Attention Real Estate Investors, Here’s How You Buy Vacant Land
Real estate investors, you may have encountered coming across some empty land that’s being put up for sale in your quest to buy and sell properties. And you may have thought to yourself, its just vacant land, why should I buy it when all I’m looking for is to close lucrative deals on homes?
Well as it turns out when you buy vacant land with an eye for getting attractive returns for your real estate business, its as viable an exit strategy as any. You need to have set yourself some clear expectations and know what happens once you buy vacant land. You need to familiarize with the whole process and a plan that looks forward to how you will use this land.
Let’s start at the beginning.
About Vacant Land
Simply put, the term vacant land refers to any piece of land that has no structure in place. NO house, buildings, barns or any other establishment that has a roof over its head. Sure, this land may have had seen some construction in the past, but as far as the present is concerned, this land has no property.
Vacant land can serve as a viable investment for your needs. You will need to consider a whole different set of things in this particular scenario since you aren’t buying a house with the territory.
How to Buy Vacant Land
Now we come to the main issue. To become a landowner of a vacant land, you need to follow some steps. Right from the time you signal your intent on buying this land, you will need to go through this land-buying process:
What are your reasons to buy vacant land?
It is important to tell yourself that buying empty land should not be done on a whim, just like you don’t buy a house impulsively. Start by asking yourself what your purpose for the vacant land is. Will you be looking to rebuild it? Will you go commercial or residential with this? Will you divide the land and sell some of it? Asking yourself these questions can give you a better idea about the kind of vacant plot you’re looking for.
What’s Your Budget?
Of course, your financial situation will determine what you can buy. But just remember that buying vacant land is different from buying a place with a house. The land is cheaper. But since there’s no structure as a collateral, banks will usually ask you for a larger down payment than usual. They will also typically loan you just 40-50% of the land’s value, even if they provide to finance the whole thing.
Your Dream Property
You should also consider if the property you like is accessible? Is it difficult to get around the place, no matter what the weather is like? Does the area have utilities within it? Is cell phone coverage good there? These issues are important to determine if you are ready to lock this property.
Time to Make your Offer
The good thing is that you can take advantage of bargaining to lower the down payment you may have to make. Since we mentioned before that in the case of vacant land, down payments tend to be huge, there’s no reason why you shouldn’t try your hand at bargaining. In fact, most real estate investors should also consider including an option on the land in their offers. This can help you complete your due diligence on the area before you buy it.
Do Your Due Diligence
Like we mentioned before, it pays off to do your due diligence on undeveloped land. You might find yourself taking care of some extra expenses or steps in this case. Start by hiring a surveyor, check the map, any existing liens, zoning and restrictions (if any) around the land you are thinking of buying. You will need to also get some environmental tests done to ensure everything’s ok. Some real estate investors also split these costs with sellers, so don’t rule that possibility out.