4 Tips for Buying and Selling Vacant Land

Posted by Dave Kotler on Friday, December 23rd, 2022 at 10:27am.

What to Know About Investing in Raw LandVacant land can be an amazing investment! If owners make the right moves, undeveloped land will often generate returns without any additional expenses. 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. Investing in raw land isn't completely passive, though. It takes a great deal of research and patience to earn the best profits. Here are five tips to help you get started with investing in vacant land for sale.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

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, the location can make or break the value of your investment. Buyers must have a keen eye to spot the less obvious signs that an area is about to explode in popularity instead of waiting until it's too late. Savvy 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
  • Sinkholes
  • Pipelines
  • Bedrock depth

Builders see sites in a very different way than laypeople do. They analyze everything from the amount of shade to the land's natural slope, 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, environmental reasons may protect certain areas from specific building methods. Just like a bad home inspection, these reports can rule out properties that won't be profitable. Learning more about the neighbourhood'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 area's property taxes. 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.

Look For Land With Utilities

There is an important factor to consider when investing in such properties: utilities. Utilities like water, electricity, and sewage can boost the value of your land. However, these properties are less likely to come cheap. Investors that are willing to be more hands-on with their land can add utilities and force value appreciation, just like a homeowner would do with the most popular home improvements.

The cost of bringing utilities to vacant land can vary depending on the size and location of the land. In some cases, underground electrical and water infrastructure may already exist and just need to be connected. Other situations may require costly excavation efforts in order to build and lay pipes and run power lines. Ultimately, you should always research your specific property before buying so that you can determine what costs will come with obtaining utilities.

Verify the State of the Land

Many 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 automatically bad investment. Still, buyers must consider the clean-up cost when estimating their overall expenses.

Vacant Land: How to Invest For Success

There may be challenges when buying and selling vacant land, especially in certain provinces, but investors who plan 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. If you stick to these tips, you'll soon learn for yourself why buying vacant land is one of the best real estate investment types.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

Dave Kotler

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