Pros and Cons of Buying Land in Kentucky

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Pros and Cons of Buying Land in Kentucky

Bart Waldon

When people think of Kentucky, images of thoroughbreds grazing in emerald fields or bourbon aging in dusty barrels likely come to mind. Who wouldn't want to own a little slice of that bluegrass heaven? Well before you get caught up in those pastoral visions and place an offer on the first rolling acreage you find, let me offer some down-home advice.

There are plenty of things to love about Kentucky. Wide open spaces that let you breathe free, friendly neighbors who stop to chat, and homegrown cuisine that sticks to your ribs. We have seen too many outsiders get stars in their eyes and plunk down their life savings on a stretch of land without doing their homework. They fall head over heels for Kentucky’s beauty and charm only to find themselves hip-deep in unexpected problems once that new property smell fades away.

This article is meant to walk you through the full picture - warts and all - before you commit to buying land here. We want you going into the process clear-eyed, approaching her beauty with equal parts admiration and diligence. Kentucky will graciously return the favor if you respect her in kind. So let’s have an open and honest discussion about the pros AND the cons. There’s a right way and wrong way to court this complex state, and I’m here to help you find the former.

Pros of Buying Land in Kentucky

Affordable Pricing Compared to much of the country, land prices in Kentucky are relatively affordable. As of 2018, the average value of farm real estate including buildings was $4,000 per acre in Kentucky, while the national average was over $3,100 per acre according to the United States Department of Agriculture (USDA). This makes the state attractive for those looking to buy larger tracts of land, farmland, or investment properties. Cost of living is also lower than the national average.

Good Returns on Investment 

In many parts of Kentucky, land is a stable long-term investment that often sees steady, consistent returns over time. The land's development potential, mineral rights, agricultural use, and recreational value (such as for hunting) provide income opportunities for landowners. Investing in the right Kentucky property at a fair market value or even below market value price can pay off nicely in the future. 

Thriving Agricultural Industry 

Kentucky's strong agricultural industry is a major perk for farmland buyers. The state has rich soil, a long growing season, and an established farming infrastructure. Major agricultural products include cattle, horses, poultry, grains, hay, tobacco and increasingly - bourbon. The horse industry alone contributes about $3 billion to Kentucky’s economy annually. Those looking to tap into these industries by purchasing farmland can find it a profitable endeavor.

Beautiful Scenery and Recreation 

From the Appalachian Mountains in the east to lakes and dense forests in the west, Kentucky is blessed with immense natural beauty. Buying recreational land for personal use or as part of a commercial enterprise can allow you to immerse yourself in Kentucky’s alluring outdoors. Activities like hiking, hunting, fishing, boating, camping and wildlife photography are extremely popular. The scenic trails, rivers, and forests make land ownership enjoyable.

Cons of Buying Land in Kentucky

Challenging terrain in Some Areas While Kentucky’s landscapes are gorgeous, the terrain can also pose some difficulties. The eastern mountainous coal mining areas can be hard to cultivate and lack infrastructure in some spots. The western Jackson Purchase region has flood plains and swampy areas unsuitable for building or farming. Carefully inspecting the geography and soil conditions on any land you intend to purchase is crucial.

Variable Property Taxes 

Kentucky has one of the lowest property tax rates in the U.S. However, taxes can vary dramatically between counties and cities. In 2019, average effective property tax rates ranged from 0.28% in Taylor County to 1.58% in Knott County. Understanding the property tax implications fully before buying land is essential.

Undervalued Mineral Rights 

It's common for mineral rights value not to be factored into farmland purchases in Kentucky. Landowners may be missing out on tens or hundreds of thousands of dollars of unseen value related to natural gas, oil, coal and other mineral reserves below their properties. Engaging in careful research and negotiation surrounding mineral rights is advised when looking at Kentucky land listings.

Competition from Industry Interests 

In many rural Kentucky counties, big companies have bought huge quantities of land for industrial farming, distilleries, wind farms, and oil and gas interests. Small and mid-size land buyers can struggle to compete with these deep-pocketed corporate buyers who drive prices higher. Knowing market values in the face of rampant speculation and willingness to buy below list price is key.

Harder Access to Financing 

Getting a mortgage for vacant land or farmland can be more difficult than financing a traditional home. Not all lenders work with land buyers, and most require 20-25% down payment. Land is also seen as higher risk than homes sites in built up areas. Having excellent credit, more cash in savings and engaging multiple lending companies is wise. Alternatively, Kentucky has several reputable land buying companies like Land Boss that purchase properties in cash, which provides seller flexibility.

Slow Resale Process 

Unfortunately, vacant land and rural real estate tends to sell slower than residential properties - often taking up to a few years to attract interested buyers. Unless you intend to improve or develop the land, reselling at full market value involves substantial time and marketing effort. Landowners must account for taxes, maintenance and other carrying costs during the potentially lengthy sales process. Accepting a discounted cash offer from an investment company can avoid these resale headaches.

Mistakes to Avoid While Buying Land in Kentucky

Not Checking Flood Zone Designations Kentucky has large floodplains and rivers that routinely overflow. Failing to verify if a property sits in a mapped high-risk flood zone can lead to repair costs or make building impossible. Review Federal Emergency Management Agency (FEMA) flood maps for the area before purchasing. Being in a flood zone can also complicate insurance and financing.

Ignoring easements 

An easement gives someone the right to use part of a property for a specific purpose, like utilities or road access. Not uncovering easements on a parcel can mean restrictions on land use or an ongoing sharing of the space. Check paperwork and conduct visual inspection to uncover any utility easements for power lines, pipelines etc. that may limit building or farming activities.

Not Inspecting In-Person 

Buying Kentucky land sight unseen frequently leads to unpleasant surprises like squatter camps, trash piles, vandalism, boundary discrepancies etc. The landscape may also be far rockier, marshier or covered in dense brush than expected. Scheduling an in-person walkthrough with the sellers and checking property lines is vital due diligence.

Failing to Survey 

Without a professional survey, assumptions about acreage and boundary lines on a deed may be inaccurate. Paying for an official property survey, especially on larger rural tracts, can uncover issues like neighbor encroachments and protect against costly future property line disputes.

Not Testing Soil Composition 

While Kentucky has excellent farmland, soil quality varies locally. Parts of western Kentucky in particular have rocky, clay-heavy soil not ideal for growing crops. If planning agricultural use, get soil sampling done to determine pH levels and mineral content so you select viable land.

Final Thoughts

Kentucky offers affordable, appealing land investment opportunities - but buying here still warrants careful evaluation and planning. Weight out priorities like intended land use, development costs, mineral rights values and local market conditions before purchasing property. While buying land in Kentucky has risks like any real estate transaction, taking the time to make an informed decision can lead to solid returns. Consulting with specialized land investment firms like Land Boss can provide further guidance during the acquisition process. Despite a few downsides, Kentucky remains a top state for scenic and agricultural land buys.

Frequently Asked Questions (FAQs)

What are property taxes like in Kentucky? 

Property tax rates in Kentucky are among the lowest nationwide, but can vary dramatically by county. On average, effective property tax rates range from 0.28% - 1.58%. Understand fully the tax implications in the specific area before purchasing.

What is the process for buying land in Kentucky? 

The process mirrors most real estate transactions. You view listings, make an offer, enter into a purchase agreement contingent on inspection and financing, then close once all terms are fulfilled. Extra steps like mineral rights appraisal, flood zone checks, and land surveys are common when buying vacant plots or farmland.

What financing options exist for buying Kentucky land? 

Bank financing can be limited and often requires 20-25% down payment. Land loans or owner financing from sellers are more common. Many individual and corporate investors also purchase Kentucky land for cash, which provides sellers faster liquidity.

Can I build on Kentucky farmland or vacant land? 

Zoning regulations determine building eligibility, so check with the county planning office first. Flood zones, utility easements and soil conditions also impact habitability. Hilly eastern Kentucky terrain presents added construction challenges. Home insurance rates may rise if building in riskier rural areas.

What price per acre can I expect to pay for land in Kentucky?
As of 2018, average farm real estate values sat at $4,000 per acre in Kentucky - but prices run the gamut depending on region, parcel size and use case. Multi-million dollar horse farms contrast inexpensive inland woodlands. Engage multiple realtors to gauge value based on comparables in the specific area and county.

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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