Standing on your property gives you various feelings such as pride, independence, and security. You’re a landowner! However, besides such feelings, there are plenty of reasons to purchase raw land. The first reason is price, and it is particularly true in rural areas. In less populated areas you can often purchase raw land through the seller at below-market rates. Raw land investments don’t fluctuate as much as your stock portfolio. Developing raw land can increase in value in a short time. For example, converting it into a recreational facility, renting it as farmland, and building a house or a hotel. Below we highlight some important tips to develop your raw land.

10: Plan for your land

If you decide to buy raw land, you should know what you want to do with it. For instance, Do you prefer to raise cattle, to build your dream home? or for retirement investment?

Before you begin the purchase process, it’s best to determine precisely how you want to utilize the raw land and when you decide to purchase it. A little planning will assist you to select the parcel that’s suitable for your stated goal. For instance, if you buy land for hunting, enough wildlife in the area is necessary. When you buy land for fishing, you need to locate streams and lakes. If you plan to use your raw land for investment, at what point will you think your investment is a success?

Planning isn’t just for your profit. It’s also crucial once you intend to apply for financing via your bank. The lender will consider this information before approving your loan. A development plan with blueprints can help to justify the loan.

9: Understand the drawbacks

While investing in raw land can be profitable, you need to consider the downside too. Buying raw land is considered a long-term, illiquid investment. In addition, developing raw land may take a long time before you obtain any profits. Selling it quickly is typically not a good option.

If you choose inexpertly or fail to fully assess the parcel, you are at the risk of losing money on the resale of raw land. Also, unpredicted events such as a slowing economy can affect your sales value and how fast you can sell it.

8: Consider the factors that affect the value

Determining the value of raw land is hard, however, some factors can affect it. For instance, Developing a strangely shaped parcel is challenging. Therefore, carefully reviewing the size, shape, width, and depth of the property is very important. 

The most important factor is location. Corner lots with easy access to roads and parking are ideal candidates for development. Considering easy access to drinking water, sewers, natural gas, electricity, and telephone service is important when choosing the location of your raw land.

Trees add value to your property, as do streams. In fact, a stream on your land can increase its price extremely. Good drainage is vital, as well as contour and grading. A good view can add value, however, it is costly when you develop the land. paying increases up to 30 percent more for utilities, road, sewer, water, and building foundations once you develop land high up on a hill. Furthermore, the environment, climate, air quality, water supply, and the presence of hazardous materials affect the worth of your raw land.

7: Be prepared for potential problems

Problems hidden beneath the surface such as buried toxic waste in leaking underground storage, old wells and septic systems, and underground pipes are probable problems. You need to consider such issues because for example if you need to dig a basement for your home, this issue can prevent more development. Also please pay attention to the location of your raw land. It should be far away from the flood plain.    

6: What’s the environment like?

Regardless of your plan to develop your raw land, a comfortable environment is a necessity. Smells from industry or landfills can dampen the fun. Also, Noise from traffic or airports can ruin the ambiance of your weekend getaway.

If there isn’t a power plant within an adequate distance, you will have to pay the cost of running cables across public lands to get hooked up. Based on your financial resources, this could be a deal-breaker. Ensure to call the utilities and find out before you purchase. Asking to know the availability of various services such as sewage disposal, septic tank, police and fire protection, hospitals, schools, churches, and mail delivery are other important considerations.  

5: Calculate the total cost of your purchase

The cost of your raw land purchase isn’t the same as the sales price you pay. The sales price is only part of it.

You need to determine the yield or profit from the developed property. That will require additional outlays of money for property surveys, fees, environmental impact studies, permits, soil tests, and engineering services.

And when you’ve determined that your land has potential worth, you’ll also have the exact development costs. These can include the building of access roads, tree removal, grading and clearing, payments to bring utilities to your property, and expenses involved with installing a septic tank or drilling a well.

Before purchasing you need to have enough financing to cover the sales price. Lenders typically lend you only half of the land’s purchase price. Therefore, you need to consider this issue for part-bank and part-seller financing.

4: Thoroughly investigate the land parcel

You need to walk in your raw land to find all details such as the location of ponds, streams, trails, and fence lines. Also taking photos of the boundaries and detecting any signs of hazardous waste are recommended.

Furthermore, researching areas can show population growth or population loss and information about future development, planned roads, utility extensions, and building costs of these areas. Also, check the land parcels around you. 

Research your land to get information about different subjects such as last sold, and area zoning. In the case of agricultural zoning, what crops can be grown and what livestock are allowed. In the case of residential or commercial zoning, find out if there are restrictions regarding the types of buildings allowed. Perfect research of your land is worthful since your purchase never surprises you later. 

3: Make sure you love it

It is important that you know all details of the land and likes them before investing your hard-earned cash. The seller is the one who knows the property information and indeed can be a great source of information. The time of owning the property, the reason for selling it, and asking about other key issues, such as taxes and financing options are necessary questions. You need to ask such questions from the seller to make the best decision.

Visiting the property to know neighbors and ask them what they like and dislike about this area. In this way, you can determine if they’re the kind of people you like to be around. You can camp on the property for a night or two to alert you to any issues with traffic patterns or noise levels.

2: If you don’t know, hire someone who does.

A real estate agent knows everything about buying and selling in the area, therefore, such experiences can help to find a suitable place at a reasonable price. Real estate agents can explain terms and processes and provide you with information on the Entitlement Process, which involves getting government approvals for land development. In addition, checking land to ensure it is free of pending court action and the seller has clear title to the land, and that there are no access problems.

1: Know the right time to develop

Timing is very important when you want to develop raw land. Changing demographics, an unsteady economy, or other uncontrollable aspects must be weighed. Building a new apartment complex when there is a housing surplus doesn’t make any sense. Nor does spending money to develop your parcel once already-developed land is easily available at a lower price.

If you already own the land, you need to wait until changes in the market appear or the economy picks up before developing. If you decide to purchase raw land, you should consider the right time. There are always other days and other parcels.

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