What to Know In Order to Buy Vacant Land
Purchasing vacant land can be a smart decision for an investor who doesn't want the hassle of renting out their home. (Even with the help of property management companies, investors are still ultimately responsible for the well-being of their tenants.) However, vacant land can also end up being more work than many investors realize. It may seem as simple as sitting on the land until the right buyer comes along, but there's more to it than that. See what to consider about raw land before getting started.
Patience and Discretion
Few investments are as easy as a quick turnaround and an even quicker profit. With raw land, buyers may need to wait for the neighborhood to change before they see any profits. During this time, they have to practice discretion when it comes to the offers they receive. If they sell for too little, they may miss a major opportunity to maximize their gains. Those without the luxury of time may want to consider a different type of investment, so they're less likely to jump at the wrong buyer.
Consider the Nature of the Land
Land can be affected by invisible factors that not all investors know they need to consider:
- A pipeline that lies under the land may make it difficult or even dangerous to build upon
- Tree roots, sinkholes, and the condition of the bedrock may interfere with a developer's grand plans.
- Raw land surrounded by hills may get too little sunlight for both residential or commercial property.
- Too much soil erosion can make it impractical to capitalize on raw land.
Canada has become a lot more environmentally friendly, and laws are rapidly changing to match the new goals. So even if a buyer purchases the land when it's legal to build upon, the laws may rapidly change by the time the buyer is ready to sell the home. Learning more about the general attitudes of the province's or local lawmakers can help buyers make smarter decisions. If it's going to be too difficult (or expensive or impossible) to obtain the right permits, developers will quickly move on. In addition, buyers should factor in property taxes into their profits. If a buyer has to hold onto the land for longer than anticipated, the total costs of the property taxes can deplete the land's overall profits.
Visits and Verification
Buyers of vacant land may find it easy to buy it and forget about it. But there's a danger to this because unmonitored land can be destroyed by anything from squatters to Mother Nature. Neighbors may start piling up their unwanted furniture and appliances in order to avoid city pick-up fees. The soil could be affected by hazardous waste if people aren't watching where they're dumping it, or a major storm may upturn the natural growth in the area. Regular drone footage or cameras can go a long way to cutting down on how much work a buyer has to do, but it may still help to build a relationship with the land, so it can keep its value before the time comes to sell.
There's no reason that buying raw land can be a lucrative and relatively easy experience, but it's also important for investors to consider both the benefits and disadvantages - especially compared to buying a High River home. This can help them buy the right property at the right price, so they never have to worry about offloading an unwanted piece of land.