Want to know what to look for before you purchase raw land?
Do you want to know tips that may prevent a headache and save you money when purchasing raw land?
In this article, you’ll discover 11 tips when buying raw land.
For many of us, we dream of building our own home. Building a dream home signifies for many the American dream. A home that we can design, build, create, and bond with. And as an investor, we may want to build homes for others or even flip raw land to other land developers and investors. However, as a land investor, there are several important key information when we start signing checks to buy raw land.
We often hear comments and remarks from land investors believing that by investing in “raw land” there are fewer problems and it is easier than investing in houses or commercial buildings. After all, who wants to deal with plumbing problems late at night from a tenant? Or termite damage, electrical problems, heating or air condition issues, or septic nightmares? These problems are real and it does happen but the land has its own issues and problems.
But as a house flipper or buy and hold investor the original developer has already gone through some of the problems when they originally developed the land.
County Maintained Road and Easements
Many raw land deals are done in the rural area and this property may or may not have road access. But if it does have road access the road may be a private road or maybe a county maintained. It doesn’t matter if it is paved or graveled, however, the key is to have this road county maintained. The problem entails if the road access is private because many times you won’t be able to get permits for building, e.g. septic tanks. Of course, you have done other things with the land, e.g. farm animals, etc. but having a permanent residence will be difficult to achieve.
Also, if it a private road knowing if you have an easement is essential. Knowing the cost of maintenance, what rights your neighbors can do and who can cross your property.
Terrain and Elevation
The terrain is a huge factor when purchasing raw land. Many investors think they can buy raw land before they even see it. Some buy raw land thinking they had a good deal ends up sitting on it for a while longer than they wanted to. One of the first houses I purchased had almost five acres of land. On the listing, the price was very low considering the land portion. I Googled map this property, analyzed the area, etc. But when I actually visited this property I walked it and the house was sitting on a mountainside. In other words, the land was just too steep to really do anything on it. There was a portion of grass that needed to be cut from where the septic was and the only way to mow the grass was to push mow it or use a weed whacker. Although the house was great, the actual terrain was quite miserable. I couldn’t plant a garden, make a sandbox for the kids, basically anything that required a flat surface was simply impossible.
Another factor you need to consider is the possibility of land stability. Is the area known for mudslides, earthquakes, volcanic, or floods (I’ll talk about floods in a moment). But knowing these conditions are important.
Treed Vs. Cleared
Another factor when considering purchasing land is whether or not the land is cleared or treed. If you want to develop a house you need to take into consideration the local regulations that either permit you or not to cut down your trees or not. Now, for the most part, you are probably alright. But in many cases, environmentalists will take the heart of killing trees. And if you do have permission you may need to replenish the trees elsewhere on the property. I’ve recently seen this happen to a church, in which the church purchased land and developed their new building and the county came back and told them they needed to plan 200 plum trees. I don’t even think they cut down that many trees when they developed it. However, they complied and planted all their trees right in the front.
There was also a church that purchased land to develop and had a tree, at the time, I heard was the oldest in the state. So they decided to build around it. The gentleman that told me the story said during the construction and building stage the tree was struck by lightning and part of it came down damaging what was built. They ended up removing the entire tree, after all.
Depending on your state. The Department of Environmental Protection may define wetlands is inundated or saturated by surface water or groundwater under normal circumstances and the vegetation is being protected. This does not necessarily mean that the land is actually wet. It may mean that there are some types of vegetations that the government is trying to protect. Understanding this, it becomes significant to know before you consider purchasing land. For one, it makes the value of the land much lower. And also, if you do want to develop the land you will need to purchase Wetland mitigation credits to basically appease the government and these credits can be very expensive. There is a tool called Wetlands Mapper that you can use before you consider purchasing land. You may think that you landed a great deal but when you find out that the lot may be on a Wetland, you know why now.
Flood zones are different than Wetlands. Flood zones are determined by FEMA and you can also check through the FEMA Flood Map Tool. Now the interesting thing about flood zones is that you can actually benefit from it by, perhaps building a pond as a filler and build a house right next to it.
However, for the most part, it can be difficult to sell in a flood zone. Floods are more common than many thinks. I recently experienced flooding in my own subdivision near the bottom of the hill. No one could get in or out. And if you are building in a flood zone you need to make sure that insurance companies will cover the property. Because if a resident can get flood insurance this may make or break a deal.
Obviously having access to utilities is important. Utilities can Actually be a deal maker or breaker. You need to make sure if the property is accessible for sewage, water, or electricity. If the road is a county maintained road, a septic should do. A well can give you access to water. But your electricity may be costly. The power company can charge an arm and a leg and sometimes, 10, 20, 50, even 100 thousand dollars to run wires for electricity. It would be beneficial to you if you knew that there where previous electricity ran, e.g. an old mobile home was in use. Knowing if the land has access to utilities can raise or lower the value of the property.
Cell Service and Communication
We are living in a day and age in which being connected to a community network is extremely important. For most rural areas having access to high-speed internet is extremely limited and if they do have access (satellite internet) it usually comes with costly plans that limit your data. How or when this problem will be fixed is unknown but many residents are really concerned about having access to the internet for work and just the simple addition of being connected to the internet. Therefore, having a strong cell reception may help rural areas because of certain communication companies coming out with the unlimited and highspeed internet. The land may not have access to cable or a fiber line for internet use but having an alternative like cell service can make or break a deal. Believe me, people are starting to really consider having internet accessibility when purchasing their homes and they will turn down a bargain if there is no internet accessibility.
Neighbors, Smells, and Sounds
Neighbors can make all the difference in the world. And at first, it may be difficult to get to know them. But if you are planning on building by neighbors as your residence you may want to study them and get to know them a bit before even considering purchasing land. Perhaps the neighbor may have a big shooting range, pig farm, horses, geese, ducks, barking dogs, loud engines running, or some type of illegal activity. Who knows? The point is certain that you think you will be comfortable with them. And the only way is to get to know them a bit. Go talk to them. For the most part, this isn’t a problem but in some cases, neighbors can make or break a deal.
Endangered species can be a huge problem. In many parts of the country, there are endangered species and if you find areas that may have endangered species the government may shut any development down and possibly permanently. And in some better situation, they will charge you thousands of dollars to relocate the species. So it is always good to be aware of possible endangered species in your area.
Understanding what zone the raw land is another critical point. There have been situations in which you may think you are getting a bargain deal paying pennies on the dollar for some raw land and finding out that the land is zone as conservation land, in which, you can’t do just about anything with it. And getting zones change can be very lengthy and even costly, sometimes taking several years to get them changed. Therefore, be sure to check with local authorities on what zoning ordinances and what you can build on the property before buying the land.
A natural hazard disclosure will tell you if the land has known hazards. Perhaps the land has fire hazards. You may want to know if the local fire department has volunteer firefighters or supported firefighters and where they are located. How far from your property? Perhaps you may consider maintaining a private pond for fire emergencies.
Purchasing raw land can be a lucrative business but there are also problems and issues that you need to look out for. Understanding these tips can help you prevent a failed deal and keep more money in your pocket.
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