#1 – Determine Your Financial Goal
Investors should first establish their strategy or goal. This will allow them to examine the goal in greater detail and determine if it is possible to achieve the goal.
Investors need to establish clear goals and timelines.
It’s a good idea for investors to create concrete plans and steps before purchasing land.
For instance, verifying that the plans and goals are consistent with the land’s zoning and regulations.
#2: Investigate the Zoning Regulations for the Land
One of the biggest myths to investing in land is the assumption you can do whatever you want with your land.
The reality is that all land or property has zoning and regulations property owners must abide by.
Many people make the mistake of buying land investments without doing thorough research about the property, such as the zoning regulations.
Government laws and regulations which determine how land or property is used.
Types of ZoningThere are several types of land or property zoning including:
- Rural zoning
- Combination zoning, which is a mixture of zoning designations.
- Historic zoning, designated for buildings fifty years or older.
- Aesthetic zoning, which controls how building plans must appear aesthetically.
- Permitted and accessory uses, which allows exceptions within a certain zoning category.
- Before you invest in land, be sure to inquire about the property zoning regulations to ensure the zoning aligns with your financial goals and plans.
#3 – Property Values of Land Investments It can be hard to determine the property values of undeveloped, raw, and vacant land. This is because there aren’t always recent comparable land or “comps”, nearby, to determine the land’s worth.
In reality, raw land is not subject to any easily quantifiable method of valuing it.
This is why it is important to ensure that you purchase land at a good price. Buy land at a low price, that is, land less than comparable land.
Request real estate appraisals before you buy. This will allow you to have an independent third party estimate the land’s value.
You should not buy land at a certain price just because the owner has stated it.
#4 : Property Search MethodsMany people overlook other methods of searching for land investments. There are several alternate methods to search for raw land, vacant land, undeveloped land, and agricultural land.
Investors are not limited to searching online listings and databases to search for land investment properties.
Some of the best land deals are made to those who don’t have the land for sale.
By using this approach, the competition for the property is significantly lower since the land is not officially on the market.
Before buying land, you need to analyze the accessibility of the land investment property.
This includes determining if the land is accessible to utilities like water, sewer, gas and electricity.
Investors must also determine if the land is accessible to highways and public roads.
refers land that does not have public roads. These cases require that one enter another property to gain access to the land.
Lock land has a lower value than land with public roads access. It is also very difficult to get financing for lock land from traditional banks. Locking land can lead to serious problems when trying to access the land. This problem can be solved by easements.
An easement, also known as a right of way, legally grants access for other designated persons or entities to have access to your land.
Easements are often caused by surrounding properties that are considered to be lock land.
Lock land properties are granted special permission to access their lock land.
An entity, such as an electric or gas company, may be granted an easement to gain access to a pipe buried on the land.
Inquiring at your local assessor’s offices will help you determine if an easement is attached. A title search of the property will also reveal if there is an easement attached.
Some investors are unaware that the land may have easements attached to it. This can be a mistake for newbies.
is an area on a Flood Hazard Boundary Map. This map shows the flood risk.
Types Of Flood Zones
There is a variety of flood zone ratings for land properties, such as:Zone B or shaded X:high risk for flooding.
C or un-shaded X:
low risk for flooding.
- V:10 not rated for flood risks. These areas are typically near bonds, rivers and streams.
- Zone B or shaded X: moderate risk for flooding.
- C or un-shaded X: low risk for flooding.
- V: not rated or evaluated for flood risks.
Investors looking to get into land investment should inquire about the land property’s flood zone rating before purchasing.
Property damage can result from purchasing property with high flood risk. High risk flood areas can also make it more difficult to resell. High flood risk areas can also lead to higher property insurance premiums.