Investing In Vacant Land: Deal Breakers To Watch Out For

Many investors overlook the potential in vacant land. There are many benefits to investing in vacant land, including not having to deal with many of the issues associated with other types of real estate. 

But as simplistic as vacant land appears, it’s actually deceptively complicated and there are several pitfalls to watch out for. If you’re looking for real estate to invest in, vacant land is a great choice, but consider the warning signs below before you do. 

Know What the Property is Zoned For

Every parcel of property is zoned for a specific use. Before purchasing a piece of land, be sure you know what it can be used for. The local Planning & Zoning Department where the property is located will be able to tell you what it’s zoned for.

Know the Terrain

Vacant land can have hills, valleys, cliffs, mountains, rivers, etc., any of which can make it difficult or impossible to build upon. If you’ve got your eye on a parcel of land, especially if it’s out of state, do yourself a favor and pull it up on Google Earth to get a bird’s eye view of its topography. 

What are the Property Taxes?

If you plan to hold onto the property for any length of time, you’ll be responsible for paying property taxes on it each year. For some reason, some vacant properties have high annual taxes. You’ll want to steer clear of these parcels to avoid spending too much. Average property taxes should fall between 1 and 4 percent of the property’s value. 

Are Public Utilities Available?

Since most people buy vacant land intending to build on it, having access to public utilities like water, gas, electricity, etc. is a must. If the land you’re looking to purchase doesn’t have access to these things, you’ll need to know this so you can plan for alternatives like solar energy, septic systems, well water, etc. If you must go with any of these options, your cost to build will be higher. 

Find Out the Land’s Setback Regulations

Every piece of land must adhere to setback regulations that give order and consistency to the buildings in that area. It may be that the parcel of land you’re looking at is too small to build anything useful on because of its setback limitations. Call the local Planning & Zoning Department to find out the setback regulations of a piece of property to find out if it’ll work for what you have planned. 

Are There Any Usage Restrictions?

There’s a reason you don’t see a large shopping mall next to a landfill or a pig farm next to a skyscraper. It just doesn’t make sense, which is why usage restrictions on land parcels exist. Most restrictions make sense like the ones listed above, but you need to find out what the restrictions are on the property you’re thinking of buying just to be sure you can do with it what you plan. Be aware that if the vacant land you’re buying is situated within an HOA (homeowner’s association), you’ll likely have even stricter regulations designed to maintain the quality and formality of the neighborhood.