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Advice on buying land for investment, development or build a home

Advice on buying land for investment, development or build a home

Land - one of the scarcest commodities on the planet!  Except for some volcanic regions, they are not making any more of it.  Because its many uses are in the eye of the beholder, it is often fought over, coveted and even hoarded.  For those looking for 3 to 40 acres in size - there are many more challenges to understand.

Though “land” covers a broad range of particular properties, this will focus on the more popular residential types. As always, choosing a full-time, professional agent who specializes in land will save you time and money. The following decisions will help you avoid the proverbial “swamp land for sale”.


Do

Do evaluate your hopes, dreams and needs

Your answers and the level of importance to the following questions, will determine what and where you will be looking for land. How far from family, friends, schools and your job do you want to be? Do you need to be near a metropolitan area? What will drive time be like? What amount of lot or land will handle the building(s) or improvements that you desire? How much can you afford?

Lending for vacant lots and land is difficult to find - not all lending institutions deal with these property types. As a general rule of thumb, land pricing may become cheaper as you venture further from a big city. A full time seasoned Real Estate professional who deals with land will assist you in finding answers...often through their own reliable sources.

Do know your country zoning rules

One of the most important aspects to discover beforehand! Some counties have begun to restrict any new building on 3 to 15 acres. Others restrict constructing more than one residence on any size parcel or mandate expensive septic systems. Zoning for hoofed or other animals may be different from county to county. That land “out in the country” may be incorporated by a local town with their own zoning rules. Associations that govern a subdivision might have even more rules like square footage requirements. Areas with municipal water (instead of wells) are more attractive to some buyers, which often drive up the prices in that area. Wells in some areas are so bad that residents resort to trucking in water. Vacant lots and tracts of land share most of these issues. These little differences can mean a big change in your lifestyle!

Do know the direction everyone else is moving

I have seen it many times. Be it for cheaper prices, country spaces or low taxes, city dwellers choose to move out further into the country. Relegating themselves to a longer drive time, they hope for the peace and serenity of country living. Fresh air and starlit nights are an added bonus. I have accomplished this myself, moving from Chicago to a quaint town 90 miles away. Quality of life could not be better!

However, for those who moved with the herd, their small town has had to develop infrastructure and relieve congestion. Schools were built to meet demand. Taxes soared. Buyer appeal waned. Home prices dropped. Many homeowners are stuck. Foreseeing good or bad trends will help you make the right decisions!

Do consider weather patterns

Building your dream house for summer fun or winter pleasures? Going to garden or start a vineyard? Sometimes an hour or two either way may make all the difference in the world. Living around the great lakes, we have “lake effect” weather. Weeks of massive snow storms sometimes take their toll during the winter. Yet moving 90 minutes south produces only minor snow and ice storms. Boating weather almost doubles in length of months!  Soil types and climate that grow bountiful grape varietals in one county, offer little growth in the adjacent one. Amazingly, my new clients say no one has talked to them with these issues in mind. There are many wonderful websites to help chart temperature, sunny days, rainfall, etc.. I suggest using them to your advantage!

Do know where to build

Utilities may be available in some areas, yet not others. Electric is common but will you need propane or is natural gas nearby? Municipal water or well? Who pays for and how expensive is the hook up or tap on? Internet speed plays an increasingly important role.

Soil types can very in areas. Tests like soil boring and perk tests by qualified companies can produce conclusions which will determine what kind of basement you can build (or if you can have one at all); or the type of septic system you can use.

Ley lines are ancient alignments of natural or man-made structures. They affect the activity or serenity of the land - like where an intersection of 6 streets may have more traffic/ congestion. I know one client that regularly had her property dowsed to reap certain benefits. Feng shui of the land (historically used to orient buildings) is a concern to some clients as well.  All of the above may play an important part in your decision.


Don't

Do not drive around aimlessly

We have all done it - driving around on a sunny afternoon in a development or the country. Excitement gets the best of us, and we call on a Lot or Land that has a For Sale sign out. Before we know it, we are signing on the dotted line without knowing who serviced us or even what we bought. Worst idea in the world! I have seen consumers purchase a property that has zoning restrictions; buy a parcel that is flood prone; or end up buying too far away.

We spend time seeking out the best butchers, bakers and candlestick makers but we’ll use anyone to make the largest transaction in our lives. Make a valued decision. Choose a full-time, professional agent who specializes in Land to ensure a proper transaction.

Do not speculate on the advice of others

I have serviced everyone from large developers to small lot owners. Whether their land cost them millions or hundreds of dollars, there is nothing worse than being stuck with it.

I know of a lake access lot that was sold for $18,000 even though $28,000 of culvert and drainage work was necessary for a home to be built there. Sadly, I estimate a normal lot was only worth $8000 at best. Even developers have gone bankrupt with their subdivision because of the economy, local building restrictions, and natural or man-made detriments in the area.

One remedy is to place contingencies in a contract that allow you to verify if you can build what you want. Ask a Real Estate attorney to add this addendum.

Do not underestimate the esthetic quality of the land

Through many transactions, this is one of the least discussed aspects of a lot or vacant land. A flat piece of property with lackluster views of the countryside, or worse, having sight or roadways or towers, is less desirable than a parcel with pleasant views of gentle rolling hills and tall trees. A nearby pond, lake or river will increase value as well but may come with flooding consequences. Square or rectangular shaped parcels are preferential for smaller buyers. In contrast, I have never met a client who asked for the views or smells of a garbage dump, pig farm, nuclear power plant or asphalt parking lot.

Be aware and safeguard your investment through common sense evaluation of your surroundings.

Do not believe that bottom ground will never flood

Bottom ground, riverside lots and some lake lots sometimes are cheap for a reason! Every river will overflow its banks. Bottom ground will take water. It is just a matter of time. Tributaries are funneling more and more water as areas become developed. In my estimation, 100 year flood-plains can’t keep up with all the progress. Flooding affects your insurance, property, shoreline and home. Do your homework to determine how prone the property is to flooding. If a seller or their representative tells you that bottom ground does not flood...run away quick!

Do not build a white elephant

A caller into a radio show once asked me why their home did not sell even in a good market. In an area of ranch homes, they added a 2nd floor monstrosity. Residing in an entry-level area, the home became too big and costly for the neighborhood. Comparables couldn’t justify the price. I informed them that they had built a white elephant - it may be intriguing to look at but nobody knows what to do with it!


Summary
Jumping cartoon

Whether your land will be used for recreation, development, investment or just a home, you’ll find many diverse parcels to choose from. Remember you can always change the way a house looks but you can’t change the lay of the land. Using these guidelines will help you make a better decision. With the help of a full time, seasoned Real Estate professional, your journey can be a fruitful and pleasant experience with few bumps in the road.


More expert advice about Buying Real Estate

Photo Credits: Buying land by Jerry Grodesky; Check Man, Cross Man and Jump Man © ioannis kounadeas - Fotolia.com

Jerry GrodeskyManaging Broker. Farm and Lake House Real Estate

21 years as a full-time Real Estate sales leader. Former trainer for ReMax & Century 21 agents. Relocation certified. Illinois foremost authority on farm, river and lake house living. Guest speaker on radio shows. Produced Coast Guard video on r...

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