The opportunity to buy land is both enticing and daunting. You’re excited to acquire land, but you’re also in fear that it’ll end up a flop. Whether you’re looking to invest or looking to build your dream home, there are certain risks and rewards when you’re thinking about buying land for sale.
Let’s keep things balanced. For every reward, a risk will also be provided. The key is to take a look at the risks and rewards and make an honest decision about whether or not buying land is the right decision for you.
Risk: Zoning Issues
Buying a piece of land for sale without knowing the zoning is a huge risk. Before you buy land, call the seller and ask about the type of zoning for the land. Once you’re given the zoning information, ask what type of properties the zoning will allow.
Don’t buy a property that isn’t zoned for something you think is useful. Hoping the zoning can be eventually changed for the property is a giant risk. It’d be best to take your money elsewhere.
Reward: You Really Don’t Have to Do Anything
Buying land is often a “hands-off” investment. You don’t have to build. You don’t have to deal with managing tenants, plumbing, and other house-related issues. All you need to know is that the property is suitable for building.
Once you know the answer to that question is yes, you know you’ve likely got a profitable piece of land.
Risk: Beware of Tax Obligations
It’s not always common, but some properties have unusually high property taxes in proportion to the actual value of the property.
What’s important is for you to do your research. A reasonable tax for property usually sits around 1% to 4%. Any higher tax percentage should be avoided or looked into further.
Reward: You’ll Have Little Competition
When you’re buying land, you won’t have a whole lot of competition. This prevents the land’s price from being driven up by an overabundance of varying, potential buyers.
When it comes to homes, apartments, and commercial property, buying land is likely to land you (no pun intended) a better bang for your buck.
When buying land, you’re less likely to be outbid. You’re more likely to acquire the piece of land you fell in love with, and you’re also able to sit on it while it becomes more profitable over time.
Risk: Building Setbacks
When you buy land for sale with the intent to build, you’re going to deal with potential setbacks. You may come to find out the land is difficult to build on or has foundation issues that require fixing before continuing with the build.
The biggest issue with buying land to build on is you really don’t know how successful the build will be until you start building.
Reward: No One’s Making More of It
Perhaps the biggest potential reward of buying land for sale is that you now own a valuable resource. No one can add more land to the earth. We aren’t living in a sci-fi movie. When you buy land, that’s one less piece of land available to the world.
Owning land offers you a valuable asset that other people are going to want. If not now, they will eventually.
Hopefully, this helps you in your consideration the next time you see, “land for sale.”