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Real Estate Tips
Sunday, January 19, 2025

The Beginner’s Guide to Buying Land in Texas

Ever thought about ditching the hectic city life for a piece of land in Texas? The Lone Star State lures the imagination with its vast open spaces. You can become a rancher or farmer, own hunting or recreational land, or build wealth as a real estate investor and land developer. Purchasing land in Texas excites because of its possibilities, but ownership comes with its own challenges. Knowing what to expect can make all the difference.

Walk through how to buy land in Texas so you’re well-prepared for the process. Buying land isn’t like purchasing a standard home. It’s its own adventure. Saddle up in our guide to purchasing Texas land.

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Table of Contents

Understanding the Land Purchase Process in Texas

7 Primary Steps to Buying Land

Type of Texas Land

Identify Your Ideal Property Characteristics

Know the Texas Ranch Market

Financing for Land

Preparing to Buy Land In The Texas Real Estate Market

Review Real Estate Contracts

Evaluate the Property Before Writing An Offer 

Property Surveys

Investigate Historical Land Use and Environmental Issues

Be Aware of Mineral Rights

Check Soil Quality

Analyze Title Commitments for Clear Ownership

Prepare for the Closing Process and Necessary Documentation

Is Buying Land in Texas a Good Investment?

Are There Tax Advantages for Owning Texas Land?

What Are Common Pitfalls in Texas Land Purchases?

Understanding the Land Purchase Process in Texas

Before buying land, take time to understand Texas’s unique land-buying process. Unlike residential real estate, purchasing undeveloped land involves additional complexities, such as zoning rules, surveys, and environmental considerations. Unlike houses, where location is more about convenience, rural land purchases also require a closer look at soils, climate, water access, and use restrictions.

How to Buy Land in Texas Checklist

Buying land isn’t just about selecting the perfect piece of property. A basic overview of what to do before you call yourself a proud Texan landowner:

  1. Decide on the Type of Land: Think about what you’re looking for—rural property, recreational land, or perhaps undeveloped land for investment purposes. The purpose shapes everything—what type of property you need, your timeline, and of course, your budget.
  2. Research Land Listings: Texas land values vary a lot. Check local land listings to understand what’s available and the prevailing land purchase price in your desired area. Pay attention to area-specific opportunities and limitations.
  3. Plan Your Finances: Calculate potential costs, including the purchase price, property taxes, closing costs, and monthly payments. Estimated income and expenses may be another factor for agricultural properties. Keep an eye on additional expenses like title insurance and a title policy.
  4. Hire a Land Agent: A knowledgeable land real estate agent can guide you through this journey. They’ll have insights into potential properties and can handle negotiations on your behalf.
  5. Conduct a Title Search: A title search is crucial to ensure no legal issues with the property. The larger the land, the more murky its ownership history may be. Hiring a reputable title company helps verify it has a clean title.
  6. Check Mineral Rights: In Texas, mineral rights are a big deal. Determine whether the land has those rights, as they can significantly impact land value and future use.
  7. Secure Land Loans: Financing raw land might not be as straightforward as a traditional mortgage. Land loans are available, but it’s wise to research options that suit your needs.

Here’s a deeper dive into all these steps behind buying Texas land.

Type of Texas Land

It’s not as simple as saying, “I want to buy land.” Ranch lands have different needs and infrastructures than farmland and hunting lands.

Decide if you want undeveloped land, rural land, or a plot of land in a more urban setting. Your intended use will guide this decision.

  • Residential: Are you envisioning a dream home? Choose a plot of land close to schools, work, and amenities. Look into zoning laws to ensure you can build your perfect piece.
  • Commercial: Planning a business venture? Find land with high traffic patterns and good visibility. Consider the type of business and if the location aligns with your business goals.
  • Agricultural: If farming is in your future, check the soil quality and water availability to verify the rural land can support crops or livestock.
  • Investment: Seeking an investment property? Look for undeveloped land with growth potential. Research property taxes, mineral rights, and any planned developments nearby.
  • Recreational: Dreaming of a weekend getaway? Focus on recreational property with space for outdoor activities like hiking, hunting, or fishing.
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Identify Your Ideal Property Characteristics

Every piece of land has its strengths and limitations. Make a list of your must-haves before falling in love with a property.

Evaluate Location and Proximity to Services

While a rural retreat may have privacy and solitude, consider practical access to healthcare, schools, and grocery stores. Being hours from services can complicate daily life, even for the most independent ranch-owner.

Investigate Zoning Laws and Land Use Restrictions

Zoning laws dictate how land can be used for agricultural purposes, commercial ventures, or rural residences. Not all land allows for multiple purposes, so confirm if you plan to run cattle, open an event venue, or build residential units before purchasing.

Assess Access to Utilities and Infrastructure

Does the property have access to water, electricity, and internet? If these conveniences aren’t set up, it could mean significant upfront costs for installation. Off-grid solutions like solar panels or rainwater harvesting might be necessary for remote areas.

Know the Texas Ranch Market

Ranch land has become a hot commodity in Texas in recent years. Developers and individual buyers alike have turned to this market, hiking the median price per acre over $4,670 as of Q4 2023. While cost will vary greatly depending on the type of land, Texas region, and infrastructure, these numbers provide a solid starting point. The Panhandle, for instance, offers more affordable options compared to Central Texas or Hill Country, where demand is stronger.

Texas Land Prices Per Acre By Region

A table displays average land prices per acre in various Texas regions for Q4 2023. Prices range from $616 in Far West to $9,600 in Gulf Coast-Brazos. A city skyline with a prominent skyscraper is in the background.

Plan Financing Before Searching for Land

Not having your financing in order is land-buying mistake #1. Start here before browsing listings or touring properties. Buying land requires cash on hand, even if you plan to finance a portion of the purchase. Most land loans will want 15-35% of the purchase price as a down payment. On a $1 million tract, that’s $150,000-$350,000.

Types of Land Loans

Each type of loan caters to different purchasing scenarios. Understanding them can save you time and money.

Raw Land Loan

If you’re eyeing a piece of entirely untouched property, a raw land loan might be your go-to. Raw land typically lacks public utilities or infrastructure. Because of this higher risk, lenders often require:

  • A larger down payment (minimum of 35%)
  • A solid credit history
  • A comprehensive plan for your land use

Raw land can be perfect for adventurous land buyers ready to start from scratch. Just be prepared for thorough title searches to ensure there are no hidden surprises like mineral rights issues.

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Unimproved Land Loan

Unimproved land is a step above raw land, often including some basic utilities but missing the full suite of essential services. It may have had a prior structure on it or a condemned structure. These loans are a good middle ground if you’re considering developing the land further but want something less bare than raw land:

  • Slightly lower down payment than raw land loans (25% of purchase price)
  • Moderate interest rates
  • Easier financing conditions if infrastructure is planned

With the right plan, unimproved land can become your dream investment property. 

Improved Land Loan

These have the full suite of utilities and road access. If you can build a home on it, it’s improved land or a “lot.”

  • Best down payment minimum: 15%
  • Can qualify for a construction loan if a home build is planned
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Research Lenders Specializing in Rural Land Loans

Many first-time buyers assume they’ll use a traditional mortgage lender for their land purchase. However, rural properties require specialized financing. Work with local land banks or lenders, like the Texas Farm Credit or Capital Farm Credit, which cater to rural buyers. Farm Credit Institutions specialize in loans tailored for rural and agricultural purposes. They’re ideal if you’re eyeing rural land or undeveloped property.

These lenders understand the nuances of financing undeveloped land or ranch properties. Sometimes, the seller might offer financing options. This can be flexible, but reading all terms carefully is important.

Preparing to Buy Land In The Texas Real Estate Market

Review and Understand Real Estate Contracts

Real estate contracts often intimidate buyers, but their outlined terms are essential. Go through the contract line by line—or better yet, hire a real estate professional to guide you. Find a land agent who understands Texas’s unique land characteristics. Their expertise is especially helpful for identifying any useful contingencies, rights-of-way, easements, or potential property restrictions linked to mineral rights and topography.

Evaluate the Property Thoroughly Before Writing An Offer

A guided tour may be great, but dig deeper during any on-site viewings. An experienced land agent knows what to ask and look for. It’s another reason they are a great resource, especially for the first-time land buyer. Look at the demand for land around it, current market conditions, access to roads, and any land use regulations.

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Understand the Importance of Property Surveys

A land survey identifies boundaries and clarifies what is included in your purchase. Surveys protect you from purchasing a piece of land that’s smaller or legally problematic. This is especially important for large rural tracts where property lines may blur over time. While you’re at it, check if the land has flood zones or erosion signs.

Investigate Historical Land Use and Environmental Issues

Is the land free of contamination from past uses, such as oil drilling or chemical farming? Look into historical use to ensure there are no lingering surprises. Part of your due diligence may include environmental assessments.

Be Aware of Mineral Rights

Texas is famous for its oil. But did you know mineral rights (ownership of below-ground resources) can be separated from land ownership? Protect yourself by clarifying if mineral rights or a surface waiver are included in your purchase. Consult an expert if any questions arise.

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Check Soil Quality

If you’re planning a farm, or even a ranch, check soil type if you plan on farming or gardening. Even if it’s already been used for agriculture, poor past practices like not rotating crops or over-grazing could have reduced nutrients. Poor soil might need amendments that could increase costs.

Analyze Title Commitments for Clear Ownership

Before closing, check the title is free and clear. This means confirming no liens, disputes, or other legal claims on the property. Title companies can assist with this process.

Prepare for the Closing Process and Necessary Documentation

Here’s where the deal finalizes. Gather the necessary documentation in advance—loan approvals, insurance policies, and identification. Check with your title agent or attorney to ensure a smooth closing process. Assuming all goes smoothly, a typical closing on land is about 30 to 90 days after an accepted offer.

Is Buying Land in Texas a Good Investment?

Investing in a piece of land in the Lone Star State can be a wise decision, but no deal is without risk. Weigh the pros and cons before making this long-term investment.

Advantages:

  • Appreciation: Historically, Texas land has appreciated well over time, especially in expanding urban areas, making it a potentially lucrative investment.
  • Versatility: Owning undeveloped land or rural property gives you numerous options to generate income: land development, agriculture, or recreational use like leasing for hunting opportunities.

Considerations:

  • Market Trends: The land’s value may fluctuate based on location and demand.
  • Initial Investment: Upfront costs such as purchase price, closing costs, and any necessary infrastructure improvements must be considered.
  • Maintenance and Taxes: These ongoing expenses can rise each year. Agricultural taxes can be complicated.

Ultimately, if you plan correctly, you’ll be the proud owner of a potential piece of property that meets personal and financial goals.

Are There Tax Advantages for Owning Texas Land?

Here’s the good news. Texas loves its ranchers. If your property is used for agricultural purposes (or even wildlife management), it could qualify for the Agricultural Tax Appraisal (ATA). This designation means Texas ranches are appraised based on their farming value—not market value. Translation? Lower property taxes.

Some tax breaks you should know:

  • Discounts on appraised value for open agricultural land.
  • Exemptions on things like equipment, feed, and certain vehicles.
  • Tax perks for farm fuel use or timber production.

Want your farm or ranch to qualify? The trick is ensuring its current or intended use matches eligibility rules. For instance, the land should have been in agricultural production for 5 of the last 7 years and stay devoted to farming or conservation practices moving forward. Check out the Texas Comptroller’s website for the official checklist, application process, and deadlines.

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Understanding these tax benefits can help minimize expenses and maximize your investment.

What Are Common Pitfalls in Texas Land Purchases?

Even the most prepared buyer can experience challenges. Don’t be one of these statistics. Some common mistakes to avoid:

  • Skipping Zoning Research: Not checking zoning laws is one of the fastest ways to land in hot water.
  • Ignoring Infrastructure Access: Remote properties may lack basic infrastructure, and setting this up could cost tens of thousands.
  • Not Working with a Specialist: Find a reliable land agent who understands the local market—they’re worth their weight in gold.
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Plan Your Texas Land Purchase Today

Buying ranch land in Texas is no small feat, but armed with research and expert guidance, your dream property is well within reach. From understanding the land-buying process to avoiding common mistakes, this guide should equip you for success.

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Preston Guyton