Pros and Cons of Buying Land in Oklahoma

Thinking about buying land in Oklahoma? You're not alone. The Sooner State's real estate market has been heating up, with cropland prices jumping 15% from 2022 to 2023. According to Oklahoma State University's latest land values report, an acre of farmland now averages $2,583. But it's not just farmers eyeing these plots. The Oklahoma Farm Report found that over half of land buyers in 2023 were in it for investment, while about a third were looking to put the land to agricultural use. Whether you're dreaming of wide-open spaces or hoping to grow your investment portfolio, Oklahoma land offers intriguing possibilities. But like any big purchase, it comes with its own set of pros and cons. Let's dig into what you should consider before staking your claim in Oklahoma soil.

Pros of Buying Land in Oklahoma

Affordable Pricing 

Compared to land prices in states like California or New York, Oklahoma offers relatively affordable rural and urban plots at below average prices. As of 2020, the median price per acre for farm real estate was $2,250, significantly lower than surrounding states like Kansas ($1,750) or Texas ($2,300). For non-agricultural land, typical prices range from $2,000-$10,000 per acre depending on the location and site improvements. This affordable pricing presents opportunities for buyers looking to purchase large acreages or multiple smaller plots.

Business Friendly Tax Structure 

Oklahoma features a favorable business tax structure for land owners and investors. There is no state property tax, and land is taxed based only on the value of improvements like buildings or infrastructure. Oklahoma also has no corporate, inventory, or personal income tax. Companies and individuals can benefit from these incentives when purchasing and operating businesses on land in Oklahoma.

Rich Oil, Gas, and Other Natural Resources 

Ample natural resources make Oklahoma land valuable for industries like agriculture, oil/gas exploration, mining, and more. The state contains over 34 million acres of farmland harvested for major crops like wheat, soybeans, grain, cotton and a $2 billion cattle industry focused on beef production. Mineral rights are also a major asset, as Oklahoma has diverse underground deposits like petroleum, natural gas, coal, rare earth elements and more. This steady industry presence from farming to fossil fuel drilling helps support stable land values when market volatility causes trouble in other states.

Recreational Opportunities 

From the Great Plains to the Ozark Mountains, Oklahoma’s scenic natural landscapes provide year-round recreation. Popular outdoor activities like hunting, fishing, hiking, kayaking, boating, off-roading and camping take place on private rural land and public lands like state parks and national forests. Owning property in natural settings close to Oklahoma’s many lakes, rivers and wildlife preserves can support recreational land use for personal enjoyment or lease income.

Cons of Buying Land in Oklahoma

Volatile Commodity Prices Impacting Industries While Oklahoma’s farming, oil/gas and other commodity driven industries are key economic drivers, market volatility directly impacts real estate across the state. Dramatic dips in crop prices, livestock values, oil pricing and more can stall investment and development. In bad market cycles, restrictions on activities like drilling/exploration may also reduce or eliminate returns from assets like mineral rights. Prospective buyers should research not just current conditions, but projections for the locations and specific parcels being considered to avoid overpaying.

Severe Weather Events 

Oklahoma’s central plains location makes it susceptible to extreme weather ranging from winter ice storms to large spring tornado outbreaks. These severe events pose risks for damage to land itself as well as improvements like buildings, fencing or infrastructure. While homeowners’ insurance policies may provide protection, potential buyers should assess disaster frequency risks for locations under consideration to understand total costs of ownership.

Rural Decline Impacting Small Towns 

Trends of urbanization and population declines in rural areas have negatively impacted small town real estate markets across Oklahoma. Once vibrant tiny farming communities now struggle to maintain services, schools, job bases and infrastructure as younger generations leave for cities. Deteriorating neighborhoods and commercial areas present challenges both for community preservation and maintaining property values. Prospective buyers should investigate the vitality of surrounding communities, not just land attributes.

Complex Regulations
In addition to market instability, Oklahoma land owners may face regulations including land use constraints, building codes, water rights administration, tax provisions that reduce incentives post-purchase and more. Activities like drilling oil/gas wells require approvals from multiple state agencies like the Oklahoma Corporation Commission. And outdated claims on everything from mineral to water rights further complicate transactions. Conducting due diligence to understand federal, state and local rules is crucial before buying.

Key Factors to Consider When Buying Oklahoma Land 

With so many variables influencing valuation and use potential, conducting thorough due diligence before purchases is critical. Some key considerations include:

• Location – How does the landscape, population density and nearby city access impact intended use cases and value?
• Existing Infrastructure – What is already on the land? Assess buildings, roads, wells, fencing etc.
• Access and Utilities – Understand easement rights, energy access, internet availability and utility connectivity costs.
• Community Attributes – For rural properties, investigate distance to hospitals, schools emergency services, shopping areas etc.
• Use Intent – How do you plan to utilize the land? Choices span farming, residential spaces, industrial facilities, oil/gas development, recreation, conservation, and more.
• Market Supply/Demand – Comparable sales histories and area value trends provide perspective on risks and opportunities.
• Regulations – Factor in all land use laws, deed restrictions, construction codes, water rights administration rules and tax policies that dictate utilization parameters.

Performing personalized market analytics tailored to target geographies can further help assess pros/cons and true value for specific parcels under consideration. Research should drill down to local influences like competitive listings that set benchmark pricing all the way to state and national level drivers impacting industries active in Oklahoma.

Weighing the Pros and Cons 

Deciding whether to buy land in any location requires carefully weighing the benefits against drawbacks to match individual buyer needs and priorities. While market complexities like commodity price shifts do influence pricing and site potential, Oklahoma still provides relatively affordable real estate for agriculture, energy, business and personal use. Understanding the interplay of larger market forces and local community factors is key to finding the ideal parcel meeting budget and goals.

Mistakes to Avoid While Buying Land in Oklahoma

Not Researching Water Rights Water is invaluable for uses from agriculture to oil/gas drilling. However, Oklahoma utilizes complex laws allocating underground water rights separately from land ownership. Failing to research which waters are included (or not) can severely limit access for intended usage. Always verify water rights before finalizing purchases.

Ignoring Easements and Access Rights 

While preliminary title searches reveal liens and leases, some access rights like easements may still restrict land use. For example, a neighbor or utility company may possess rights to traverse portions of the property. Not researching easements can derail development plans post-purchase.

Lack of Flood and Environmental Assessments
Between Oklahoma’s vast river systems and extreme weather, flooding poses a frequent hazard. Buyers also face risks like pre-existing hazardous material dumping grounds or wildfire prone brush. Skipping specialized assessments for both flood zones and other environmental issues leaves buyers vulnerable to unseen clean-up and maintenance costs.

No Due Diligence on Oil/Gas Rights 

Fossil fuel reserves mean mineral rights represent huge value in Oklahoma. However, deeds may have already severed those subsurface rights from land ownership decades ago. Failure to investigate these assets leaves opportunity on the table. Always scrutinize deeds, leases and reservations before purchase.

Final Thoughts

Buying rural property offers opportunities spanning farming, drilling, conservation, commerce and living in Oklahoma’s diverse natural landscapes. However, the complex rules and regulations governing land use make conducting comprehensive due diligence essential. Failures to thoroughly research water rights, access easements, disaster vulnerabilities and severed subsurface assets before purchase can lead to unanticipated barriers, expensive mitigation costs or missed revenue down the road. Taking time to fully evaluate parcels under consideration relative to intended usage avoids regrettable mistakes. Partnering with specialized local professionals like assessors, legal experts and land companies can further help buyers navigate Oklahoma’s complicated property market to find the ideal land meeting their needs.

Frequently Asked Questions (FAQs)

Do I need to research water rights before buying Oklahoma land?

Yes, investigating water rights is crucial. Oklahoma follows complex laws that may sever those rights from land ownership. Failing to verify what waters you can access could severely limit intended usage for things like farming or drilling oil/gas wells.

Could parts of the land have easements or access rights I'm unaware of?

Possibly. Even if preliminary title searches are conducted, some access rights like easements may still exist. Neighbors or utility companies could maintain rights impacting usage. Research all easements to avoid surprises post-purchase.

Should I assess for environmental risks like flooding or contamination?
Definitely. Between extreme weather and previous land uses, Oklahoma properties may face flooding, hazardous dumping sites or wildfire risks. Specialized environmental assessments establish these liabilities before acquisition.

What's the risk of the mineral rights being separated from land ownership? 

Very common. Deeds from decades past may have already severed out valuable subsurface oil/gas rights. Leases could also complicate ownership. Carefully investigating these assets ensures you capitalize on them.

Who can help me avoid mistakes when researching Oklahoma land? 

Partnering with local real estate attorneys, appraisers, assessors and experienced land companies provides essential guidance. Their expertise assists in navigating complex regulations and supports due diligence.

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