Put this lesson to work
Use what you learned to review current opportunities, or ask a property-specific question before you make a decision.
What you will learn
- Why building and development costs vary from one property to another.
- Which site, utility, permit and construction expenses may apply if you decide to build.
- Why some parcels cost less to improve because valuable work is already in place.
- How local professionals can help you create a practical budget.
- Why land can still fit your goals even when building is years away—or not part of the plan at all.
One of the most common questions buyers ask is, “How much will it cost to build?” The honest answer is that every property is different. The cost depends on the location, the home or improvement you have in mind, the condition of the land and what may already be available.
The land is one part of the plan
If your goal is to build, the purchase price is only one part of the overall project. Depending on the property and your plans, additional costs may include:
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Site preparation
Clearing, grading, drainage and preparing a building area.
Clearing, grading, drainage and preparing a building area.
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Access and driveway
Driveway construction, road improvements or culverts.
Driveway construction, road improvements or culverts.
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Utilities
Electric service, water, sewer, well, septic, gas and communications.
Electric service, water, sewer, well, septic, gas and communications.
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Plans and permits
Design, engineering, plan review, permits and applicable fees.
Design, engineering, plan review, permits and applicable fees.
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Foundation and construction
The home, shop or other improvements you choose to build.
The home, shop or other improvements you choose to build.
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Finishing work
Landscaping, fencing and other optional improvements.
Landscaping, fencing and other optional improvements.
Not every parcel requires every item. A property may already have a driveway, utilities nearby, an existing well, septic information or a favorable building site. Those improvements can save time and money.
Every property is different
Two nearby properties can have very different development costs. One may have power at the property line and level ground, while another may require a longer driveway, additional grading or a longer utility extension.
The goal is not to assume the best or the worst. It is to investigate the particular property and understand what your own plans may require.
Talk with local professionals
When your plans become more specific, local professionals can help you develop a realistic picture. Depending on the project, that may include the city or county planning and building departments, utility providers, well drillers, septic contractors, general contractors, surveyors and engineers.
Ask what is included in an estimate and what is not. A low number can leave out permits, engineering, trenching, pumps, electrical work, finish grading or other necessary items.
If you plan to build, allow room for the unexpected
Construction and development sometimes uncover conditions that were not obvious during the initial planning. If you intend to build, including a contingency in the project budget can reduce stress and help keep the work moving.
If you are buying land to hold, for recreation or for future possibilities, you may not need a construction contingency now. Your budget may be limited to the purchase, closing costs, property taxes and any maintenance or improvements you choose.
Ken's Tip
One of the things I enjoy about land is its potential. Some people buy land because they're ready to build. Others buy it for recreation, retirement, or simply as a long-term investment.
I've even known buyers who look at their monthly land payment as a forced savings plan—each payment builds equity in something they own instead of spending money on things that quickly lose value.
Whatever your goal, choose a property that fits your budget and your vision for the future.
Frequently asked questions
How much does it cost to build on vacant land?
There isn't a single answer because every property and building project is different. Local conditions, utilities, permits and the type of home you plan to build all affect the overall cost.
Should I get estimates before I buy?
If you're planning to build soon, estimates or preliminary opinions from qualified local professionals can help you understand your potential costs.
Are development costs always expensive?
Not necessarily. Some properties already have improvements such as nearby utilities, an existing driveway or a favorable building site that may reduce development costs.
Can I buy land even if I'm not ready to build?
Absolutely. Many people purchase land as a long-term investment, for recreation, retirement or with plans that may be years in the future.
Should I include extra money in my budget?
That depends on your plans. If you intend to build or develop, it is wise to include a contingency for unexpected expenses. If you are purchasing land to hold, your budget may simply include the purchase, closing costs, property taxes and any maintenance you choose to do.
From My Experience
Everything in Land University is based on what I've learned over many years of buying, selling, developing and researching land in Northern California.
My goal is to help you understand the questions to ask and the issues to investigate before buying land. Every property is different, laws change and city and county requirements can vary.
I'm not an attorney, licensed land surveyor, engineer or government official. These lessons are practical education based on my experience, not legal, engineering, surveying or tax advice.
Please verify important information with the appropriate city or county departments and consult an attorney, licensed surveyor, engineer, CPA or other qualified professional when needed.
— Ken Grisham