​​Karen Summers Realtor
​​​When Results Matter
​​​951-333-8065
​Karen@summerscre.com​​
LAND 

Buying and Selling Land

 When it comes to real estate investing, buying land - vacant land specifically, is the most often overlooked potential investment opportunity.  Quite understandably, people assume that putting down precious investment money on raw land is a losing proposition. After all, land just “sits there and does nothing”.  It’s boring and cannot possibly produce income.  This is so far from the truth!
 
When you invest wisely and the conditions are right, undeveloped land can bring in major returns on your investment. Perhaps one of the most ironic reasons why it’s such a great investment is precisely because it “just sits there”. 
  
Why Undeveloped Land?

Other real estate investments require hands-on commitment and time during ownership.  And can come with their own set of problems. With vacant land, you do not need to do anything to it - no construction or renovation and certainly, minimal maintenance and no tenants to think of.  It is a long-term, tangible asset which does normally not depreciate nor wear out nor break, nor get destroyed. The only thing you need to concern yourself with is making sure that it is suitable for future development and building.
 
As a long term investment, land is inexpensive to own. If you buy it at the right price (more on this later), there would be no mortgage payments to make nor utility bills. And because there are no improvements on the land, you keep property insurance and taxes low. 

Land For Investment
Buying Vacant Land Takes Knowledge and Experience
 
Having laid out the pros of investing in land, let us look at some considerations when deciding on what particular property to buy. These considerations can make the difference between investment land that will give you the best return on your investment or being stuck with a non-performing asset.
 
As with all things, it pays to do your research before pouring in your investment dollars on undeveloped land.  And a realtor® who knows the ropes of land investment,  specializes in land real estate, and who has relationships with city planners can make a huge difference.
 
The following list of considerations may seem daunting, and is not meant to dissuade land investors.  It is merely here to educate a potential land investor and to emphasize the value that a realtor® experienced and knowledgeable in land investment can make a huge difference in making the process much easier and letting you sleep at night a little more peacefully.  
 
Key Considerations When Buying Land
​  
1)Zoning and Usage Restrictions of the Property. Zoning is defined as the laws that establish how a property can be used and what codes must be followed when erecting new structures.  Aside from making sure that your property is suitable for building, it is likewise important to find out what it can be used for and more importantly, the highest, best use for it.   Once you have this information, you will be able to decide if a specific property will fit your needs and meet the requirements of your target market.
 
Closely related to zoning is usage restrictions.  Usage restrictions are designed to help maintain order and support the value of the properties in a particular community.  Therefore, different sections of land have different designated usage.
 
If you are not aware of the usage restrictions of your property, these might come in conflict with the plans you have for it. Usage restrictions can also impact the sale-ability of your property at a future date and the price you will be able to sell the property for.
 
If the property you are considering is part of a Homeowner’s Association which typically have stringent restrictions intended to maintain quality and formality of the neighborhood, you may also want to review your choice. After all, you may not want to purchase a property that requires maintenance or payment of HOA fees.
 
2)Topography. The characteristics of the area on which your property stands have great impact on how suitable it is for building (and its viability as an investment property).  Can the soil support infrastructure? Take note of where the water runs and watch for signs of flooding. Soil types and grade may also make a difference depending on how you want to market your property when you are ready to sell.
 
3)What Utilities are Available; Is There Water, Electricity, Sewer, Gas, Cable/Internet and Phone? If your property does not have access to one or more of these basic utilities, it most likely would not be considered ideal for building. While there is a growing number of people opting to live more simplified lives by going off grid, a large majority would still like to have these conveniences when considering a location for a home. If a property lacks these utilities, it would be considered not build-able and would greatly affect its marketability and value.
 
If the property you are eyeing cannot tap into the municipal water supply (e.g. a desert or mountaintop location), the alternative to this is to drill a well in order to access clean water or have water hauled in by truck.  Before deciding on a purchase, you might want to consult with an expert to ascertain if you can tap into a water source on the property. Or alternatively, find out if the cost of bringing in water via truck would be worth the trouble.
 
4)Required Building Setbacks.  As important as knowing the exact dimensions of the parcel of land you are considering to purchase, it is equally important to know what the designated setback requirements are for it.  Taking into consideration these setback regulations, would the property still be buildable? There are properties that become practically worthless because the area left to build on becomes too small due to setbacks.
 
5)Easements or Access Roads.  Easement is described as a right to cross or otherwise use someone else's land for a specified purpose. How does this come into play when considering a property?
 
There are many properties that are surrounded by other private properties and have no direct road access. For all intents and purposes, this would make it useless. However, if a legal recorded easement to the property can be established, then all may not be lost. This can be done if one of the neighboring properties will allow access through it to yours. If the property you are eyeing is landlocked and has no easement or access roads, you may want to reconsider your choice.
 
6)Junk, Garbage and Other Contaminants. Before purchasing a property, it is always a good idea to see the property yourself, or have your realtor do a visual site inspection for you. Some people purchase land only to find out that it has actually been used as a dumping ground or makeshift landfill. It is expensive to do a cleanup, so it is best to ascertain that what you are getting is indeed just land.
 
7)Annual Tax Obligation.  Before buying a property that you intend to hold for a length of time, make sure that the annual tax is reasonable in proportion to the actual value of the property. A good rule of thumb would be 1%  to  4% of the property’s full market value.
 
With all these factors that can have potential impact on the value of your investment, it is best to consult with an expert to help you make your decision. I specialize in working with my client/investors to find the right piece of property at the right price.
 
With my land investment knowledge, and city and county connections, including city planners, I can assist you in finding out zoning and usage restrictions, buildability of the land, annual taxes, availability of public utilities, long term city plans, and more.
 
Whether buying or selling, I am knowledgeable in what it takes to maximize return on your investment. 

Call me today and let’s chat.