What To Look For In a Land Investment

The world as we know it today is changing, and that change has some people concerned about the direction of their future. For those looking at the possibility of living a more minimalist lifestyle, buying land may be an option to consider. Unlike many other types of investments, Damon Becknel, experienced entrepreneur and land developer understands that land has the potential for greater equality over time due to its limited supply and relative affordability. So what do you need to look out for in a land investment?

The Property’s Zoning

The property’s zoning will play a major role in how it can be used. Different types of zoning can allow for industrial, agricultural or residential uses of the land, and each has its list of rules and regulations. Some areas may only allow for certain buildings on zoned land, while others may exclude buildings altogether.

If you plan to make your investment into a home someday, make sure that the zoning allows for homes. If you plan to keep your investment as undeveloped land until later, research whether industrial properties are allowed in the area; these sometimes appreciate faster than residential properties due to their scarcity.

Demand for Land in the Area

The value of residential properties is often tied to the economic health of its surrounding area. If you live in a larger city and own a large plot of land, chances are you will not be able to move it for much less than what you paid for it due to demand from other people who want large plots of land around the city center.

On the other hand, investing in rural land can decrease as cities expand as more and more people move away from rural areas. For these reasons, knowing population growth trends and development plans near where your property is located is useful before making any speculative investments.

Accessibility & Transportation

The accessibility of your property will depend largely on where it is located and what other properties are surrounding it. If there are few ways to access your land except through neighboring properties, then those neighbors have a clear incentive to restrict your development options to reduce competition. This can lead to higher prices for building permits that are out-of-proportion with the actual costs of construction so that they

The Land’s Current Value and Potential for Appreciation

The current value of your land represents what you have to work with, but its potential for appreciation is what makes it an important part of your portfolio.

It may be difficult to know the exact value of a piece of land based on its size and location without actually starting development on it, but figures can still give you a general idea. The greater the difference between the purchase price and estimated construction cost, the better off you are likely to be in terms of future return once you start building.

Annual Property Taxes

One of the first things you should look for when buying land is whether it has any existing structures; if not, the property may be subject to annual taxes separate from property taxes on any buildings. Farmland can be taxed by how much it produces or its potential productivity rather than at its current market value.

Final Thoughts

Many factors go into determining whether or not buying undeveloped land is right for you. It can be seen as an investment unto itself, but make sure that it fits well within your overall financial plan before committing any funds.

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