Buying Rural Property: A Complete Guide Before You Buy

Buying a piece of rural property is a dream for many people. Some envision starting a hobby farm or evolving into a working farm. Others see themselves owning a cabin on the lake where they can bring their family on the weekends.

But there’s a lot to know about buying rural property. Before you start searching for that parcel of rural land that aligns with your dream, you must know what to expect and the hurdles you might encounter.

Your very first step before buying a rural property should be to set clear goals. You should know from the start what you plan to do with your new property so you can create a realistic budget and consider your financing options.

Use these 10 tips to help minimize the potential stress of buying rural land and know how to clear any hurdles that come across your path.

1. Decide what type of rural property you want to own

Rural properties offer a diverse range of options. You can use some properties to build a primary residence and others to do business. Because you’ll need different types of financing for different uses, it’s important to know ahead of time what you want to use your rural property for.

• An affordable home: Most rural homes are built in popular house styles, such as Cape Cod and ranch-style homes.
• A weekender property: A weekender property is typically a vacation home for getaways and outdoor activities, such as hiking, swimming or gardening.
• A hobby farm: A hobby farm is a small-scale farm. It can be a few acres or up to 50 acres. Owners run the farm as a passion project rather than a profit-earning venture. The activities on a hobby farm don’t count as a business activity for tax purposes.
• A working farm: Many people purchase working farms and ranches to grow produce or raise livestock. Working farms are larger than hobby farms, averaging around 464 acres in 2023. The IRS classifies working farms as a business because they make a profit. Buying a working farm may require special financing.
• A self-sufficient property: Self-sufficient properties can generate their own power – often relying on off-grid solar or wind technologies. Owners typically live a homesteading lifestyle, raising animals and growing vegetables.
• Raw land: Some buyers buy land to build a home rather than purchase an existing home. Investors typically purchase raw land to buy and hold or flip the property. Many buyers keep the property until the value increases, and they can sell for a profit.
• Rental or investment property: Common examples of rental or investment properties include short-term and long-term rentals. Short-term rentals, like Airbnb listings, cater to vacationers. Long-term rentals lease a property to tenants for extended periods, usually around 1 year.

2. Learn how to find rural homes for sale

After pinpointing the right property type, the next step will be to find the right property. If you’re new to the area or buying real estate, you may need some help figuring out where to find rural real estate for sale.

One of the best strategies is to talk with a local expert. Local real estate agents can offer valuable insight into finding the perfect property.

3. Scope out land options and consider locations

Some fundamentals of shopping for a home apply to shopping for land. Just as it isn’t wise to buy a home without extensive research and understanding the state of the market, you shouldn’t purchase rural land without doing your homework.

Shop around to get an idea of locations that fit your lifestyle and offer the features you want. Shopping around can also help you identify the areas that don’t align with your goals.

The right parcel of land will depend on what you plan to use the land for.

If you’re buying land to build a house, confirm the lot is suited for construction and consider the cost of clearing and grading the land. If you’re buying land to farm on, ensure the soil is suitable for farming. Your research should also include learning about any easements that may limit your land use.

4. Browse lenders and loan options

Most buyers can’t afford to buy a piece of property in cash. Most prospective landowners need to shop around for a loan. When applying for a loan for land, a lender will likely require you to outline your intended use for the property. Financing for a primary residence, rental or business property will likely differ significantly and offer unique advantages associated with the property’s use.

For instance, if your primary interest is a primary residence, the federal government offers U.S. Department of Agriculture (USDA) loans to help low- to moderate-income families buy or build homes in eligible rural areas.

USDA loan property eligibility requirements

The home must be a primary residence in a USDA-approved area to qualify for USDA financing and meet the following property requirements:

• Structural requirements, such as an adequate foundation and roofing
• Functional heating, cooling and electrical systems
• Adequate water supply and plumbing for waste removal systems
• Accessible from a road, street, driveway, etc.
• Working doors and windows

The federal government also offers loans for individuals who want to buy rural property to use as a primary residence and a farm. Research your options to see which loan program you may qualify for.

5. Be aware of codes and restrictions

Before buying property, research local codes and zoning and check into any restrictions or encumbrances. In some areas, rural zoning limits how much you can develop a piece of land. These laws are intended to preserve open land but could be a nasty surprise if you bought the land intending to build on it.

Here are some zoning code categories that can restrict usage on a plot of land:

• Residential
• Commercial
• Industrial
• Agricultural
• Historic

A single zoning category can have even more subcategories. For example, a residential zone may be classified as single-family, suburban or multifamily, restricting your potential use of the property for other purposes.

Another factor to look out for is local building codes. Whether you’re buying or building a residential, multifamily or commercial structure, it must meet its code requirements. Check with your local government to learn more.

Finally, you should do your homework on property lines. Determining where one property ends and another begins in rural areas is a common challenge. Before you close on a property, request the property’s boundaries from the county assessor’s office. You may learn that the land isn’t as large as you thought. Or you may discover that what you thought was your property is part of a local park or its right of way that you maintain, but the city owns it.

6. Research grants and specialized loans

Buyers interested in purchasing rural land can look into many grants and financing options intended for land purchases. It’s vital to research your options before you buy rural land.

The USDA offers grants for certain types of land, such as land for growers of a particular specialty crop, including fruits, vegetables and tree nuts. Individuals interested in building community facilities or starting small businesses can also research available grants.

Other financing assistance includes farm loans for family-size farmers who don’t qualify for a commercial loan and loans for beginning farmers and ranchers. Browse the USDA’s list of grants and loans to see what else you may be eligible for.

7. Know what tax breaks to expect

You may be eligible for some tax breaks depending on where you live and what you use your rural property for.

The IRS allows businesses to deduct expenses associated with running the business. If you’re running a business on your land, you should be able to deduct ordinary and necessary expenses for your business.

Some property tax exemptions can help lower your tax bill. Farmers may be eligible for agricultural property tax breaks. Depending on the state, farmers may also be eligible for green energy equipment exemptions or for agreeing not to develop land.

8. Set a maintenance budget

The upkeep of rural property usually requires a substantial amount of money. If you own a large acreage property, you’ll likely need to invest in heavy-duty equipment to maintain the land. Add checking out the equipment and storage facilities already on a property to your property shopping checklist.

If you’re buying rural land for commercial reasons, you’ll have even more expenses, including buying additional equipment and other business operations expenses.

If you underestimate the maintenance cost of your land or house, you may find yourself staring at an unexpectedly large bill to cover. When you estimate your monthly budget, include a generous budget line item for maintenance.

9. Review available utilities

Rural living often means relying on private well water, septic tank systems and heating from oil or propane. But in some communities, municipal utilities are available. Learn which utilities connect to the property and which an owner must generate independently.

10. Look for an experienced REALTOR®

Working with an experienced and knowledgeable real estate agent can make or break your property purchase. Interview multiple agents and prepare a list of applicable questions to ask to help narrow your search.

The bottom line: Understanding a rural property ensures country life is right for you

A good plan can be the difference between a smooth or a rocky experience when buying rural property. Decide what type of property you need and create a realistic budget for purchasing and maintaining the property.

Shop around for lenders, loan options and grants. Research local codes, zoning regulations and other restrictions that may turn your adventure into a disaster or an expensive misstep.