There are warning signs in every real estate deal, but land is its own beast altogether, and therefore plays by a different set of rules.
There are a number of things that need to be addressed and evaluated before even considering purchasing a parcel of land – we know what not to do, because we’ve made the mistakes for you.
Land is an amazing investment, as long as you’re educated and know what to watch out for.
Most important, you need to know the zoning of the property. It’s the only way you’ll be able to determine the highest and best use moving forward – and that greatly influences the amount of your investment and potential profit.
Call the city, get the answer, and take it one step further. Ask them to provide some examples of what type of property could be allowed under each zoning classification – you might end up with some ideas you hadn’t thought of before.
2. What’s Uncle Sam’s Take?
Sometimes a property will have an absurdly high tax bill relative to the property value itself. A reasonable property tax falls somewhere between 1-4% of the property’s full market value. If you plan to hold for any length of time, this is definitely something you want to be sure of before purchasing.
3. Access to Public Utilities
Is there water, power, gas, internet etc? In some areas not having county water or power is normal, but in others it’s a deal killer. At the very least, not having access to one of more of those public utilities will affect the value of the land. Know before you go.
4. Flood Zones
Is the property located in a flood zone? Properties in flood zones can come with all kinds of complications – it might be a swamp land, it might have a high water table (if city sewer isn’t an option, septic might not be either, and then you’re bust) or it might be seasonal, as with lakefront properties meaning insurance is a beast. Check the FEMA flood zone maps to make sure your property isn’t in a flood zone. If it is, proceed with caution.
5. Can You Get to It, Legally?
You’d be amazed at how many properties are essentially landlocked by other privately owned land, meaning there’s no legal way to access them.
The issue can be resolved with a recorded easement to the property – giving you access to your land through theirs, but it won’t be free. Best to know in advance what kind of access is already available, and if there isn’t any, what it’ll cost you to get it.
6. Size, Shape, and Setbacks
Some people are selling the most odd sized and shaped land, rendering them virtually unusable. Make sure you know the dimension and whether they’ll work for your purpose. Once you know those, have a conversation with the zoning department about the required building setbacks. Once you take those into consideration, is there still ample room to build something beneficial, or do the setbacks render the property useless? Do your homework.
7. Are You Getting More Than Land?
Some properties are glorified junk yards. You’ll want to make sure that what you’re purchasing is land and no more, or, if there is existing content on the property, that it’s something you want. Otherwise you might find yourself with a hefty bill to clear the land so that it’s saleable.
Those are just a handful of things to pay attention to when researching your land purchase. It’s not difficult to find the answers to any of those items, but overlook them, and you might be paying a tremendous price.
Contact us today to chat about your land buying needs, we’re here to help.