When deciding to go into real estate investing, undeveloped lots can have great potential. Purchasing a parcel of land can be one of the best investments you can make. A landowner has great (but not unlimited) freedom in how to develop their land, and land never expires, so its potential is essentially infinite. So, buying undeveloped or vacant land can be risky business, so read on to find tips on purchasing a parcel of land.
Do Your Homework: Before You Get Onto the Land
Before anything else happens, figure out your priorities. Decide what you want the land for, what amenities and what location you want, what you're looking for in terms of neighbors or local government, and, of course, know your budget. More specific questions will arise around taxes, fees and permits for building and available utilities/water access – but, first, just start with your ideal land plot and work backwards (and into reality) from there.
Research the Land Itself
Once you find a plot that fits your needs on paper, get out onto it. Walk the land with an eye on the topography, any unexpected hills or valleys? Is the ground solid/fertile/arable, (depending on what you need)? Are there neighboring properties, size and shape of the plot, and any other elements that the walk brings to your senses (smell and hearing as well as sight)?. Ideally, do this walk in the fall, so there is no foliage hiding your view of the property and what's around it.
Don't Lose Hope: It's Costly, But There Are Deals Out There
Remember that developing the land will incur costs too. Budget for as many foreseeable costs as you can, including: a land survey, well/utility installation, legal fees, land-clearing, landscaping and road construction. That said, there are places you can look at for deals on the initial land purchase, including property lots for sale (which are cheaper the farther they are from major cities, road access and already-connected utilities) or bank-owned plots. For those, you can talk to your real estate agent about asking local banks for lists of their foreclosed properties, which tend to be cheaper as banks look to sell them off.
Don't Be Afraid to Ask: Speak to An Expert
Finally, talk to people. Ask locals about the neighborhood, previous uses of the land and potential surprises (like calm paths that turn into snowmobile trails in the winter). Connect with professionals in the local health department, zoning and building departments, accountancy and other areas of development for in-depth answers to your municipal questions. Remember: while you will need to talk with many professionals in your due diligence, let your local real estate agent be your first point of contact. A good place to start is Equity Smart Realty. Call us at 888-670-8845.