Purchasing land in Texas

Hey R, welcome to Texas. I'll try to answer what I can.

Buying land is not that difficult at all (especially not compared to continental Europe for what I know), but it is obvously more difficult if you are trying to do it long-distance and/or sight unseen. Key is to have a real estate agent represent you locally to help with locating land, title searches and handle paperwork etc.

Mortgage lenders always ask about US residency. Having said that, I am not sure that means they would not finance a purchase for a foreign resident given that the loan is secured by property but in today's arbuably declining real estate market they will want a large cushion (read: a lot of money down) to make sure they are not left with a worthless piece of property. Best is to contact a few lenders directly, but you need to have an idea of where exactly you are planning to buy and how much land we're talking about here.

Zoning is local, so this would depend on where exactly you are buying. Where are you looking to buy? Houston, for example, does not have zoning, but lots in subdivisions, even vacant, would have deed restrictions - meaning, they have contractual limits on use that are contained in the land transfer and deed documentation, so even though they are not government-mandated, the buyer would have to obey them - so do your due diligence on the property, seller must provide you with any deed restrictions. Again, your agent would be the best resource to help with due diligence on zoning and other restrictions.

You will need to make arrangements on how to pay annual property taxes. If you finance, you could arrange that the mortgage company escrows the taxes (i.e. your monthly payment includes 1/12 of estimated taxes and the company would simply remit them annually for you, which IMHO the easiest way to go). Otherwise, you'll have to send a check drawn on a U.S. bank every January. E.g., for Harris county (Houston) you can check the tax bills and do some due diligence on properties by their address at www.hcad.org - keep in mind that vacant lots are often given the address of "0 [insert street here]" instead of a regular street number. I suppose other major counties would have similar record systems.

Title and ownership issues - a few thoughts:

First, you want to make sure you get a "fee simple" title, which means you hold all property rights to the property. In Texas, mineral estate (sub-surface) is separate from the surface estate, and it is possible for them to be owned by two different persons - and mineral estate is "dominant", meaning that the surface owner has to accomodate the mineral estate owner's access to subsurface, so they could come onto your property and dig holes, drill wells, all without having to pay you for anything other than unreasonable damages to your property (major cave-ins, etc.)

Second, if you are married, keep in mind that Texas is a community property state and you may want to research whether that would affect how you hold title to the land.

On prior ownership, real estate records are held in the county clerk's office for the county where the property is located. When you buy real property, you will get title insurance required by the mortgage company; the title company researches property records and makes sure seller does indeed have the right to sell and they own what they claim they own, and issue you a policy to that effect with certain standard exceptions.

Hope this helps.

Yuliya

 

I hope you are not trying to put together a residential subdivision development. That market is really suffering almost all over Texas. Well, maybe not in the Austin area, but everywhere else, yea.

Good luck,

Jeff
Dallas

 

The picture is a big picture and not a whole. I live in Frisco, TX and it is one of the fastest growing areas in the nation. Last year it was number 2 and McKinney was right next to it which is the neighboring city. The value of my house went up 30% from last year and homes are being sold. It has cooled off allot but not as much as the media makes it out to be. We will feel it if it gets worse toward the end of the year but the average home in Frisco is around $350,000 so that maybe the reason we have not felt it as bad as some other cities in Texas.

 

Globalm3 is absolutely right. I believe the 4 major metropolitan areas in Texas ranked within the top 10 across the country in regards to population growth. Also, many news reports I have read have stated that Texas as a whole, will not experience the major declines in home values that other parts of the country are going through. That is because our housing prices never had the strong price increases that the other major metro areas went through. However, having said that, there has been a significant drop in demand for housing priced at the entry levels. I heard one expert state that the reduction in the loan qualification standards allowed many to purchase homes a few years earlier than when they would have normally been able to. I.e. - they did not have to save as much down payment as was required in the past, or their level of consumer debt did not have to be as low as was required to qualify in the past. Thus, in effect, people who would have qualified for a home loan in the future were able to get a home loan now. In effect, they robbed the future demand for the sake of current sales. It will take a year or so for this to correct itself. However, many believe that new housing starts will not reach the levels that were experienced in 2005, 2006 and 2007.

Even still, there is still stable demand at the upper end of the housing market. And compared to other parts of the country, our $350K homes appear extravagant compared to what they could get in parts of California or along the east coast.

Overall, any real estate investment should be based upon local supply and demand conditions. There may be pockets of opportunity available even though other segments of the industry are suffering. If you want to find out information on just about any Texas metropolitan area, spend some time on this web site: http://recenter.tamu.edu/

It is the Real Estate Center at Texas A&M University. The real estate center is funded in part by the licensing fees the real estate brokers pay. They have a tremendous amount of news articles and other information available on just about any Texas market. Also, it never hurts to pay for the services of an independent valuation expert - either a CCIM, a licensed real estate appraiser, or a CRE. Just make sure it is done by someone not connected with the person trying to sell or put together your deal for you.

Good luck, and come on over and become a future Texan. The weather is much better than over in the UK. Oh, but do not bring the Ferrari, we drive on the wrong side of the road from you.

Jeff
Dallas

 

You can't really go wrong in Houston. It's the fourth larges city in the country. It's got more fortune 500 companies then any other city. The working person in Houston is still able to afford a house here. It's not like that in California where everything is still overpriced compared to the median income.

There are a lot of great buys out here. This truly is a buyers market right now in Houston, because of all the bad press the housing markets have gotten in the rest of the country. Like the members above said. Texas has not had the artificial increase in appreciation the rest of the major markets have had. It is a pretty solid place to invest. And this market is one of the fastest growing.

My wife is a real estate broker that deals with alot of investors, last year was very slow for her. Most of the investors stayed out of the market for the most part last year, because of all the uncertainty and the bad press about the other major markets like Florida and California. But this year everyone is buying in Houston, from investors to even first time home buyers. But everyone is looking for agreat deal which there are alot of great deals out there.

In Houston alot of the foreclosures that I have seen were do to fraud. Where someone would buy a nice place under a fake person and then have the place over appraised and then take over $100000 cash out of the loan and in the end not pay property tax or pay the mortgage on the loan.

My wife's investors purchased a town home in River Oaks area last year for $300,000. My wife sold it for him for $400,000 a few months later. Turns out he person who bought it used a fake name and got money out of the loan. He did this with a few other properties and made a few million dollars. But he got caught and is now in jail. There was another group of people that I heard about (from a law enforcement friend of mine) the group was made up of loan officers, investors, appraisers, and people in title companies. They had a scam like this with fake buyers. They made about $60 million doing this.