How to Determine How Big of a Lot You Should Buy

The golden rule of real estate is location, location, location. And one of the best ways of making your dream of owning a home in a specific location a reality is to buy a parcel of land in your desired spot and build.

When buying or building a home, you’ll have to answer a lot of questions, such as do you want a ranch or multi-level home? Do you want a brick exterior or siding? And what kind of finishes would you like in your kitchen? But the first — and one of the most important questions to answer — is how big of a lot should you buy?

Ultimately, the size of the lot you select for building your home is a deeply personal decision that only you can make. Here’s a list of six factors you should take into consideration to help you make the decision that is best for you.

Size of the Home

Before picking out paint colors and interior finishes, the first decision to make when buying a plot of land is determining the size of the home you want to build. If this is your first-time buying a home, you may not know how much land you need for a 2,000-square foot home. That’s when it pays to work with experts.

When selecting a real estate agent, hire someone who has experience not only helping buyers find land but also developing it. After finding out how big of a home you want to build, they will help to identify plots of land that meet your needs. As a bonus, they will likely also have contacts and referrals for local contractors who can help you with the building phase of your project.

Proximity to Neighbors

When you buy a home that’s already built, you don’t have much choice in how closely your house is situated to your neighbors. But when buying land to build a home, you have more flexibility if you’d like to increase the amount of space between houses.

In addition to buying a lot large enough for distance, you may also be able to select the specific location and direction your home faces on the property for even more privacy. For example, instead of walking onto your deck and looking directly into your neighbor's kitchen, you can arrange it so you face a line of trees or a blank field. A word of caution about empty spaces: Find out if that empty field you’re walking out into isn’t slated for development, otherwise you could end up with a new neighbor instead of a view.

A home with privacy features isn’t just a benefit for you. It’s a smart investment when you eventually sell, as homes with more privacy tend to fetch a higher price than similar homes without.

The Local Environment and Topography

The condition of the land itself can also help you decide how big of a lot you should buy to build. Not all parcels of land are equal, with some having limited space where you can safely construct a home.

For example, if you’re looking at a piece of land on a mountain, or even a sloping hill, you’ll want to consult with a real estate expert on how much of the land is suitable for construction. You may find that while a piece of land boasts a large square footage, the amount of space for building is much smaller because of the threat of natural disasters, such as landslides, because the baserock is nearly impenetrable.

In addition, you should also take into consideration other environmental factors, such as if the land is on a body of water or has a small wilderness.

Local Building Codes and Zoning Regulations

Before you fall in love with a plot of land, you will need to consult local building codes and zoning regulations to make sure it meets your needs. This is where working with a real estate agent who has a good understanding of local codes and zoning is worth the expense of paying a commission fee.

First, make sure all of it is zoned for residential purposes. Don’t stop there; make sure it is also zoned specifically for private residences, as some plots of land are designated for multi-family units or businesses.

You also need to check building codes as some municipalities have codes about how close structures can be to property lines. It would be frustrating, and inconvenient, to find out you have to decrease your home’s potential size after you’ve had plans drawn up to comply with regulations.

Property Taxes

One of the biggest expenses that comes with buying a home, along with a down payment and monthly mortgage payments, is property taxes. Paid annually, these taxes are calculated not only based on the assessed value of your home but also the size of the lot itself and its location.

Before buying an acreage, find out roughly how much you can expect to pay each year — assuming inflation — over time. If it’s more than you can swing with your budget, you should scale back the size of the lot or select a parcel in another, more affordable location.

Living and Lifestyle

In addition to thinking about the size of the home you plan to build, take time to consider how you would like to use the space outside of the house when choosing a parcel of land.

Would you like to build an in-ground swimming pool, a guest home, or a large garage? Are you a gardener in need of ample space for a vegetable patch and flower garden? Do you have pets or children who need lots of greenspace for play? Even if you don’t plan on having any of those at the moment, do you see them in your future?

Make a list of all of the ways you would like to use the land itself in addition to building. Rank your list based on what qualifies as needs and wants, and use it as a point of reference when looking for lots that will fulfill your plans.