Vacant land can be a truly amazing investment because it sometimes only takes the initial cost of investment to generate profits. Owners don't have to build upon or adjust the land in any way, all they need to do is wait for the right buyer to come along. Hopefully, this happens as quickly as possible so investors can turn around and reinvest the profits. But it's not always that simple. Here are four suggestions to save buyers time and sanity.
Be Prepared to Wait
Vacant landowners may have to wait for quite some time before they get the offer they're looking for. As with any real estate purchase, buyers need to have a certain degree of instinct for a neighborhood. They have to look to the less obvious signs that an area is about to explode in popularity, as opposed to waiting until a major warehouse moves in. Lake Country BC real estate investors who see the big picture will have a much better chance of making money, but this strategy isn't recommended for those who can't afford to have their assets tied up for too long.
Confirm the Topography
There are a variety of factors that can get in the way of building that may not always be obvious to buyers:
- Large trees and tree roots
- Soil erosion and slopes
- Bedrock depth
Builders see sites in a very different way than laypeople do. They analyze everything from the amount of shade to the natural slope of the land, and even one deterrent can make the land much less valuable than the owner anticipates.
Research the Laws
Certain provinces can impose strict laws on building, which may make builders hesitant to buy the land or prohibit their projects completely. For example, certain areas may be protected from specific building methods due to environmental reasons. Other inspectors or city officials may make it difficult to obtain the right permits. Learning more about the neighborhood's restrictions and informal customs is a must for buyers who deal with raw land. It helps them anticipate the problems before they even arise.
In addition, buyers also need to research and account for the property taxes of the area. If they're too high, the land may not be a financially sound investment if owners need to keep the property for several years before it becomes profitable.
Verify the State of the Land
A lot of things can happen on raw land that can interfere with an investor's profits, especially if the land sat abandoned for quite some time. It may have turned into an unofficial junkyard or even a site to dump hazardous waste. Even with pictures and drone footage of the land, the camera may still miss key problem areas. Visual tools can be a great way to eliminate sites for an investor, but it's not a substitute for visiting the land with a certified inspector. A piece of land that has become contaminated is not necessarily an automatic bad investment, but buyers will need to factor in the cost of clean-up when trying to estimate their overall expenses.
There may be challenges when it comes to buying and selling vacant land, especially in certain provinces, but investors who plan ahead can still make money. Because owners usually work with highly motivated commercial developers, they can set their prices as high as the market allows — and they don't have to worry about emotional attachments getting in the way.