Calculate the total cost of your purchase
The cost of your raw land purchase isn't the same as the sales price you pay. The sales price is only part of it.
You'll want to determine the yield, or what you can get from the developed property. That will require additional outlays of money for property surveys, environmental impact studies, fees, permits, engineering services and soil tests.
And once you've determined that your property has potential worth, you'll also have the actual development costs. These can include tree removal, grading and clearing, the building of access roads, payments to bring utilities to your land and expenses involved with drilling a well or installing a septic tank.
Before you buy, make sure you have the financing to cover the sales price and beyond. Lenders usually won't lend you more than 50 percent of the land's purchase price. So, you might consider part-seller and part-bank financing [source: McLinden].