The Right Way to Buy a Lot, A Detailed Guide.
I have been looking at several lots of land lately. I have been looking for myself as I am going to build a home and I have been helping a couple of investors of ours find others.
Since I have been going through the evaluation process over and over I thought it would be a good time to share with you what I think about when I evaluate these opportunities and what I have learned over the years.
Generally speaking lots are for one owner to put a house on and maybe a guest house. Most lots are smaller pieces of land and that is what I will be writing about today.
When you start looking for lots you will often find two types that are common.
Lots within a project, which means there is a developer of some kind and lots outside a project which means there is no developer or another way of saying this is that you are the developer.
When the land is completely raw with no hooked up infrastructure or even a cleared building site the evaluation process begins with figuring out the costs to get a lot ready to build.
In Nosara there are many versions of lots you can buy from raw jungle with no services to all the services available on a cleared piece of land.
At any rate, you will be figuring out some or all of the following costs.
Cost to create access road/driveway
Cost to create a building site (Often called Plantel in spanish)
Cost bring in utilities (Water, Electric, Septic/Sewage).
Lets start with determining the cost of access to your lot by making a road or driveway.
Dirt work to make dirt roads and driveways is pretty inexpensive if you know what you are doing. Unfortunately, you can spend a ton of money here if you don’t pay close attention to the topography or type of soil of the lot.
First make your plan for access, decide where you want it to go and how it will fit onto the land.
Start by walking the the area where you plan on putting the road several times to get an idea for how how you want to do it. Sometimes you may need to add rock to bring up the level of a site and others you need to punch in a short access road to get to most buildable area of the land.
I put up colored tape where the road will be to get a sense of scale and to see where the new road will be relative to the rest of the surrounding area.
You will need to get a couple of bids from local dirt workers if possible. Usually you will be starting with a ball park idea on costs from your real estate agent, but I would always get a bid or two before you buy the land just to make sure there won’t be any surprises.
If you need to cut in a road and want to keep costs down focus on flat lots. Avoid long access roads and watch out for lots that are located in steep areas.
Steep roads or winding access roads can take much more time to create and be more technically difficult to execute. It is not just length that costs, but the time it takes in sculpting the ground that determines the overall price. If it is rock it will take much longer than an if it is clay, if it is clay it will take longer if it is wet like in the rainy season. As a result most dirt work gets done in Dry season between December and April.
If you do have to create access in a steep area make sure to stretch out any curves as long as possible so that you don’t end up with short sharp curves which can cause difficulty navigating and make people uncomfortable.
You will also need to understand drainage. Most people underestimate this and end up redoing roads several times to get them right especially if it is their first go at it. To get it right means guiding the water run off in a way that will preserve the road work you have already done. If you don’t you can lose access to your lot in rainy season when water starts running down your driveway in large amounts.
Guiding water does not have to be expensive, you can achieve perfect drainage by angling the grade to shed water towards areas that are less sensitive. An example of a sensitive area is an area with with freshly cut dirt that is soft and not compacted. This type of area is extremely sensitive to rainfall and running water.
The way I approach roads is to make sure I see the new road with rain on it to see where the water flows then use that information to make any course corrections.
Water is the biggest enemy of roads here, mostly this is because they are dirt and when the water really flows like during a heavy rain the water will cut grooves in the road or sometimes completely wash it away.
Next is the building site.
You may be creating the site to build your house on. Sometimes this is very straight forward, but other times you have to understand the topography to create the best spot. Years ago when I bought my first property I made 4 building sites acre a 10 acre piece. The best view as at the top of the property but the building site seemed really small.
Originally I wasn’t even considering it a building site, but I was told I was crazy and it would be great site. To make it work I just needed to go down a bit where the ridge flattened out that would allow me to expand the footprint of the site.
I was convinced and decided to do it.
I dug down from the original level about 20ft or 6 meters, and pushed the excess dirt onto a flat spot on the ridge below. It ended up working fine and I built my house there eventually, but since I had dropped level of the site by 20 ft, there was now a 20ft dirt wall at the back of the lot. This wall was created as I took the level of the site down farther and farther from the original height.
This caused me to have to build a retaining wall which of course has extra cost.
Over all the cost of the retaining wall was not a big deal for me, but it can be very frustrating if you didn’t budget for one and have to add the extra cost to your bottom line.
General rules of thumb are that you don’t want to use fill to expand a site. What this means is that you don’t want to push dirt onto a steep grade and just leave it because that is always the first to slide. When you are looking at lots with homesites already made make sure that the tractor operator didn’t fill in some of the site on steep grades. Without sufficient hold dirt will just slide down the steeper angle when it rains and you can lose a huge chunk of the site if you are not careful.
Once you cut in your homesite or roughed in road, you have exposed dirt and this not good to leave exposed. You can lose everything in one rainy season if you don’t protect the work you did by planting, adding drainage, or compacting the soil.
You will need to implement an erosion control strategy. The cheapest way to do this is through planting and Vetiver is the best thing to plant if you can get it.
Vetiver is a clumping grass with a deep growing root system that holds dirt together through the toughest rains. Not only are the roots good at holding dirt the but grass part above the ground can be arranged to guide water to places you want the water to go, like a culvert. This preserves topsoil and prevents the dirt from getting carried away down the mountain.
If Vetiver is not available, plant corn as a first stage top soil holder and simultaneously plant other plants that grow slower grow but will hold soil. This works in two ways, the corn grows really quickly and holds the topsoil in place and gives the slower growing plants a chance to grow and take hold after the corn dies.
The other thing you can do seems underwhelming, but it works. You can dig small ditches with a shovel usually only a inch or so deep in areas where water is building up or cutting into the road. These little ditches give the water a place to run and with them you can guide water all over the place and most importantly you can make it go where you want it to go.
Next step, Utilities
Bringing in power is something you will most likely have to do unless you are going off-grid.
In developments, the power is often brought to the lot, but not inside the lot so that you can plan your house and then decide exactly where you want to the power lines to go.
If you are not in a development you may have to buy a transformer, this is surprisingly common. How it generally works is you buy the transformer and then once it is installed the power company takes over the ownership and maintenance. Definitely look into this when you are costing things out, it is usually not a large expense and almost alway under $5,000, but if you have a really tight budget it comes as an unwelcome surprise.
If you have hook up water to your lot, then usually the municipality/ASADA or a well is where it will come from.
Drilling a well is usually not something you will have to do unless the lot is really big or in a far away location.
You will need water to get a building permit so if you plan on building make sure you understand where the water is coming from.
Even if water comes to the lot and you are in a development, it is worth checking out how the system is set up and seeing how reliable it is. Several locations in Central America have water issues in the sense that systems break and water gets shut off. In Nosara shutting off water has become increasingly common during the dry months of the year.
The easiest way to over come this is to have your own holding tank that feeds your house directly and that way you won’t notice if the water gets shut off for an hour or a day because you will have your own back supply.
Control your view.
It is possible to buy a lot with a insane view only to have neighbor in front of you plan a giant type of bamboo that slowly takes over and eventually blocks your view.
There is nothing you can do about this other than have your neighbor disappeared, which I don’t recommend. Find out what is in front of you and figure out if it is possible to be planted out or blocked in some way.
The bottom line is your are evaluating if a lot is worth the price. If you end up buying it you are trying preserve that value over time at least and increase the value at best.
The best way to do this is make sure that any catastrophic type loss is mitigated as much as you can control.
For example, make sure the site is secure and won’t slide down a mountain or that a building built on top of the land will stay secure. It can be worth discussing with an engineer what will have to be done to create a secure building. I have seen sites that were build able but the cost to make a structure safe because of the elaborate foundations necessary were not worth making a purchase.
You will need sufficient water, no water, no value. Learn about how water is provided to the lot or what process you will have to go through to get water to the lot. In Nosara this is a critical step don’t assume you will get water just because everyone else has, do the necessary leg work of asking questions or meeting people who can give you the straight talk on what you will need to do to get water.
Find out who the neighbors are and what they plan on building if possible. Container homes next to your million dollar mansion is generally not good for you.
Find out about any easements and how they work, easements can be a big pain if they cause you to lose control of your property in some way.
When evaluating lots I think it is important to understand what each steps adds in terms of value that way you can make a good decision between $100,000 raw lot with view and $200,000 fully serviced view lot that is ready build. If you don’t know any of the costs to develop the raw lot it is impossible to to know which is the better value.