You’ve heard it before: “land is the best investment.”
But is it?
Traditional wisdom says real estate usually appreciates in value over time. But investing in undeveloped land isn’t quite as simple as investing in a duplex. And with the economy issues of the last decade, consumers have been granted a firsthand look at the volatility of real estate and land, leading them to question conventional thinking.
The short answer? Investment in land can be a wise one. The trick, however is entering into the venture fully informed and with a game plan.
Before making a land purchase, consider these points.
Knowing what to look for in raw land is vital
Raw land is a catch-all term for undeveloped or unused land. When most people talk about investing in land, this is probably what they mean—buying an out-of-town parcel on the cheap and holding on to it until the time is right. Of course, what you see isn’t always what you get.
Here’s what to watch out for:
- Is the ground solid enough to accommodate your building plans (or the plans of future builders)?
- Is water accessible via a well or city hookup?
- How is the condition of surrounding properties? Does the seller have any agreements with them?
- Is there road access? Will you be able to get any large equipment you need into the property?
- Are there any zoning issues that could hamper your future plans?
No matter how good the deal seems, make sure you do two things before you buy. First, get topography, soil, drainage, and other similar reports done, so you know exactly what you’re buying.
Second, visit the land in person. This can seem like kind of a no-brainer, but many people buying undeveloped or remote land are satisfied with a couple satellite images.