In real estate, land is referred to as “vacant” or “raw” land. It’s an area of land that has not been developed. Although the piece of land is untouched, it is still considered a real estate investment.
This is because the land can be bought and converted into a residential, commercial, industrial, public or semi-public, or agricultural space. A piece of land can also be used solely as an open space such as a park or campsite. Additionally, it can be used as an easement to provide residents access to their property.
What are the benefits of investing in land?
Interested in investing in land? There are several benefits to investing in raw land. Let’s take a look at some of them:
#1 Land is in demand
Land is a natural resource that doesn’t replenish. Eventually, there won’t be any land left. Those who were lucky enough to invest in land will be able to take advantage of the demand. They can lease the land for millions or turn it into a residential or commercial property.
#2 Land doesn’t require maintenance
Unlike rental properties, raw land doesn’t require repairs and maintenance. Until you decide to develop it, your expenses will be limited to taxes and security.
#3 Land is a low-cost investment
Raw land in certain locations can cost millions of dollars, but if you do your research, you can buy land for a lot less. In some cases, you can buy a parcel of land without taking out a bank loan.
What are the benefits of building on land?
It’s not uncommon for property investors to buy land to develop it. If you’re planning on buying land to build a single-family home, here are some of the benefits:
#1 You can design your dream home
When you buy land to build on it, you can design the (rental) home of your dreams. You’ll be able to build a home that suits your prospective tenant’s taste. The freedom allows you to customize everything, from the flooring, cabinetry, colors, and so on.
#2 You can comply with building codes
The risk of buying a rental home is that it might not be compliant. For instance, if your rental home was built before the 80s, there’s a high chance that it contains asbestos. By building from the ground up, you can guarantee that the home complies with current building codes.
#3 You can save money on maintenance
If your rental home is old and outdated, it requires regular maintenance and repairs. By buying land and building a home, you won’t have to worry about spending a significant amount of money on upkeep. A brand-new home means that there’s no leaky roof, rotten wall, faulty heater, etc. You can use the money for more important things, such as property management company fees.
How can a property investor buy land?
Buying land is a lot more complicated than buying a house. It also requires in-depth research, otherwise, you could end up with a parcel of land that isn’t as profitable as you had anticipated. Let’s walk through the steps to buy land:
Step #1: Find Land
The easiest way to look for land for sale is by enlisting the services of a real estate agent. A professional real estate agent can save you time — and money! If you don’t have a real estate agent in your contacts, try asking friends and family for recommendations. Be sure to hire someone with experience in the real estate market that you want to invest in.
You could also check websites such as Zillow and Trulia for land for sale. Similarly, don’t forget to look for land on auction sites by searching for terms such as “land auction in Florida” or “land for sale in Miami” on google.
In some cases, however, owners directly sell their land. This means they don’t use a third-party listing site but instead, they use classified ads in the newspaper. A property manager can help you be on the lookout for these types of listings.
Step #2: Assess the Land
Before buying land, be sure to assess whether it’s an ideal investment. Here’s what you should look into:
- Ownership history. Are you sure that the person selling the land has the right to sell the land? Ask an attorney to verify the land title in the Registry of Deeds. Find out if anyone has filed a lien against the land.
- Tax rate. Even if you aren’t using the land for anything, you still need to pay property taxes. Ideally, you should invest in land in an area with a relatively low tax rate, such as Tampa and Jacksonville. Can’t find a property in a city with low taxes? You can always lower your taxes by following these tips.
- Zoning limits what you can do with your piece of land. For instance, if the land is in a residential zone, you may not be allowed to build an office building on it.
- Does the land have access to water, gas, electricity, and so on? If not, you’ll have to take into account the cost of installing these utilities.
Step #3: Get Financing
Once you’ve found that perfect piece of land, you can now purchase it. If you can’t pay in cash, you can consider getting a land loan. If you’re planning on building as soon as possible, the lender may lower your interest rate. Alternatively, you can ask the seller if they’re willing to offer short-term seller financing.
Step #4: Start Building
When the land is legally yours, you can start constructing a residential or commercial building. Be sure to enlist the services of a reputable contractor. A property management company can provide you with a list of vetted vendors in the area.
If you’re thinking about buying land to build a residential or commercial property in South Florida, Luxury Property Care can help you get a good deal. Our property managers are professional real estate agents with years of experience under their belt. We would be delighted to help you buy and build from start to finish.