When buying land in Alberta, there are many factors to consider. Although the process can be overwhelming, the following article provides a step-by-step guide to acquiring property. Additionally, different sections explain the types of land available and particular considerations for investors and farmers.
Ensure buying land in Alberta is right for you
Buying rural property is not the same as living in an urban environment. In rural Alberta, things like municipal sewage systems and paved roads may not be accessible.
If you live in the Edmonton housing market, all you have to do is turn on a faucet for clean drinking water. However, those intending to live on their rural property may not have this luxury. You'll almost certainly have to dig a well or two to obtain usable water. Additionally, you'll have to maintain a septic system.
You've also got to deal with invasions from pests, damage to access roads to your property, garbage collection and knowing what to do when grass fires and floods become a problem.
Understand zoning restrictions
Many people find it appealing to buy wide-open acres, but part of the pre-purchase research is ensuring that you don't end up with a property that you can't use as you desire. If you develop a building that breaches zoning rules, the city or province may compel you to demolish it at your own cost.
Environmental Reserve: These can typically be found along rivers, lakes or and other bodies of water. The goal of these environmental reserves is to protect that land from degradation or pollution. Environmental reserve land can't undergo any alteration or development. You can't remove any plants, including trees, nor can you construct anything on reserve land. If your home is located near an environmental reserve, you should study the terms carefully before signing the purchase contract.
Crown Land: There are several restrictions on the use of crown land, one of which is that no buildings may be built or roadways established. They are assuming liability for the property's upkeep and preservation as Lenders.
Pre-qualify for a mortgage
Typically, you'll need to make a larger down payment and pay a higher interest rate with Canadian land loans. This is because the lender’s risk is higher than a traditional urban home. However, you can get a higher loan-to-value (LTV) if the property zoning is favourable and closer to a metro area.
If you don't have enough money for a down payment, there are alternative methods to acquire land in Alberta. One option is to use your current home as collateral through a HELOC in Canada. However, it would help if you had prime real estate with sufficient equity. Those looking to build a house on their new property can also apply for a home construction loan.
Determine a lot to buy
After doing all the preparation, you can now look at various lots and find one to buy. Although it's always best to purchase Calgary property with an experienced real estate agent, some important factors to consider are:
Estimated land value: Know how much you should pay before buying. An experienced real estate agent will value property with a comparative market analysis (CMA). If there are no comparable properties, a formal appraisal is a great secondary option.
Environmental problems: The last thing you want to spend money on is an expensive environmental cleanup. Before you purchase the property, make sure to ask the owner about the history of the land. Additionally, paying for an onsite environmental audit might be worth it.
Easements: An easement is a right that someone else has to use your property. For example, it is typical for a pipeline easement to be included with your parcel in Alberta. A large oil pipe flowing through your backyard may affect your property use and development. Additionally, there could be a mining easement meaning someone has the right to mine on your land. Make sure to review these rights before buying land to prevent an unpleasant mistake.
Land ownership rights: Make sure you know exactly what you are buying before making an offer. Confirm the property chattels that are included with the purchase. In some cases, a seller may leave chattels behind. If these were not included in the purchase agreement, they are not your property, and you don't have the right to remove them. Consider adding a clause that any chattel left behind will automatically be transferred to you on closing. Additionally, you can use a conditional offer that forces the seller to clean up garbage before receiving funds. Finally, be clear with land ownership rights in the purchase agreement. This will prevent the seller from cashing out on lumber rights to another party before closing with you.
You can buy three categories of land in Alberta; raw land, vacant land, and crown land.
There has never been a development of raw land before. Water and power will not be available, and no buildings will be on the site. There could also be no access by road. Private property is involved.
Vacant land has had at least part of its electrical, water, sewage, road services, or other infrastructure installed. Vacant land is also privately owned.
In Alberta, most property is Crown land (otherwise known as public land), which is public property controlled by the provincial government. The northern part of Alberta is nearly entirely owned by the Crown, whereas the areas surrounding Calgary and Edmonton are mostly privately owned.
Crown land is not typically bought in Alberta - mainly leased. You must meet the criteria to rent crown land and apply through Alberta sustainable resource development. Crown land is leased through an auction to the highest bidder. In some cases, the province will sell crown land, but it typically must be used for agricultural reasons. In general, crown land can only be used for livestock grazing and timber harvesting. Roughly 60% of Alberta is crown land, with the majority in the northern regions.
As a real estate investor in Canada, you must have additional considerations on top of the ones previously mentioned. Continue reading to see the best tips for buying land as an investment in Alberta.
If you plan to sell the property one day, you better make sure people will want to buy. Try to appeal to many potential buyers by building a house that is similar to surrounding buildings. Additionally, paint it a standard colour. If you plan on renting the home out for a while, it's a great idea to build with durable materials that prevent tenant damage.
As rural areas become more popular, they may not have enough roads, schools, or sewage to meet the demand. Your tenants will not be happy if they wait in congested traffic to take the highway due to narrow roads. Try to forecast the community to figure out a promising investment.
It should go without saying that you shouldn't solely rely on the advice of others when making an investment decision. It would be best if you tried to do independent research on buying land in Alberta. No matter how good the deal might seem, it is up to you to make sure all your numbers are correct. Land is an illiquid investment, meaning there aren't many buyers. You could find yourself out of money and forced to sell to the only buyer at a steep discount. As a result, make sure to take lots of precautions when forecasting construction costs.
Like an investor, a farmer is running a business and must ensure the land can provide them with profits. Some considerations a farmer should have in mind while buying land in Alberta include:
Yes, there are strict regulations in the application process. Candidates must be at least 18 years old and Canadian citizens or permanent residents of Canada. If the applicant is a corporation, at least 75% of the shares must be held by Canadians. However, there are no ownership restrictions for resource extraction-related parcels.
An easement is an agreement with another party where they have the right to use your property for a specific purpose. Some common easements include the right of passage where a landowner allows another party to cross their property. There could also be an agreement for utilities such as gas, water and electricity, which require access to a specific area. When buying land, make sure to review pre-negotiated easements you could be inheriting.
A fixture is a piece of property that is permanently attached to the land. Standard fixtures include trees, fencing, or other objects that require tools to move. Although fixtures are typically included as part of the sale, it's best to review the purchase agreement and have everything in writing.
Unlike a fixture, chattels are not physically attached to the property but are secured by their weight. Chattels may be bought with the house or sold separately. Some examples of chattels include parked cars, tractors or even livestock. When buying land in Alberta, make sure to review the purchase agreement to understand what is included with your purchase.
When buying land, you may not be buying everything that comes with it. A previous owner may have sold the rights of a specific property function to a third party. A great example is mineral rights which is ownership of the property located beneath the surface. This includes oil, gas, coal, and precious metals. In the case of water and lumber rights, the name is self-explanatory. A third party owns the water and trees on the property you are considering buying. When buying land, it's essential to understand what is included with your purchase.