You may have asked yourself if the purchase of land is a good use of your financial resources. Real estate has a good track record. For the last quarter century, land values have far outdistanced the inflationary spiral in real economic growth and have avoided the pitfalls of saving depreciated dollars or investing in risky and speculative investment markets Factor land out of the recent housing market crash, and you still have a steady market. You may not be surprised to learn that the value for recreational land is far outpacing that of residential homes.
Timing can be just as important as the choice of property. A historical chart of real estate values would look like a set of stairs with values climbing for a couple of years, then leveling off for a while, then climbing again. It would be impossible to state with any real assurance how much real estate values will climb next year, or which properties will increase in value the fastest, or in which geographic location.
Most people buy real estate for personal enjoyment. They invest in their own personal satisfaction first, with financial return as a secondary bonus. People who purchase with personal enjoyment as a primary goal and financial gain as a secondary goal, benefit from the use of their property, reveling in the fresh air and quiet solitude of the country. And, although they benefit from a growing equity in their property, they realize that real estate is not a liquid asset. A good return on real estate can be received only when the seller understands that a reasonable amount of time will need to elapse before you can find the buyer to meet your price.
Q. Is the property surveyed?
A. With a surveyed parcel you have a guarantee that the acreage will be exactly as described. Boundary lines shown on a survey map should be pinned and flagged on your property.
Q. Is financing available?
A. Financing on unimproved land is difficult to find and almost impossible to obtain on a property that is out of state. Banks who agree to finance land have usually appraised the property before offering to finance. They will often prove more beneficial than your local lender.
Q. Is the title to the property clear (free of liens, easements, and other encumbrances)?
A. Property on which clear title is guaranteed (usually by Warranty Deed) is “worry-free” and far more saleable than property which is encumbered by liens, taxes, or easements.
Q. What are the zoning and/or deed restrictions on this property?
A. Each state, county and town follows different subdivision and zoning regulations. It is very important that you understand what uses are permitted or not permitted on any given property in order for you to decide which parcels meet your requirements for a specific use. A property might meet with all town requirements for a particular use but a deed restriction will not permit that use. Be sure to ask if there are any “deed restrictions” on your desired property. If you intend to build, inquire about building codes.
Q. What have comparable properties in the area been selling for?
A. A property purchased at above market value will take longer to appreciate than one purchased below market value. If properties of comparable size, terrain and aesthetic appearance have been selling in the same area for slightly more than you are contracting for, you are probably “buying right.”
Q. What is “Title Insurance?”
A. Title Insurance is a guarantee that in the event of there is an issue with your title, you will be refunded your full purchase price, plus damages.
Q. What services are available in the area?
A. The answer to this question will help to determine the feasibility of this property for you. Often, there’s always a tradeoff. When you’re buying rural property, you may need to swap city conveniences you’re accustomed to for the peace, tranquility and charm of living near a small town.
Q. What are the current taxes on the property?
A. This might be the most important question you can ask!
Land ownership is a goal that is within your reach. Owning a sizeable parcel of real estate away from population centers where land is not measured and sold by the square foot, is achievable. Accurate assessment of your financial capabilities, your lifestyle, and your goals for the property are essential to making the “right buy.”
Property in close proximity to popular vacation areas is expensive. Location always determines price and this will directly affect how much property you can afford to purchase. You might want to consider purchasing property 20 – 30 minutes away from obvious tourist destinations to reduce your purchase price.
If you are in the market for a homesite, consider both value as well as privacy needs. While 1 or 2 acres will provide adequate privacy, more acreage might be a better buy. Cost per acre on 5 to 20 acres will be much less per acre than if you’re only buying one.
Land with southern exposure can cost less in the long run. Home builders should keep the architecture of the landscape in mind when purchasing property.
Most people buy real estate in a vacation area for personal enjoyment. They invest in their own mental health first with financial return as a secondary bonus. People who purchase with personal enjoyment as a primary goal benefit from the use of their property for fishing, swimming, hiking and canoeing with it’s proximity to parks, lakes and coastal areas. While enjoying the fresh air and quiet solitude of the country they may benefit from a growing equity in their property. A good return on real estate can be received only when the seller understands that a reasonable amount of time will need to elapse before the “right buyer” at the “right price” is found.
Consult professionals to immerse yourself in the details of your purchase. There are many experts available to guide you through the purchase process. Never leave yourself open to costly and unpleasant surprises – always consult a professional. National Land Partners Land Consultants are well versed in every aspect of land acquisition
The Bottom Line
ALWAYS… Discuss the availability of owner financing. Many real estate companies can arrange proprietary financing or partner with a bank familiar with your property.
ALWAYS… Ask for a recent survey. The more recent the survey, the more accurate and reliable it will be. In addition, a property should always be marked for your inspection.
ALWAYS… Insist on reasonable access. Frontage on a state, town, country, or private road is desirable.
ALWAYS… Require a warranty deed. You cannot buy better protection than a warranty deed.
ALWAYS… When a warranty deed is unavailable, title insurance is a must.
ALWAYS… Establish a good working relationship with your seller. Deal only with a seller you can trust.