Whether you are exploring the idea of buying land as a business investment or are interested in building a dream home on a plot of newly purchased property, it’s important to enter potential transactions fully informed. Before committing a substantial portion of your savings or taking on the burden of a massive loan, here are several land deal details you’ll want to scrutinize.
1. Location Really IS Everything
“Location, location, location” is a realtor’s favorite mantra for a reason. Nothing is more important to think about when buying land than where it’s situated. If the property has been for sale at a good price for quite some time yet still hasn’t sold, this should set off alarm bells that there’s a catch.
Issues such as the property being located on a flood plain or near other natural hazards, proximity to railroad tracks or an airport with constant planes flying overhead, or distance from powerlines and industrial plants all play an enormous role in the location’s worth. In the Pacific West, wildfires are an additional major concern.
Likewise, consider how convenient travel times are to the nearest stores and amenities. Generally, beautiful views (including the ocean) and popular urban lifestyle access are the most profitable locations, as long as they’re safe from both crime and natural disasters. All these considerations directly tie into the next item.
First consider whether you plan to build on the vacant property. If you have no immediate plans for new construction and the land is strictly an investment, you will be looking at very little financial overhead. However, if you plan to build on the land, your strategy for long-term value should change.
Even if you are planning to build a single home on the land and retire there, unforeseen circumstances may require you to sell the property and move. Would anyone want to buy the land? Consider carefully whether your chosen plot is in an appreciating area or if it has features that will cause concern for future buyers.
3. Future Plans of the Surrounding Area
If instead of a single-family home you are planning commercial development on your new plot of land, including housing or retail space, plans for future development will be especially critical to consider.
Land buyers should always closely inspect future plans of the surrounding area. What other developments are planned? Could that beautiful view soon be paved into a mall parking lot? Is there a grocery-anchored retail strip going up next door? Is a gas station going up alongside your land, digging tanks that may threaten your well water? Multiple factors beyond your control could alter your plans for the land as well.
4. Check Comparable Property, Including Neighbors
Zillow or a related real estate site will prove to be a useful tool for checking the comparable property. By looking up a map of the area, you should be able to generate home estimates of the surrounding property, along with individual sale histories. This should give you a loose range of what you can expect the lot to be worth, especially if you decide to build on the property.
Speak to Neighbors About the Land: Yes or No?
In most instances, asking questions before jumping into a new venture is the safest path. But when it comes to land purchases, buyer beware: in some instances, rural neighbors might be adamantly against new construction in the area. Speaking to them could set off alarms, and possibly persuade them to take action that prevents new construction.
What to Ask When Buying Land
On the more optimistic side of things, you might be shocked what people tell you if you simply ask. Neighbors owning nearby land could be willing to advise you on certain details regarding their direct experience. As a potential buyer, this helps inform you about what you’re getting into. Water drainage, potential environmental issues, cell and internet service, and commute times are common inquiries you should make.
5. Consult a Builder, Possibly Even a Land Surveyor
It’s very important that you complete this step of consulting a builder before signing anything. Access is going to be incredibly important too. Even if you’re buying the cheapest land in the world, the investment could prove costly depending on several conditions of the property.
For the same reason nobody should play a game without first knowing the rules, you’ll want comprehensive understanding of zoning, along with restrictions currently in place that might prohibit the new construction of anything from sheds to swimming pools to building a second home on the lot. Hiring a land surveyor will assist with navigating these hidden obstacles.
6. Setting Up Utilities
When buying a plot of land, it’s critical to remember the various utility companies needed to lay piping for water, sewage, and gas, plus connect power lines for electricity. Unless you plan on using an outhouse and canceling your Netflix subscription, this will add significant costs to the overall property development.
7. Find a Reputable Realtor Specializing in the Purchase of Land
There’s no shameless plug here—you’re free to choose any realtor you trust. However, we strongly advise you do thorough research and select the most knowledgeable agent possible. Similar to how baking differs from cooking, real estate is much different depending on whether the purchase is land or a home. A great land realtor will advise on deed restrictions, tax breaks, and more—before you sign.
The Excitement of Buying Land
While the majority of land purchases end up being smooth transactions, hopefully you’re now aware of some basic cautionary measures to add to your checklist. Consulting with professionals is always beneficial, particularly when you consider how large of an investment purchasing land can be. Above all, this is an exciting process that should be fun. Just make sure you buy, hold, and develop land the right way!