Monday, September 27, 2010

Buying Raw Land Is a Great Investment

First, let us make sure we understand what raw land is exactly. Any property that is unimproved has no utilities; sewer, streets or any structure on it is considered raw land. It may be wooded and have underbrush, but nothing placed on it by man, it is still in its natural form.

While raw land can be a great investment, getting it financed can be more difficult than getting improved land financed. Raw land does not generate immediate income. The expense of getting the land up to standards so that it will generate income can be astounding. The potential income of raw land is completely speculation.

So you need to ask yourself, is your reason to buy this raw land? What are you looking for in return? If you know exactly what your goal is in purchasing this property, and you know that it will in fact serve that purpose, you can then move forward in getting financing. When you have a defined purpose and a plan of action, getting raw land financed will be easier.

There is so much to know about buying raw land than one may realize at first. The chances of getting duped, conned or misled are highly possible. Being ill-advised and uniformed it may be too late before you realize it. Doing your homework by investigating the land and evaluating the situation is always recommended.

Depending on what your plans are for the land, there are many factors to consider. Are you planning to build your home on the land? Is this home for the present or your future retirement? Perhaps you plan to develop it for resale, such as a housing development or retail purpose.

Keeping your goal and purpose in mind, some key factors to know are as follows:

Clean air: What are the regulations and stipulations of the area for industrial use if you are looking a commercial development? Or if a residential plan is the goal, what is the surrounding area like?

Water: A daily necessity for either commercial or residential use. If a residential use is planned, does the water meet government standards for drinking?

Sewage and waste disposal: Knowing if the property you are looking at is on city water and sewer or if a septic system is required will be key information needed in getting financing. Regardless for residential or commercial purpose, the need for garbage collection will be necessary.

Electricity: A daily need regardless if a property is commercial or residential. Is there electricity to the property? How far will you need the electrical line ran to have power? What licenses and requirements are needed to run electricity to the land? Not only will there be the cost running the power to property, but there most likely will be fees as well.

Answers to these questions can be answered by local officials. Start your homework and research by inquiring with the planning and zoning offices. Phone calls or visits to the utility offices will answer many questions that you will have after knowing the zoning requirements.

A raw land investment can be a good investment if you do your homework. Have a clear goal set and a plan of action before going forward in finding funding. Once you have all this in place, you can sit back and enjoy the profits from your investment. Or take those profits and start your next investment!

1 comment:

  1. Great Post! I wholesaled two land deals in the past 6 months and think I need to give land deals more attention.