If you want to buy raw land (known also as undeveloped land) for investment, business or in order to build a home, there are a lot of considerations that need to be addressed before, during and even after the process. You will find here-under some tips to reduce your risks and increase the value of your deal:
- Decide exactly the reason behind your purchasing, as each scope has its own risks. People buy land for farming, building a house (home), speculation or even diversifying own portfolio.
- What is your budget, meaning that raw land involves additional amounts to be planned in advance such as: due diligence, conversion costs (to convert the land for the intended use), carrying costs (interests on loan, property taxes).
- Once you begin your search, it is recommended to go through a real estate agent, for many reasons, especially if you want to buy raw land far away from your residence. Also, a real estate agent may have valuable information if some land has limitations regarding future development or if there are any future zoning plans that could affect your own plans.
- First and foremost, it is vitally important to understand what a land can be used for and why and for how long it is vacant. Once you know the zoning classification (e.g. – residential, mixed-use, commercial, industrial, agricultural, etc.), you can determine what type of property would be allowed under each of these particular zoning classifications.
- Always make sure you understand what the rules are before you buy a parcel of vacant land. This will help you to avoid owning a property that requires maintenance you do not want to do, or can not be used for your intended purpose.
- Investigate the kind of properties that border your future land. Take into consideration how much different industrial, farming or agricultural practices may affect the value of your land.
- Investigate location: this include among others access to sewage and water systems, electricity, gas, topography and transportation, environmental restrictions.
- Based on previous steps, prepare the list of questions for the seller/the seller’s agent to cover your specific needs of information to be sure is the land is worth viewing.
- Plan a visit to see the land and the available options for access roads. If possible talk to other community members and try to stay overnight to have the best idea of the daily rhythm of the area. Plan a visit on a cold, rainy day to look for water problems and at night and on weekday to look for night-time lighting, traffic, noise, odors problems.
- Before finalizing a bid, consult other experts like lawyers, appraisers, real estate brokers, local banks or credit union.
- Purchase land in the path of growth markets. Owning land near prime or up-and-coming growth areas means your property has a greater chance of increasing in value at a faster rate. Purchase high quality land for the best value – the presence of trees, hills, picturesque views, water access or water frontage, often yield higher value over time. If possible, buy land with modern infrastructure. Modern conveniences add value to your property and increase your everyday enjoyment and comfort.
- Be prepared to make a decision the day you view the property. Being a successful land buyer means being prepared to act. Do investigative homework prior to the visit and be prepared to use that knowledge to maximize your financial leverage. And if you find the perfect property for your needs on your first visit, don’t wait. Don’t let someone else beat you to the bargaining table.
- Acquire land and build with resale in mind. A smart land purchase is about not only yourself, but also the person you may try to sell to in the future.
Contact us if you would like us to assist and navigate you through the buying process!