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So how do you buy land in Alberta for use such as for a manufactured home or acreage? When some people think about investing in real estate within Alberta, they focus on properties in Edmonton, Calgary and the surrounding metropolitan areas. However, Alberta has just as much of a legacy of wide open spaces, ranching and a close relationship to nature as the American states of Colorado and Wyoming. Before you rush out and buy some acreage under the big sky, though, there are some important things to consider when buying land in Alberta. Then to fast track the process you can pre-qualify using the form at the end of this article.
Things to Consider when Buying Land in Alberta
For buyers wondering how to buy land in Alberta, they must first consider there is a reason why most urban areas are not like the wide open spaces. The conveniences that people have developed for urban life, covering everything from municipal sewer systems and climate control to paved roads, are not always accessible in rural Alberta. If you live in Edmonton, you just turn on a tap to get safe drinking water. If your buying land in Alberta for a ranch far from the cities, you are likely to have to sink a well or two to find water that you can use. On a rural property, septic systems requires regular maintenance as well. You have to deal with incursions from pests, damage to the access roads to your property, dealing with garbage removal and knowing what to do when the dangers of grass fires and flooding show up.
In some parts of Alberta, the province has set aside land as an environmental reserve. This is common on swampy areas or places that provide natural drainage, as well as steep slopes or along rivers, lakes and other bodies of water. The purpose of these environmental reserves is to shield that land from degradation or pollution, as well as to guarantee continued public access to the shores adjacent to bodies of water. Land that is set aside as an environmental reserve cannot undergo any alteration or development. You can’t remove any vegetation, including trees; you can’t erect any buildings on reserve land. If your property is adjacent to an environmental reserve, you need to be aware of the restrictions before signing the purchase agreement.
Alberta also features a variety of zoning laws that have often been put in place for land that is far from existing cities because of planning for future development. It is important to know what the zoning is on a parcel before you consider making a purchase. Buying wide open acreage is a tempting prospect for many people, but part of the due diligence in the process is making sure that you don’t end up with land that you can’t use the way you want to. If you put up a building that violates zoning requirements, the municipality or province can require you to get rid of that building at your own expense.
Buy land in Alberta
So now that you know about some of the red tape involved with buying land in Alberta, if you’re still ready to buy some acreage, the next process is coming up with your funding. Some of you may be able to qualify for a loan from a bank, but if you can’t, you have other options out there. Amansad Financial has a network of private mortgage lenders who are ready to provide funding for people who can’t qualify on the basis of the difficult bank regulations. The lender fees are reasonable, and we provide the connection to private mortgages for as much as 50 percent of LTV and potentially higher if the zoning is favorable and the property is closer to a metro area. Additional security can also increase the LTV. Because the LTV is low, our lending partners rarely require income verification; the property itself serves as the security. Our approval process is fast, so both buyer and lender get their answers quickly.
Minimum down payment for land in Alberta
Typically you need to put down a larger down payment and pay a higher interest rate for a plot of land than you would if you were getting a mortgage on a home since the risk for the lender is higher. There are different ways to purchase land if you don’t have the required down payment. If you currently own other prime real estate in Canada with lots of equity, it can be added to the loan as collateral to either reduce or eliminate the need for a down payment.
For more on Down Payment Requirements, please refer to our Basics About Land Mortgage Lenders article.
Buying Land as Investment in Alberta
Land remains one of the most potentially valuable commodities on the planet. After all, there is a finite, limited supply. Depending on where the land is located — and depending on the potential uses of that land — the value can skyrocket in a short amount of time. If you are looking for land as an investment in Alberta, there are some things to consider. After all, beachfront property in Manitoba is a scam — but beachfront property in BC is not.
Tips for Buying Land as Investment in Alberta
Don’t rely solely on the advice of others.
Just because your friend tells you that a land deal is “amazing” doesn’t mean that it will actually turn out that way. Lots of friends will give you advice on a piece of land — but none of your friends will help you out when you get stuck with a lot that you can’t get rid of. Sometimes people will buy properties with access to lakes or other amenities well above their actual valuation, not knowing about the expense needed to bring in plumbing, drainage and utilities to make that property friendly for construction. This doesn’t just happen to individual investors, though — this happens to developers as well, and their acquisition of multiple lots at a time can lead them into bankruptcy. Remember that you can add an addendum to a contract placing a contingency that guarantees the usability of the land. That way, you have a specific amount of time to find out if you can put the land to the use you had in mind for it, and if you change your mind, you get your money back.
Don’t use your car to conduct research.
Lots of people look for houses by driving around and looking for one that they like. However, before they buy it, they look into school systems, neighborhood statistics and other metrics to determine whether it is the right purchase for them. You should take the same precautions when you are purchasing land in Alberta for an investment. You might be driving through a sunny Alberta afternoon and find a lot that just looks gorgeous — and it’s got a “For Sale” sign on it. Before you know, you’ve purchased a lot not knowing much about what is beneath it and whether it will serve the purposes you want. Buying land without knowing thing like the zoning restrictions or its proximity to a flood plain — or to municipal services — is one of the worst ways to throw money away.
Don’t use the land to build a monstrosity.
If you plan on building a house on your land and living there for the rest of your life, then it really doesn’t matter what you build on it. Your heirs might take a bath on the sale, but they didn’t put the base money into it. You did — and you enjoyed it. However, if you think that you might want to sell the land someday, then you want to be careful with what you build on it. Buying a plot of land and then putting up a house that looks nothing like the surrounding structures — and then painting it an unusual color — are not smart tactics if you are using the land primarily as an investment in Alberta. People will drive by to see what you’ve built, but no one will ever want to stop and make an offer.
Do research moving trends.
Lots of times, people move out of city centers in order to take advantage of a less crowded, less stressful way of life. However, a lot of times these developments turn into logistical nightmares of their own. The subdivisions that spring up are often served by roads that are not nearly wide enough for the traffic that the subdivisions will create once people buy the homes and move in, which means that new homeowners face snarling traffic just to get to the highway that takes them to their jobs. The logistics of putting together new communities is often a logistical mess. Figuring out what logistics are already in place helps potential land investors figure out what is a promising area — and what is going to be a financial trap.
Understanding the ins and outs of land use and location will help you find the right plot of land for investment purposes in Alberta, so that you can make the most profit. Give us a call at Amansad Financial — we have relationships with commercial and residential realtors who can help you make the best investment decisions.
Get Approved to Buy Alberta Land
At Amansad Financial, our philosophy is that we provide “more than just excellent rates, but excellent solutions too.” You can fill out our online form below to apply, or if you have some more questions about your own situation, give one of our lending solutions specialists a call today if you are thinking about buying land in Alberta.
(Adequate Equity + Qualified Real Estate = Mortgage Approval)
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