In this post we’ll discuss some of the ideal tips and tricks I use to locate and ideal piece of land. Everything in real estate begins with the ideal piece of land for your personal or business needs. Land, if done correctly, can be highly profitable and a main staple in your investment portfolio. Some of the basics are as follows.
-Ensure that your tract of land has the correct easements. (Easements, simply put, are access points to use your land. These are critical to make sure you can install a driveway on your new homesite, that customers have an entry and exit point to your business and that you are not in a landlocked situation.)
-Make sure that the terrain of your land is conducive to your project. (Elevation is a critical piece of land acquisitions. Is your property located in a low elevation which could flood? Before you install septic, wells, sewer, electric, plumbing or other utilities, is there a bedrock obstacle which would prevent moving forward? No matter how small the obstacles to develop, it can add thousands to tens of thousands to your initial budget.)
-If your development site is for business or industrial use, you’ll need additional studies. (Business and industrial sites will need a moderate to enormous amount of due diligence. Soil and water studies, Phase I environmental studies, civil engineering if bridges are required, architects for renderings, surveys, plat maps, proposed utility easements and if any parts of the land are in a protected conservation area are just some of the studies. Understand as well that doing diligence and studies is not wasted money. There are plenty of land deals where studies, plat maps, surveys and renderings can add big $$ to your resale value.)
-ALWAYS walk the land and avoid buying any land site unseen. This is a very critical step so you can visualize everything about your potential land and highest and best use for development. Walking the land allows you to figure out one or several ideal homesites and how you want your house to face. For commercial locations, it’s important to understand parking ratios, will dock-high doors be needed in the business for 18-wheeler loading and unloading, potential expansion sites should your business need an additional building, access to any public utilities and distance for those utilities to be run to your new facility.
-The benefits of subdividing. A savvy land developer may utilize an array or techniques to offset their initial costs of the land by subdividing. Let’s say you have a 50 acre tract of land but only want to use 5 acres for your new homesite. If you have public easement/access on even one whole side of that property, it can be an ideal situation for you to subdivide. If you were to have an additional survey and divide the rest of the land into numerous 5 acre tracts, you now have 9 additional tracts of land to sell. The proceeds from those sales could not only pay for the initial 50 acres you purchase but also pay for some of all of your new home build. Tips to see if that scenario would work are to talk to a Realtor or professional and run comparables. See what different sizes of land have sold for in the last year so you get a better range of resell. Another scenario could be that you keep all those 5 acres tracts and develop smaller homesites to use as rentals so you never have to work another job again. After all, monthly cash-flowing rentals provide freedom and your potential real estate portfolio expansion and growth.
-Know yourself and your audience. Know what you really want to do with your land. Is this your forever homesite? If it’s not, then factor a successful resale/rental/owner-finance into your development. Home size, outbuildings, natural resources and other unique features of your land all play a part. You may want to consider building a standard 3-4 bedroom and 2 full bath home. Building too large or too small of a primary residence may lead to a tough sale when you are ready to liquidate or rent that property. Building a decent sized shop, barn, stable, equipment storage, garage or other type of outbuilding can add some serious money to your resale. I’ve seen so many buyers fall in love with the land and residence but buy another property, with a smaller home, because it had a workshop/outbuilding there. Natural resources is another HUGE factor in the resale or rent of your development. Does it have a nice canopy of trees that shades the home? Does it have a natural spring, creek, lake or river? Could a family homestead there and be off-grid from utilities? Is there an additional amount of land for a garden or livestock?
-Be aware of any HOA/POA/Covenants/Restrictions. These existing organizations or recorded documents tell you what you can and can’t do with your property. It can tell you minimum home size build, setbacks, what utilities are in place, what kind of livestock is allowed and other useful information before you begin any diligence or investing in your land. A good idea on any land contract is to have a contingency to allow you time to do an inspection, check with a title company on any liens or existing HOA/POA/Covenants or Restrictions. Know what you are buying before you get to the closing table. We are experienced in guiding any type of buyer on these situations. Since sellers typically pay our fees, it doesn’t cost you anything to use us to help buy the right piece of land.
If you like this post and want to see more content related to successful land investing, let us know in the comments! As always, do your diligence and wish you much success in your developing or investment journey.