In many areas, today’s housing market is a rather competitive one. New homes are being snatched up before they’re even finished being built. Older homes can come with older home problems. If the current housing market just isn’t offering what you need, then purchasing land and having your own home built according to your specifications may be a much more viable option.
Buying rural land also affords you more freedom and less intrusion from nearby neighbors and costly HOAs. If you like the idea of being able to do more of what you want on your land without neighborhood covenants and restrictions, then once again, buying your own private land is probably a good choice for you.
Whether you're buying land as an investment or for residential use, ask yourself the following questions before making any decisions.
For first-time buyer:
Buying a large tract of land might seem like a daunting task. However, for those who remain thorough throughout the process, and enlist the help of an experienced land specialist, it can be the most rewarding experience of their lives.
Land specialists, such as those found throughout the Mossy Oak Properties network can be invaluable to first time land purchasers.
"The biggest mistake I see first time land buyers make," explains Jared Groce of Mossy Oak Properties of Texas-Gainesville in Gainesville, Texas,"is that they try to do too much research on their own via the internet. Land is a different animal than say a house, so only a real estate agent specializing in land can adequately help them."
Good land specialists will be able to match a buyers' wants and needs with the right available property in the area. Their expertise will give a buyer peace of mind and provide them with the information they need to make the right decision. As buying a large tract of land may be the largest purchase someone will make in their lifetime, it's important to find reputable help.
2. Consulting other experts
Those buying land may also want to consult with other experts for help. For example, if you have any doubts about the exact acreage or any property lines, you may want to have a survey done. You may also want to have a title attorney do a title search to make sure the current owner has clear title on the property and no issues will arise in the future. Once you have decided to purchase the property and determine you will need financing, look first to "land banks" in your area whose primary business is lending to landowners.
3. Buyer beware
As with any real estate investment, there are always potential pitfalls that need to be assessed beforehand. In many states, the burden on discovering these problems may fall on the buyer, so it is important to ask as many questions as possible. A reputable land specialist will strive to ensure that once you sign on the dotted line, that you are a happy land owner and will stay happy for years to come.
For experienced buyer:
If you have experience in buying land, then there are a number of things that need to be evaluated before purchasing a parcel of vacant land.
Consider these seven strategies to consider when buying land:
Buy and sell: In this approach, you are basically flipping the land. You believe you purchased the land below market value and are hoping you can find another buyer who is willing to pay at or more than market value. You are hoping for a quick sale with little to no additional work on the land on your part.
Buy and hold: In this approach, you buy the land and hold onto it for a period of time. You believe the land will appreciate in value. You will still have to pay taxes on the land, as well as any additional costs to maintain the land during this time. This is a common approach in areas that are being re-gentrified. The investor purchases the land in the hopes that they can sell it to a developer in the future as the area becomes more popular.
Buy, develop, and hold: In this approach, you are purchasing a raw piece of land with the intention of developing the land yourself. For example, you could build a complex of townhouses that you will rent out to residential tenants. You could also decide to build a strip mall, which you could rent out to retail tenants. Another option could be to develop a bed and breakfast which you will run and manage.
Buy, cultivate, and hold: In this approach, you are more interested in using the actual land, than building property on the land. For example, you may want to grow crops on the land, use it for livestock, set up a Christmas tree farm or set up a vineyard. You will actively manage the land and hope to make a profit off of what the land can produce.
Buy, go through the entitlement process, and sell: In this scenario, you will purchase the land and then go through the process of having the property zoned for a specific use. For example, there may be a plot of land that was zoned for commercial use, but now that the area has developed, it would be an excellent site for a new high-rise residential building. If you are able to get the land rezoned for residential use, it would make the land more valuable to potential developers and more desirable, as it is one extra step they do not have to do themselves.
Buy, develop, and sell: In this case, you buy the land with the intention of developing the land yourself and then selling it to an end-user. For example, you buy the land, build a new construction home and then sell it to a buyer who wants to live in it. As another example, you set up a vineyard and sell it to a buyer who will manage and run the vineyard.
Buy, develop, and rent: Finally, you could develop the land and then rent the land to someone else. For example, you may buy land and decide to put a parking lot on it because there isn't ample parking in the area. The owner of a multi-family property nearby asks if they can rent a lot from you because they do not have enough parking for their tenants.