Buying a piece of land is an investment decision that should not be taken lightly. Before you can begin to evaluate individual investment opportunities, it’s important that you have a clear idea of your goals and potential outcomes. Here are 12 things to consider before buying a piece of land.
Shape and size of the property. This is the easiest place to start. First, you will want to determine whether the shape and size of the lot is suitable. Of course, this depends on what you plan to use the lot for, or the type of business you plan to lease it to.
Zoning of the property. Next, you need to find out what the zoning classification of the land is. This will help to determine what the land can be used for. Specifically, it will identify the types of structures and developments that are allowed in that particular property. Surely, you will want to consider whether these requirements meet your needs as an investor.
Topography of the land. Understanding the topography of the land is essential. In other words, you are examining what it actually looks like. Does it include hills, valleys, cliffs, rivers and so on? This too will have an effect on the potential uses of the property. An effective tool for exploring this is Google Earth as it can save you lots of time and hassle. This is especially important if you are not able to view the property in person.
Associated tax obligations. Be sure to look into any tax obligations associated with owning the property. Land tends to be a buy and hold type of investment, so this is worth looking into. If you plan to hold a piece of land for extended periods of time, be aware of any taxes that may accumulate. This will have an impact on the affordability of the investment.
Public utilities and water supply. Not all land has access to public utilities or municipal water supplies. Knowing this ahead of time can save you lots of time, money and hassle. It can also affect the feasibility of building certain structures on the land. As for water specifically, you should consider the options of drilling a well or having it shipped by truck in the case that the land is not connected to a local water supply.
Building setback requirements. Every municipality has these to ensure some level of consistency among buildings in an area. You will definitely want to inquire about these to ensure the land will be able to support any development you had in mind.
Usage restrictions. Similar to the zoning requirements of the land, there will likely be some usage restrictions. This will identify what you can and can’t use the land for. Again you will want to compare this against your initial plan to determine whether the investment is feasible and makes sense.
Flooding or other natural disaster zones. If the parcel of land is in a flood zone or some other natural disaster zone, it means that there is a likelihood for damage. This translates into expensive insurance premiums that can again, affect the affordability of the investment.
Previous uses of the land. To save yourself from future headaches, you should inquire about the previous uses of the land. Specifically, there are certain legal requirements in place that are intended to protect the land from contaminants. If for some reason, the previous owner or occupants contaminated the land, you will want to know about this sooner than later. Keep in mind that this can also affect any funding tied to the property.
Surrounding properties in the area. This will have an impact on the attractiveness of the property. You’ll want to ensure that the presence of nearby neighbors aligns with your investment objectives. For example, you may look for neighboring businesses that complement any potential developments you had in mind.
Access to roads. Believe it or not, there are many pieces of land that are not accessible by road. Of course, this has major implications for you as an investor. First of all, will you even be able to access the property? And second, does your intended use of the property require road access? Without access to roads, the potential use of the land can be severely limited.
Soil percolation and nearby sewage systems. It’s important to determine whether the land has access to nearby sewage systems. If not, you will need to find out if the soil percolates and whether you can install a septic tank of your own on the lot. If the answer to both of these are no, then it is not as feasible to build any structures meant for permanent living on the land.
We encourage you to use this as a checklist for evaluating potential land investments. Today's market is filled with many opportunities for the savvy investor. Our Elite Legacy Education trainers will introduce you to proven strategies that can help you launch your career as a successful real estate investor.
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