Pros and Cons of Buying Land in Alabama

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Pros and Cons of Buying Land in Alabama

Bart Waldon

Purchasing rural land or real estate in Alabama offers investors, developers and individual buyers an array of advantages, along with factors warranting careful evaluation. According to the Alabama Center for Real Estate, median land values currently sit at $2,700 per acre for farm real estate and $1,533 for timberland. 

Additionally, Alabama's business-friendly tax climate and low cost of living compared to national averages makes owning property an attractive play. However, assessing regional land market nuances, environmental conditions, development limitations and state population patterns - which recently crossed over 5 million residents - is vital for informed decision making. 

Thorough cost-benefit analysis around ownership opportunities across Alabama's nearly 52,000 square miles includes weighing locales with solid income-generating potential against more remote, undeveloped territories challenged by access constraints and vulnerable to weather risks. With careful research into market stats for targeted counties and zones, buyers can strategically pinpoint asset locations positioned for returns through timber harvests, farm productivity gains and/or long-range commercial, industrial or residential builds as the population expands.

The Benefits of Owning Land in Alabama

Alabama offers prime opportunities for land buyers looking to settle down or turn a profit. Let's take a look at some of the top reasons people invest in the Heart of Dixie:

Fertile Fields for Farming

Thanks to nutrient-rich soil and an ideal growing climate, much of Alabama is perfect for agriculture. You can harvest lucrative crops like cotton, peanuts, fruits and vegetables. With irrigation, the possibilities are even greater. Farming provides income and long-term land value appreciation.

Play All Day in Alabama's Nature Playground

Alabama is packed with forests, lakes, rivers and mountains that are a paradise for outdoor recreation. Purchase a scenic chunk of land to hunt, fish, hike, camp, ride ATVs and more right in your backyard. Build a cozy cabin on a pristine lake to relax in on getaways.

Smart Money Growing in Expanding Areas

As population and development increases, land values rise too. Buying near growing cities and suburbs can pay off big as demand escalates. Even rural parcels shoot up if new highways or infrastructure get built nearby.

Room to Roam and Build Your Dream Home

A large spread lets you choose the perfect spot to build with ideal views, trees, a pond or whatever natural features you fancy. Ample acreage also provides privacy and breathing room from any neighbors.

Timber! Lumber and Long-Term Income

Harvest pine, oak and poplar trees on forested lands for timber sales. With proper management, selective logging or clear cutting can be sustained for recurring income.

Mining Money from Mineral Rights

Some land includes full or partial underground mineral rights. Even a fraction can yield oil, gas or other royalty checks if resources are found below.

Comfortable Four Seasons in Northern Alabama

The southern Appalachian region offers cooler summertime temps without the sweltering Gulf humidity. Ideal for those seeking beautiful mountain scenery and pleasant weather.

So those are some of the top reasons Alabama lands are well worth investing in. Just be sure to do plenty of research before purchasing!

The Drawbacks of Buying Land in Alabama

However, there are also some potential downsides to purchasing land in Alabama:

Rural Decline

In some rural areas, especially away from major cities, populations are declining as younger people move away. This can make it hard to find workers, contractors, and even schools and medical care nearby. It also depresses land values over time.

Property Taxes

Property taxes on land typically remain low until improvements like buildings or infrastructure are added. However, tax rates can be high in certain counties. This must be considered when budgeting long-term carrying costs.

Insurance Costs

In coastal areas, the cost of flood and hurricane wind insurance keeps rising. This can take a big bite out of returns on beachfront or lakeside land investments. Inland areas also face risks from tornadoes and storms.

Limited Infrastructure

In very rural locations, getting access to utilities like electricity, phone/internet, municipal water, and sewer can be expensive or impossible. Make sure to research what infrastructure is readily available before choosing a parcel.

Distance from Services

Day to day conveniences like grocery shopping, medical care, schools, and social opportunities require more planning and travel time in remote areas. Consider proximity to population centers based on your lifestyle needs.

Soil Issues

While Alabama has excellent farmland overall, some parcels may have characteristics like shallow soil, rockiness, poor drainage or erosion that can limit agricultural productivity and building capabilities. Always thoroughly inspect the property before purchase.

Water Rights

Alabama follows the reasonable use water rights doctrine. Before assuming you can access groundwater or establish surface water rights, consult with legal experts to verify.

Key Factors to Research Before Buying Land in Alabama

Buying vacant land is a complex decision with many variables to evaluate. Here are some key factors to thoroughly research in advance:

  • Location - Confirm the parcel meets your criteria in terms of views, acreage, distance from key locations, etc. Drive the actual property and surrounding area.
  • Access - How close is the property to public roads? Are there any easements across the land? Can you build a driveway?
  • Utilities - What public utilities like electric, water, sewer, trash service, and internet providers are available nearby?
  • Environmental issues - Are there any apparent erosion problems, streams, flood zones, wetlands or other issues on the property?
  • Permitting - What are zoning and building requirements? How difficult is the permitting process?
  • Survey - Review the plat survey and have the property lines clearly marked. Make sure there are no encroachments.
  • Title - Read title insurance commitment carefully. Are there any easements, liens, unclear ownership issues or other problems?
  • Market value - Thoroughly research local sales data to establish fair market value. Consult multiple experienced real estate professionals.

Working with a Professional Land Company

Selling and buying land involves complex legal transactions and extensive paperwork. Working with a professional land company can streamline the process and help avoid costly mistakes.

Companies like Land Boss have experience navigating all the intricacies of land deals. They have ready access to financing, can estimate land value accurately, and handle titling and closing efficiently. Land Boss has closed over 100 successful land transactions in its 5 years in business.

A common misconception is that companies buying land to resell somehow take advantage of sellers. In reality, there are many legitimate reasons why an individual may prefer to sell to a land company for cash versus listing on the open market.

  • Avoiding high Realtor commissions and closing costs
  • Eliminating extensive marketing and showings required to find a buyer
  • Receiving cash quickly instead of waiting months or years for a sale
  • Skipping the complex negotiations involved in setting list price, offers, and contingencies
  • Avoiding the possibility of tax implications from selling for a profit
  • Preventing trespassers and vandals during long showings and listing periods

Of course, selling to a land company does involve accepting a discounted price compared to potential market value. The seller must weigh their priorities and determine if the convenience and speed of a cash sale makes sense for their needs. There are good and bad actors in the land business, so it pays to do thorough research before choosing a company.

Final Words

Purchasing land in Alabama can be a smart move depending on your goals and research. But it also involves substantial financial risk if property issues or market conditions are not properly evaluated in advance.

Thinking through all the pros, cons, and key research questions ahead of time will help you make an informed decision. Enlisting help from qualified real estate and legal professionals is also wise to avoid costly mistakes.

With proper planning and reasonable expectations, owning a piece of Alabama's beautiful countryside can be a dream come true and solid long-term investment. Take time to thoroughly explore all options and get expert guidance before signing on the dotted line.

Frequently Asked Questions (FAQs)

What are property taxes like on land in Alabama?

Property taxes in Alabama are among the lowest in the U.S., especially for undeveloped land without buildings. However, tax rates vary significantly by county so be sure to research the specific area where you may buy land.

Does Alabama collect state income tax on land sale profits?

Yes, Alabama does impose a state income tax. Any profits from the sale of land held for investment purposes would be subject to capital gains taxes, with rates based on your tax bracket.

Do I need to be an Alabama resident to buy land there?

No, there are no residency requirements to purchase land in Alabama. However, out-of-state buyers should consider working with a local real estate attorney to represent their interests.

What regulations apply to building a house on a vacant land parcel in Alabama?

Construction requirements like permits, zoning, and minimum setbacks differ depending on the county and municipal jurisdiction where the land is located. Research regulations thoroughly before making any purchase plans.

How can I find good hunting land for sale in Alabama?

Look for large acreage parcels located away from urban areas, research the types of game commonly found in the region, and potentially work with a land broker who specializes in recreational properties. Joining a local hunting lease can also be an option.

About The Author

Bart Waldon

Bart, co-founder of Land Boss with wife Dallas Waldon, boasts over half a decade in real estate. With 100+ successful land transactions nationwide, his expertise and hands-on approach solidify Land Boss as a leading player in land investment.


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