Real estate investors spend plenty of time thinking about what’s built above ground. Fewer stop to think about what’s beneath it — but for anyone who owns, builds, develops, or renovates real estate, understanding soil can save (or cost) real money.
Take a seemingly perfect development site: level farmland, road frontage on three sides, near a major town. Everything about the location says “subdivide and sell.” But if the soil has hard clay that won’t pass a perk test, that lot’s development potential just took a serious hit — since advanced septic systems suitable for poor-perking soil tend to be too costly and space-intensive to pencil out.
Why does a real estate investor need to care about soil?
- If you intend to own, build, develop, or renovate real estate, knowing what lies beneath the ground helps you anticipate costs. A property that looks ready for a larger parking lot, for instance, can turn into an expensive excavation project if the area you need to clear turns out to be rock under a thin layer of soil.
- If you invest in farmland or have an interest in commodity investing, basic soil knowledge helps fuel profitable decisions.
Understanding the Geology Beneath the Soil
Underneath the layer of soil is bedrock, made up of limestone, shale, and similar rock formations. The depth of soil before hitting rock varies, but in the Northeast it’s typically several feet. The Pennsylvania Department of Conservation and Natural Resources (DCNR) provides mapping of the state’s geology.
The map below shows soil depth before bedrock across the US — red denotes 0-10 meters, white denotes 50+ meters. Note that the Midwest has notably deep soils (50+ meters), reflecting the rich soil the region is known for. Iowa, for example, has some of the most fertile soil in the US, thanks to a deep base of high-quality soil deposited in its basin areas.
Understanding Basic Soil Types
- Clay — known for high water retention and plasticity. While it may seem ideal for supporting heavy structures, clay expands and contracts with moisture changes, which can lead to foundation issues, cracking, and other structural problems.
- Silt — finer than sand and able to retain water for a long time, which can lead to poor drainage. Properties built on silt may experience shifting and settlement, especially when the soil becomes oversaturated.
- Sand — drains well but doesn’t retain moisture or nutrients effectively. Sandy soils are typically more stable than clay and suitable for foundations, though they may need additional stabilization to prevent erosion.
- Loam — considered ideal for construction, since it’s a balanced mixture of sand, silt, and clay, with good drainage and enough support for most structures.
The Best Soil for Farming
The best soil is the one that yields the most plentiful harvest with the least tillage and fertilizer. Both scientists and growers point to loam as the easiest to work with and the most fertile, thanks to its balanced composition — roughly 40% silt, 40% sand, and 20% clay.
Within US agricultural regions, soil type plays a big role in which states lead in production. The top 10 agricultural producing states are:
| Rank | State | Agricultural Production |
|---|---|---|
| 1 | California | $58 billion |
| 2 | Iowa | $44.7 billion |
| 3 | Nebraska | $31.6 billion |
| 4 | Texas | $29.7 billion |
| 5 | Illinois | $27.9 billion |
| 6 | Minnesota | $26 billion |
| 7 | Kansas | $23.5 billion |
| 8 | Indiana | $18.3 billion |
| 9 | North Carolina | $16.8 billion |
| 10 | Wisconsin | $16.6 billion |
Pennsylvania doesn’t crack the top rankings by dollar amount until around #20, but Central PA still produces a significant volume of crops. Maryland trails further behind, at #36.
Soil Testing and Analysis
Before purchasing a property — especially for development — a thorough soil analysis is crucial. Soil tests reveal composition, bearing capacity, and potential issues such as contamination or instability.
- Soil lookup tools — the USDA’s Web Soil Survey lets you look up the soil type for a specific location online.
- Geotechnical surveys — while online tools provide useful data, on-site testing is still needed for specific planning. A geotechnical survey involves drilling boreholes and taking soil samples at various depths, which are then analyzed to determine physical and chemical properties that inform foundation design.
- Environmental testing — particularly important in urban or industrial areas, where soil may be contaminated with hazardous substances like heavy metals or chemicals that pose health risks or affect development.
- Percolation tests — used for properties relying on septic systems, to determine how well soil absorbs water. Poor percolation rates can require expensive drainage systems or make a property unsuitable for development.
Soil-Related Risks and Mitigation
- Erosion — caused by wind, water, or human activity, leading to loss of soil stability and support. Retaining walls, vegetation, or geotextiles may be needed to protect the property.
- Expansive soils — soils that expand and contract with moisture changes can cause severe foundation and structural damage. Mitigation includes soil stabilization, moisture control systems, and deep foundations that reach more stable soil layers.
- Sinkholes — certain soils, particularly those rich in limestone, are prone to sinkhole formation, which can be difficult to predict and cause serious damage. Certain areas throughout Central PA and Northern Maryland have shown a tendency toward sinkholes; thorough geological surveys and insurance can help manage this risk.
Legal and Regulatory Considerations
- Zoning laws — may restrict development in areas with known soil issues; some municipalities also restrict development on higher-class agricultural soils (for example, permitting solar development on agricultural land only if it’s not on higher-class soil). It’s worth consulting local planning authorities on soil testing and mitigation requirements.
- Environmental regulations — soil contamination can trigger strict cleanup regulations, and remediation costs can be substantial enough to affect a project’s financial viability.
- Building codes — often include specific requirements related to soil stability and foundation design; compliance is crucial to avoid costly fines or unsafe conditions.
The Bottom Line
Whether you’re developing land or purchasing an existing property, a solid grasp of soil considerations leads to more successful, stable real estate investments — and helps you spot risks (and opportunities) that lie hidden well beneath the surface.
