for all developed property.
A perc test indicates if the ground will absorb the water required for a septic system … and how fast the water will be absorbed. The absorption rate is used along with the size of the proposed house to determine the amount of septic drain field that will be required.
If you are buying into a subdivision, the developer may do it. If not, prepare to have it done yourself.
Securing a Loan
Land Only Loans
Planning to finance only the land? The terms of this loan will be shorter than a traditional home loan.
Your down payment may range from 20% to 50% of the loan amount. Expect higher interest rates with this type of loan, too.
Land and Build Loans
You can get longer terms if you include funding for your land and the home you plan to build. Remember your budget. Take it with you and discuss your expectations with your lender.
You’ll get a preapproval, first. Then, you’ll go through documenting your income and closing the property deal. Final approval comes in the form of your loan package.
That down payment is due when you close on your loan. The lender will give you directions on how to pay it
Want more info? Check out my guide to all things Mortgages!
4. Hire Your Team
Buying land is a little bit different than a traditional home deal. It isn’t something you want to navigate by yourself. Get the right people on your team to help you cover all the bases.
Why? Because this deal will affect your lifestyle and finances. You want to make sure it’s a beneficial one.
A Seasoned Realtor
Many of the things listed in the rules section get sorted out by a good realtor. Your realtor will be your first contact when starting to look for property. Craig can help you find properties that work for your needs.
As we said above, a good lender can help you navigate the loan process without the stress. Getting a loan can be difficult when purchasing a piece of land. Look for a lender that has experience in this area.
There can be special tax considerations when you buy land. Talk to your CPA about any tax breaks or tax payments you can expect.
Ready? Let’s Get Started!
Buying Land on Maryland’s Eastern Shore is an investment in building your dream lifestyle. Whether you’re actively looking, or simply daydreaming, these rules of thumb will lead you in the