How to Buy Undeveloped Land

Posted by Edmonton Homes.ca on Thursday, September 5th, 2019 at 8:26am.

Should You Buy Raw Land?Buying land is different than buying a home. Buyers of land may not need to build on it or rent it out in order to make a profit. Ideally, they just need to hold onto it until they can sell it to a well-funded investor. But there's more to buying raw land than just sitting on the property. Here are a few tips before jumping into a new land venture.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

Patience and Profits

When it comes to finding another buyer to take the land off one's hands, investors sometimes wait far longer than they anticipate. This is because neighborhoods can bend and change for any number of reasons. Let's say a major car processing plant decides to move to a certain neighborhood. It may seem inevitable that the nearby blocks will become exceptionally valuable in the next few years. But companies can't always keep their promises - situations and the economy changes. The raw land that was purchased in optimism may be worth next to nothing in just a few months.

One way investors can combat these uncertainties is to find out more about who's interested in moving to the area. A neighborhood full of constantly transitioning young people may not be as valuable as one where people are putting down roots.

Learning the Land

In addition to the surrounding neighborhood, investors have to look at the physical attributes of the land:

  • Damage: From soil erosion to overgrown tree roots, any obstacles that stand in the way of building will make the land less valuable.
  • Barriers: If the property is surrounded by hills, it will ultimately impact how much light the building receives. Whether it's for residential or commercial purposes, a developer will take this into account before making an offer.
  • Elevation: If the land is located on too steep of a slope, it may be impossible to build anything without risking people's safety in the event of a natural disaster.

Rules and Regulations

Zoning laws in Canada differ from province to province, with some municipalities more stringent than others. If the land is located in a hotly contested area (e.g., environmental, commercial, etc.), it may become illegal to build upon it after the owner has already purchased it. Owners also need to account for the costs associated with the land, including property taxes during the time they own it. These costs can end up affecting how much money an investor makes on the sale, especially if there's an unexpected change in policy.

Watching and Protecting

It's easy to buy raw land and forget about it until there's a reason to sell. However, leaving any property unattended—even a vacant lot—can cause the value of the investment to deteriorate. Not only can the vegetation start to overrun the property, but people may begin to see the land as the perfect place to put all their unwanted garbage. If anyone disposes of hazardous waste on the land, it can ruin the soil, and a developer may declare the land unsafe to build upon. Investors can always pay to have these problems cleaned up of course, but depending on the damage, it may cost more than the property is worth.

Buying in Beaumont can be an extremely lucrative choice for investors who don't want the responsibilities of taking care of a building. However, it's not always as easy as waiting a few months for the right buyer to come along.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

By Justin Havre

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