The Pros and Cons of Investing in Vacant Land

Q: I’m thinking about investing in vacant land. What are the pros and cons of investing in undeveloped land?

A: Investing in vacant land is VERY RISKY.  It’s important to do your homework first. Here are some things to consider when considering land.

How much return do you want on your investment?

Getting a return on undeveloped land can take a long, long time. Be clear about what you want from your land investment. Research development trends in the area you want to buy in. City and County planning divisions can help with that. If it looks like the area is slated for growth, you may see your land value go up.

If you want land for your own recreational or future use, make sure it is zoned for what you want. How will you pay for the land?

It can be difficult to get a loan for vacant land. If you CAN find one, be prepared to make a large down-payment and understand that the interest rate will be higher than average.

If you’re able to make a cash purchase, do so with the understanding that it could be a long time before you can get that cash back.

If the land is for recreational use, consider crowd-funding the purchase with people you like and trust. It’s a easy to set up a schedule of who can use the land when and it avoids long-term interest on the purchase.

Factor in your incidental costs

If you’re paying cash for the land, don’t skip the survey. It’s important to know what you’re getting and what your limits are. Also, remember that property taxes will be due every year. Depending on where you purchase the land, you may be required to maintain it. Check the local codes and abide by the usage rules to avoid costly citations and fines.

Vacant land is generally a long-term investment. It requires solid research, and even then, it can be risky. Work with an expert to make sure your investment works for you. You know the one! Call me today to start your land investment journey!

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