The Do's and Don'ts of Buying Vacant Land
Real estate investors know that buying vacant land can solidify one’s financial stability or work against it.
The balance comes in knowing exactly what to look for and what to avoid. Real estate developers who have learned how valuable vacant land is making sure to not pass on a good deal when they see it.
But equally important, they know what types of land characteristics to settle for and which ones to steer clear of.
Looking to build? Check out site plans for architecture and landscape design by MySitePlan!
Benefits of buying vacant land
Vacant land is a limited, valuable resource. While location is a factor, buying land is generally a safe investment. There are several benefits to buying vacant land and developing it when the market demand makes it the most lucrative to sell.
Even if the return on investment isn’t immediate, there are many benefits to owning land:
Costs Less to Purchase Than Residential or Commercial
There’s nothing wrong with buying an already finished residential or commercial property. However, more often than not, buying vacant land and building the property that one desires ends up being cheaper several times over than buying a finished property. Vacant land usually has:
- Minimal carrying costs
- Lower property taxes
- Lower maintenance costs
And vacant land is a blank slate that you can develop however you please (within the zoning laws, of course.)
Capitalize on Market Trends for Higher Gains
The term 'cheaper', however, can be very relative. In most real estate deals, the element of timing is very important.
For that reason, an investor may see it fit to buy an already finished property at an astronomically higher price in order to seize the opportunity that the markets present at that point as opposed to buying raw land and developing it.
On the other hand, a different investor may seize the opportunity of market trends to buy vacant land and develop it to meet specific market needs.
Either way, timing is important to help make the choice that’s best - because wrong timing whether buying a finished property or vacant land can end up being very costly.
Almost Never Depreciates
The truth is a good number of people express hesitation in buying vacant land, even though they know that they can eventually make a fortune from it. Vacant land will appreciate in marginal market conditions because it is a hard asset that is a scarce resource. But waiting can prove difficult for some investors even though they know vacant land is a safe long-term investment.
The best part about a good land buy is that it almost never depreciates from the value of the purchase and almost always appreciates in value.
This is the core benefit of buying land.
For the most part, buyers may hesitate because they do not know what to look for and are afraid of making a bad business decision.
With the right help of a knowledgeable real estate team, excellent landscapers and home or commercial property builders, one has nothing to worry about as they can get help with property assessment of the vacant land before purchase and figuring out whether it’s matched to one's needs.
Can Develop The Land as You Please (Within Zoning Code)
Another benefit of buying vacant land is that one has the opportunity to design their property according to their preference within the zoning code.
Buying pre-built houses means one ends up with a generic looking house without any stamp of their preferences or input.
With the help of professionals, one can customize a property to reflect their own sense of style by giving the building a unique signature.
Secondly, the building phase can be done in phases depending on the availability of funds.
Less Competitive than Residential Real Estate
Given that the competition for vacant land compared to finished properties is less, chances of investors landing an amazing location for a very affordable price are higher. Once a property has been finished, the value of the place is likely to steadily rise into a handsome profit at the point of selling or renting the property.
Lower Market Rates with Seller Financing
Because banks and other traditional lenders view vacant land as a speculative investment, they are less likely to provide financing. Many times the property sellers will act as the lender and offer lower market rates to attract buyers.
Financing for the property will largely be influenced by how you plan to develop it. You will need a substantial amount of cash to develop vacant land.
5 Important Things to Consider When Purchasing Vacant Land
Before you purchase vacant land you should take into consideration our five tips:
1. Have a Good Team
Surrounding oneself with a knowledgeable team of professionals can help to avoid costly mistakes. The costliest mistake would be acquiring a piece of land that is mismatched with the real estate need that one has in mind.
Assess the Best Options
If one is looking to build a property, whether it’s a mix-use building, commercial, industrial or residential, engaging with architects and landscapers before making the buying decision is crucial. Their input will help the buyer weigh their building options and their professional advice on the piece of land will give the project direction.
Although it means extra fees for these experts, it’ll prove worth it because they can spot and sort out issues that may cost the owner down the line.
Engaging with such professionals will also help the owner know whether the vacant land is a match to the property he wants to build or not.
Have you considered creating a site plan for the property? My Site Plan can create a custom architecture site plans or floor plan for your vacant land development.
Identify Safety Risks
A team of professionals can recognize unforeseen risks and safety issues. For instance, if the land is at the edge of a right-angled cliff, an architect and landscaper may counsel against the purchase for safety reasons.
At the same time, they’ll also present options that can ensure safety for such a site while adequately communicating the hefty financial implications involving such an undertaking.
This may include the challenges of accessing utilities such as freshwater, roads, gas connections and electricity. With this information, the potential buyer can weigh the pros and cons of the site from an educated point and make the best decision possible based on his business needs.
2. Lay of the Land
When purchasing land, one should consider the topography of the site. It’s easier to build on flat land than it is to build a property on a hill.
By having a good idea of the topography of the land one wants to buy, the investor is able to tell whether it will be suitable for the kind of property they want to put up.
Topography Can Help or Hinder Depending on Property Type
For example, when considering building a hotel a surrounding topography of hills, mountains, lakes, and forest is not so bad as it contributes to panoramic views and offers the guests natural adventures activities such as hiking, kayaking, and skiing.
Homes for sale, on the other hand, may not be best suited for such a topography because the location is far removed from the city, schools, and hospitals. Even the infrastructure elements like gas, water, and electricity are not easily accessible to the planner.
Depending on the type of property one wants to set up, they have to consider if the vacant land's topography is conducive. Usually qualified architects and landscapers will advise appropriately on such technical matters.
Related: Tree removal in my area
The local planning and zoning department can be very helpful in finding out what type of properties can be built in various zones. This can range from commercial properties, mix-use properties as well as exclusively residential properties.
So, if a developer is interested in purchasing a parcel of land for the purpose of building a commercial building such as a high rise office or warehouses, then they must make sure that the land on offer is in the appropriate zone.
Communicate With the Planning and Zoning Department
This isn’t complicated to find out as a phone call to the planning and zoning department will explain what property can be built on the zone the land is under.
Some investors buy vacant land in areas where the zoning is expected to change after some years. This is in anticipation that once the zone changes it will work to their favor in value appreciation.
While it may be a sound strategy, one can never tell when a zone change will happen. It might happen after one's lifetime meaning the appreciation of the land may be felt by future generations.
Related: Where to get a house site plan?
4. Building Setbacks
Building setbacks are requirements set by planning and zoning departments for the purpose of giving buildings in a given area consistency and order. A setback determines the space between the lot line and the building.
Most people looking to purchase land may not be aware of such a requirement when building which is why engaging the help of a professional in-home design and landscaping is vital. It can help the investor reconsider their purchasing decision.
By consulting a professional, it quickly becomes clear that one has to know the dimensions of the property they aim to build.
Setbacks Can Determine Property Viability
This information about the building setbacks will directly determine whether the size of the land they are about to purchase will be enough for the property or not.
Often, vacant land buyers have made the mistake of buying a piece of land without important due diligence on the land vis-à-vis their property plans. The typical result is finding out that after building setbacks, the property they would like to build is too big for the piece of land they bought.
To avoid such disappointments, it's best to team up with a professional in local vacant land purchases as well as building requirements in the area.
Related: Best Patio Plants
5. Annual taxes
Annual tax obligations on a property are a factor to be considered even before the purchase of vacant land.
The acceptable annual tax obligation on a property is from 1-4% per annum of the total value of the property. If the annual tax is above the mentioned rates, then one has to reflect on the viability of the purchase.
Related: What is a site plan?
Is It Better Buy Land or a House?
When it comes to real estate, people constantly battle with the tough choice of either buying land to build a property on or just buying the property outright. Everyone’s situation is different, which will be reflected in whatever choice they make.
We’ve already mentioned some benefits of buying land, so now we’ll look at some benefits of buying a house outright.
Move-In Right Away
When you’re buying land to build a house on, you’re usually be waiting about six to seven months before you can move in. No one wants to wait that long before moving into their dream home.
When you buy a house that’s already built, there’s no waiting period. After your loan gets approved, all you need to do is find a home, and then you can move in when you want to.
Easier to Negotiate
Are you a good haggler? If so, then you’re in luck. You may be able to negotiate your final buying price depending on who you’re working with.
If you’re buying land, there’s little to no wiggle room since builders take labor into consideration before giving you the final price.
Buying a house can be stressful because you need to figure out:
However, when you’re buying land and building on it, you need to worry about those costs plus the interior and exterior design plans of your home, which includes:
Also, remember that you need to take care of all of these tasks while staying within your budget. So if you want less headache, it may be easier to focus on buying a house instead of the land. But if you’re up for the challenge, purchase the land.
Vacant land has many benefits but also numerous caveats. Vacant land is always a safe, appreciable investment when you do the research and due diligence to determine the property’s value and potential.
Since one already knows the kind of property they would like to build, it can’t be overstated how important it is to seek the counsel of professionals before making a purchase. That ensures that the property one buys is matched with the property they want to build.
Once the land has been purchased successfully, hiring professional site plan designers to design a home and build is a logical next step with no unnecessary hassle because everything has been taken care of by the professionals.
My Site Plan has experienced CAD designers who can create a non-certified site plan for a new architecture projects. After gathering the required information, My Site Plan can create a site plan within 24 hours for most projects.
Looking to build on your property? Check out architecture site plans by My Site Plan!
How to Make Money With Land: 10 Business Tips for Vacant Land
Profiting from your vacant land sounds like a dream. Some buy vacant land for a variety of reasons -- to build on it one day, sell when it appreciates, or lease it. Land is one of the best investments in the world as it is impossible to create more.
Many people find a way to make money with their vacant land that, in some cases, turned out to be a better use for it than building. This may sound too good to be true, but vacant land can lend itself to many profitable uses. This guide will explain how many are making an amazing extra or even primary source of income from their land!
Related: How To Develop Land: A Simple Guide
Is Vacant Land Worth Investing In?
Some see vacant land as a space that isn't used to its full potential. Most don't know that even without building on a piece of land, it can be a worthwhile investment that will usually appreciate while having the ability to provide unique streams of income.
Vacant land can also provide you with tax benefits. You can write off property taxes on your Schedule E form (from 1040). This can offset some of the profit you will be able to make on other real estates you may own.
How Do You Buy It?
Buying a great piece of vacant land will take some investigating into a few things. Make sure you know everything when it comes to zoning, land use restrictions, and take a look at some common mistakes when buying land.
Compare properties carefully so you can get the best plot for your money. Do your due diligence and enlist the help of an expert agent to help you with the buying process.
You can browse these sites to take a look at vacant land offerings in your area!
The 10 Best Ways To Make Money With Your Vacant Land
Event and Campground Space
Camping has been booming in the last few years as families have been seeking the outdoors for a peaceful respite from their day to day. People wanting a break from civilization has driven an exploding outdoor recreation scene that you can benefit from by renting campsites out nightly.
You will need to follow all regulations in your areas and make sure that your land is available for this use. But once you make it through the paperwork and bureaucracy, you will have an extremely lucrative business on your hands!
The market for outdoor event space is also better than ever. If your property is particularly scenic, providing a wedding for venues can make you a killing. Many have grown their incomes by a huge margin with wedding venues, and so can you.
Leasing to Solar Companies
If you have a larger vacant plot in a sunny area, you may be in luck. Solar energy is another exploding industry in the US that has companies looking for more space to set up solar panels. You can seek out solar or utility companies in your area to see if they might be interested in producing solar power on your property. This is a long term investment as it can take up to 5 years to finish, but one that can pay big dividends.
Are there a lot of horse owners in your area? Vacant lots offer the perfect opportunity to provide a horse stable. Many people don't have sufficient land to keep their horses, so they stay on other property. Consider making your land available for horse riding as well.
Recreational Vehicle Storage
Like horses, many people don't have the best places to store their RVs on their property. Across the country, RV storage facilities provide a booming business to those with large lots. You will need to provide a secure area for RV storage and be available to allow owners access, which can provide a challenge. However, depending on what you charge for storage fees and how many RVs you store, you can face a huge monthly income.
Related: What is the Cost of a Land Survey
Want the best plans to build on your property? Contact My Site Plan to get the plans you need to obtain a permit.
If you own a large area with plenty of timber, then leasing your land to a commercial logging or timber company could be the way to go. These companies will pay large sums to harvest your land for the hot commodity of wood. Don't have quite enough trees to sacrifice? Opening your land to a smaller firewood company or selling wood yourself can be a perfect option.
If your land is near a lake or the ocean, offering boat storage could be the perfect business. When your property is on the water, you are perfectly situated to open a marina, dry boat storage, or both! This also comes with the high maintenance of providing a secure space while allowing owners to take boats out when they please, so as with other storages, you may need to consider hiring an employee.
Leasing Your Property to Cell Companies
Cell tower companies need more space than ever to expand our mobile service capabilities with 5G and beyond. Reaching out to local cell providers could be an excellent way to gain a large source of income, especially in highly rural areas with one or two providers.
Leasing to Farmers
Leasing your land for farmers to grow their crops on is a tried and true model of income for land that would otherwise sit empty. Farming can be hard on land, so ensure that you know about the pros and cons of opening up your property to crop growing.
Provide a Seasonal Destination
Pumpkin patches and Christmas tree farms could be the perfect use for your vacant land and can be highly profitable. Turning your land into a destination a few times per year can be a great way to invite vendors and fun.
Raising cows, chickens, pigs, or any other livestock on your property that belong to yourself or someone else can be a highly profitable venture that is sure to provide a large monthly income.
Looking for the best site plans to develop your land? My Site Plan can draw the highest quality plans from sketches of your dream home within 24 hours!
There are a variety of ways to profit from your vacant land that we haven't listed here, but this should get your creative juices flowing for how to maximize your investment.
Although it may seem like it isn't reaching its full potential without developing your land, you can make money while waiting to sell the land or build your house!
Related: 10 Best Backyard Workspaces
- Annie Rosellini