The idea of buying land may appear to be a massive and scary procedure. It’s easy to become lost in the process when there are so many questions and difficulties to overcome.  

There are plenty of environmental and legal considerations that can make you second-guess your decision after the fact. So it’s critical to complete your research and ensure that you’re making a wise purchase. 

For a skilled investor looking to create a residential or commercial real estate on the site or sell it, a vacant, undeveloped tract of land can be a gold mine. Choosing the right parcel of land is also critical if you plan to construct your home instead. However, several hazards and ambiguities can hamper the process, ranging from zoning concerns and easement issues to utility issues and restrictive covenants.

Buying land is a complex real estate transaction with numerous moving pieces. If you’re ready to invest in real estate, you should know a few things first. Continue reading our guide on the 11 things you should know before buying land.

Process in Buying Land

What Questions Should You Ask When Purchasing Land?

Every piece of land is distinct, and real estate transactions are also unique. Transactions are affected by the area, property usage, and buyer and seller conditions. Even if the property appears to be ideal, there are several things you should ask before handing over your cash.

A seller may not tell you everything upfront t hat you need to know about a property.

  • Has the land lately been surveyed? Are the lines delineating the boundaries painted or marked?
  • Are services such as power, sewerage, and water already available on this land or property? Is there a well or a septic system on the property?
  • What are the property’s access rights? For example, is there legal access to a public road, or does a deeded easement supply access?

The questions above should assist you in constructing a picture of a property’s current condition and future possibilities.

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What Are the Pitfalls of Buying Land?

An undeveloped patch of land can appear to be brimming with possibilities. However, as you try to develop or sell this land, you might quickly learn several limits and challenges.

The government may impose restrictions on the type of buildings or property that can be built or the usage of the land. You can run into environmental issues like flooding or pollutants.

The scale of the development you will be allowed to create is the second factor to consider when purchasing land. There will undoubtedly be zoning requirements for the land to building ratio or the size of the structure or other building you can have when establishing or improving a business property.

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Is Buying Land a Good Idea Right Now?

First and foremost, land as a resource is becoming increasingly scarce and expensive over time so it is a good idea to buy land right now. There’s nothing that can be done to increase the amount of land available. There is limited land in the United States, and as the population grows, so does the demand for land and its cost.

Although it may not suit everyone, investors who wish to diversify their portfolio might consider land while still making a profit. Land as an investment can be advantageous since it provides investors with higher returns at reduced risks while diversifying their portfolios.

Considerations in Buying Land

What Should I Check Before Buying Land?

Buying vacant land can be simple in rural locations with few regulations or exceedingly tricky in areas where you may have to deal with county limitations, zoning concerns, and other challenges. Here are 11 things to consider when buying land.

1. Location Matters

Regardless of why you’re buying property, the location is crucial. If you’re looking to invest, avoid purchasing land that has no resale value.

Don’t buy land that’s completely cut off from potential clients if you want to start a business. Also, if you’re going to build housing, don’t buy land that you won’t be able to build on.

2. Zoning

Commercial, residential, or mixed-use land can all be zoned. You must first determine whether the land is zoned for extra structures, and zoning constraints determine the minimum construction size you can develop.

3. Easements

If a property’s title includes an easement, you’ll want to know what it says before you buy. An easement gives another person or entity legal access to another person’s property for a defined purpose, regardless of who owns it.

4. Roads and Utilities

Make sure you know what utilities have been brought to the property before you buy. An undeveloped area frequently has few, if any, utilities coming onto it.

If you buy land lacking utilities, you will be responsible for the expense and labor required to put them onto your property. This covers utilities such as electricity, water, gas, telephone, and cable.

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5. Covenants with Restrictions

Subdivisions consist of smaller parcels of land that are going to be built on or sold. You should be aware that the land in a subdivision has already been subjected to some restrictions before purchasing.

If the vacant lot you’re looking at is in the heart of a developed neighborhood, there’s a strong possibility it’s governed by a homeowner’s association. Homeowners associations collect dues and establish regulations for conduct and decorum in the community.

6. Costs of Land Development

Before you place an offer on a piece of land, think about how much it will cost to develop it. How much money will you put to make your parcel of land into a shopping center? Or an upscale neighborhood?

Will the extra costs be worth it to you and your family if you’re looking at two pieces of land that are roughly the same price and size, but one requires a well and septic system as well as extensive excavation to suit the needs of your home? It could be, but make sure you get all the facts before signing on the dotted line.

7. Previous Contracts

Always check with your real estate agent to see whether the land has had any past contracts. It’s helpful to understand what others have gone through and how their experiences may affect you.

8. Restrictions on Deeds

Before you set your heart on a piece of land, check the deed limitations to see what you can and can’t do with it. You’ll also need to determine how enforceable these limits are. A REALTOR® should be able to assist you in this situation.

You may encounter limitations such as restrictions on architectural types or minimum and maximum residence square footage.

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9. Property Taxes

If the property is already in use before you buy it, you may be eligible for significant tax benefits. Check with your local Commissioner of Revenue to see whether your property qualifies for any tax relief.

10. Financing

When it comes to land, sellers are more likely to carry or offer seller-financing options to buyers. The interest rate on seller-carry deals is typically higher than bank rates, but the qualification process is usually less rigorous. Some sellers choose seller-financing versus cash to attract interest and, perhaps, a higher sale price.

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11. Think of It as a Long-Term Investment

If you’re considering buying land as an investment, think that it’s a long-term commitment. This isn’t a quick-turn investment. You should only purchase land if you intend to keep it for at least 10 or 20 years. It can shield you from inflation, but its value isn’t likely to increase much.

Recognize that if you come across cheap land, there’s a reason for it.

Making it Count

Purchasing a parcel of land isn’t easy. It’s critical to conduct your research and consult with professionals and experts. This is to guarantee that you’re following local zoning and real estate laws. Once you’ve completed all of the necessary steps, you’ll be able to purchase the land you’ll need to build the business or home of your dreams.

If you’re looking to buy land in Charlotte, Nancy Braun provides some insights into the The Charlotte Future 2040 Comprehensive Plan.

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