Banks are usually reluctant to invest and finance vacant land, and identifying suitable investment and profitability opportunities requires sufficient information and expertise. Therefore, investing in this asset class is a kind of risky investment. So if you are planning to invest in vacant land, pay attention to the following recommendations:
1-As much as possible, the exit timeline should be short.
“The biggest risk in this area is time,” say investment experts. You should not keep the purchased land for a long time. If you want to make a profit by buying and selling vacant land, you have to think about selling the land after a while and repeat this process several times. This strategy is suitable for someone who wants to make a profit from buying vacant lands.
It is worth noting that long-term maintenance or stays on land can reduce its value. Of course, if you are planning to start a business on vacant land, the situation is different. You may start a business on the land and never think of selling it! However, we mean that if you want to make a profit from buying and selling land, you should not keep the purchased land too much.
2-Earn money during the pre-development period.
In the period between buying and developing land, you can earn money from your property by renting or launching activities such as agriculture, warehousing, amusement parks, installing billboards, etc. What business you start during this time depends on your intelligence. But note that this business is not going to be very long. Your goal is just to make money in the time between buying and selling that land. Of course, it is not unlikely that you will stop selling it as the business flourishes in these lands!
3-Right entitlement is critical.
Property development requires work on zoning, subdivision, and construction permits. This set of tasks is called entitlements. Entitling, if done properly, can add significant value to a property. On the other hand, incorrect entitlement can reduce the value of the land. We can only mention this issue here, but a full understanding of this issue and knowledge of its various dimensions requires more experience and study or consultation with relevant experts. However, take this issue seriously as it can have a huge impact on the profitability of your trades.
4-It is necessary to verify and evaluate the vacant land before buying.
If your goal is to build the land you purchased, you should research whether it has the necessary building permits before you buy land. Consider environmental constraints or issues related to zoning. Ignoring these issues can get you into trouble. You need to be fully aware of the utilities’ capabilities and identify the effects that adjacent uses can have on your property. Investigate previous uses. In this regard, consult with experts, and before taking any action, consider all aspects of the matter.
5-Buy vacant land that is growing at the right time.
It can be said that the most important factor in the success of investing in vacant lands is to identify which areas are growing and invest in these areas. If you do not have enough information and experience in this field, you should refer to experts.
Buying land in 30 to 40 km of growing urban areas is a good idea. To make that decision, you need to be familiar with the 10 to 20-year growth prospects for industrial development, or a plan for future highways, or future transportation development plans. Buying land in such areas can be very rewarding.
Buying time is also very important. During a seasonal or periodic downturn, prices may fall by as much as 75 percent. Therefore, choosing the time to buy land is one of the factors that will determine your profit. So try to buy when prices are at a minimum.
6-Municipal Service Rates:
Even if you are not going to live on the land you are buying, keep in mind that you will have to pay municipal fees for services such as sewerage or garbage collection. Of course, the rate of municipal services is lower in lands that are not developed. So when choosing a land, make sure the ones you are considering are not too expensive.
7-Vacant land maintenance:
Of course, vacant land maintenance is less expensive than other properties, but that does not mean you can ignore it. Local councils are usually hard on land that has been abandoned. Therefore, you should be careful about cleanliness and related environmental issues. Vacant land maintenance is not expensive, but you need to plan for it to work properly.
8-Restrict construction on vacant land.
If you want to make more profit from selling your land, refrain from building new buildings and facilities there. You will usually need more time to make a profit from selling newly built buildings. Therefore, do not enter the process of building new facilities or buildings on the purchased land as much as possible.
Note that buying and selling vacant land requires experience, information, and careful planning. So you need to do more research in this area and gradually increase your operational knowledge. Do not enter into a deal without sufficient scrutiny and always remember that profitable deals usually require expertise and experience.
Finally, if you are looking for a profitable way to invest, we can not say that the best way for you is to buy vacant land, but this method also has its advantages and many people have made a lot of profit from this method. So you can also consider it as an option. Consider your possibilities and advantages and invest in them if you deem them appropriate.
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