Investing in raw land online these days is very tough. First, how do you know if the seller really owns the property? Then, if they do own the property, how do I know the title is free and clear of any liens or encumbrances like back taxes or an IRS liens? Furthermore, if the Seller is honest, what are my reasons for owning this land? Here are the 3 questions I ask myself before investing in any land:
1. What is compelling about this property?
Are there mountain views? Is it near a lake or major body of water? Is it private? Is the weather beautiful most of the year? Is it near outdoor activities that I enjoy like mountain biking, hiking, riding quads, horseback riding, etc. Do I get a little imaginative “rush” thinking about the possibilities I would have owning this property? Basically, if I don’t find it compelling odds are neither will anyone else.
2. How difficult is it going to be working with the local Planning & Zoning authorities to accomplish what I want to accomplish on this parcel of land?
Some counties are easy to deal with and even helpful. While other counties make it as difficult and as frustrating as possible to do anything you want on the property. I always call Planning & Zoning first before acquiring any piece of property to learn about the restrictions, future growth in the area and pending developments. What are the County fees to get a building permit if I want to build? What is the paperwork process and timeline for permit approval? What if I just want to park my RV on the land? Is that cool? If so, for how long? I typically shy away from anti-social planning and zoning Counties to save myself the brain damage in the future.
3. What are the holding costs associated with the land? What are the annual taxes? How often does the County re-assess the land? If it’s often what has been the historical tax inflation? Is there any type of Property Owner’s Association that have maintenance fees and various other rules? I don’t want to own land that is going to nickel and dime me every few months with taxes and fees. Even if the community is pristine and fantastic, I just would rather have something a little less expensive to maintain, but that’s just me. You may like the community and its amenities and feel like you’re getting value for those fees.
Once those three questions are answered then you can begin the due diligence process and being certain there aren’t going to be any surprises with your land acquisition.
Let me know what questions you ask yourself before buying property.
