Buying and Building on Raw Land


What a great dream, I have had this one as well.  There would be nothing better than to buy a piece of land and build my own home to my own specs. I havenít done this yet, but have worked with people that have.  What I have found is that you can do it, it just takes patience and education.  I can't help you with the patience, but I can help you a little with the education part.  

There are several inaccurate assumptions when it comes to buying and developing land in the area.  Below I will try and address a few of them.

I will buy a piece of land and subdivide it.

Not usually.

Most of the property up here has been subdivided already.  Many of the parcels are remnants of large ranches from the 1800ís.  Land was handed down and different generations subdivided as they went. 

San Mateo county uses ďdensity creditsĒ to decided how many homes can go on a piece of land.  One density credit equals one home.  At some point in time the county looked at all the parcels and all the people and assigned a maximum number of homes it would allow from Skyline to the Ocean, then lots were assigned density credits.   Most of the lots for sale have 1 density credit.   Many of the remaining lots that have more than one density credit are larger lots and there are usually road or water challenges.  For example, there may be 150 acres with four density credits, but the last two areas where the density credits ďresideĒ are impossible to get to (and by impossible I mean they may need a $5M Ĺ mile road, or may need a $10M bridge).  So for all intents and purposes there are 2 density credits, however itís usually priced like there are 4.  The net-net is you arenít going to buy one, two, five or twenty acres and be able to subdivide it.   There are always exceptions, but they are rare.


I can have a house up in a year from the purchase.

If you are lucky, you will have just broken ground. 

As I mentioned earlier, most of the parcels left are remnants of old ranches, which means that the lots arenít ready to be built on when they go up for sale.  What do I mean by that?  In order to break ground on your home, you need some infrastructure already in place.   Remember there are no sewers up here, and usually no water at the street you can tap into.  So BEFORE you close you need to make sure you can build on the land before you finally purchase it.  This means you need to drill a well (you need water), perform a percolation or ďpercĒ test for the septic system (you are going to need a bathroom), you need to make sure there is road access to the site you want to build on.  You also need to make sure that in a good rain year, the place you want to build isnít going to slide, so you need a geology report.  You also need to make sure where you want to build the home is actually on the property you want to purchase, so you need a survey. 

So the timeline to build a home on a piece of land goes something like this.  You find a piece of land you want, it takes you 3-6 months to make sure you can, with 80% surety, build a home there (and around $30-50k).  Then you get an architect, and submit your plans to building and planning, they tell you to redo something, which you do, then they tell you to do it again, which you do.  This process can take six months to a year or more depending on zoning.  Then you break ground, and start the process.  This can take a year or two.

I always tell my clients to be prepared for a two or three-year process from start to finish.  I am not usually wrong.


Itís cheaper to build than buy a home


It depends, as I mentioned earlier, you typically have to spend about 30-50k when you find a piece of land just to make sure you can actually build a home there.  If you have to do this a couple of times, it gets rather expensive.  Building prices up here range from about $300 to $400 a square foot.  Also keep in mind that construction loans are typically more expensive than regular home loans (in terms of interest rates).  And the closer you get to completion the more your payment is to the bank.  In the interim you are paying your current house payment, or rent while your home is being built.  This is why you have friends that have built and are riding their contractors to do the finish work so they can move in.  They are making almost a full home payment, and the contractor has almost all of his money.  This leaves you pleading with the contractor to finish so you can move in.


Building on rural land is the same countywide


There are several different areas with different restrictions.  You have scenic corridor areas that have more restrictions on what you can build, and you have coastal zones that have a ton more restrictions.  What may take you two years on a piece that is not zoned coastal or scenic corridor could take 3 or 4 years for scenic corridor or 4-5 or more for coastal zones.

Some things to think about

Water requirements

We all need water, and oddly enough the county requires you have water to build a home.  There are several different ways in rural communities you can get water.  There are numerous small water companies that supply water on Skyline Blvd, in La Honda, Loma Mar and Pescadero.   ButÖbaring that, you usually need a well.  As I discussed earlier, most properties for sale donít have water.  This means before you buy the place you need to drill a well.  This can run you $20-30k.  If there is no water or the well yields less than 2.5 gpm for 4 consecutive hours of testing (for a single family home as of Jan. 1, 2006), then you canít build, or you have to drill another one.  But at least you didnít spend $750k on a piece of land you canít build on.   When the well is drilled, and you get ready to hook it up, you will need a 1250-gallon storage tank (for a single family home as of Jan 1, 2006) and usually a pressure bladder set up and a filter system.


Septic systems

There are no sewers in rural areas, so you need to have a septic system.  A septic system is usually a concrete box divided into two chambers that holds about 1500 gallons.  Hooked to this are two leach lines that take the liquids from the tanks and leach them into the ground.  In order to find out how long these lines need to be you need a perc test.  A perc test (short for percolation) is done prior to installing a septic system in order to assure that the soil is of such a nature to accommodate your septic effluent in a safe manner. The idea is for the soil to filter and allow oxygen contact with the liquid effluent so that the good bacteria will safely and completely digest the not-so-good stuff. Soil that has too much clay, too much sand or gravel, bedrock close to the surface or too much water, will not do the job properly.  What they basically do is dig a big hole, put in water and time how long it takes to drain into the ground.  If it drains to fast, thatís bad, too slow, thatís bad too. 

After your perc test you will be given a ďgradeĒ depending on how fast the water drained out, either an A, B, C or Failed.  The grade is the deciding factor on how long your leach lines need to be.  Itís a good idea to have a perc test complete and signed off on by the county prior to close of escrow.  These usually run in the neighborhood of $1500-3000.  Again, if it doesnít perc anywhere, or there isnít room enough for the leach lines, or the grade is too steep (you canít put leach lines on a slope of 50% or more) then you canít build. But itís better to have spent your money on this and find out you canít build than to spend $750k on a lot you canít build on.


Building on raw land is a great opportunity if you know what you are getting yourself into.  With a little patience and wide open eyes, building the perfect home to meet your personal needs is still an obtainable dream.  I always have my favorite pieces of land in the area, give me a call and I would be more than happy to further discuss them with you.


Questions?  Give me a call or send me an E-Mail

Scott Hayes

RE/MAX Pioneer @ Skywood