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What Are the Best Tips for Investing in Land?

Article Details
  • Written By: K. Kinsella
  • Edited By: Shereen Skola
  • Last Modified Date: 11 May 2020
  • Copyright Protected:
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    Conjecture Corporation
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People who invest in land often make significant profits, either from reselling plots of land or through rental income. The best tips for successfully investing in land include working with a real estate agent, ordering a title search and checking local zoning laws. Additionally, some conventional lenders are reluctant to finance plots of land, in which case savvy investors have to find alternative sources of capital.

Landowners typically advertise pieces of land by placing advertisements online, in local journals or by listing parcels with local real estate agents. Some investors spend a significant amount of time browsing through such listings looking for conservatively priced plots of land. Many people save time by enlisting the help of a real estate agent. In many countries, the agents’ commissions are paid by the seller rather than a buyer which means that the person buying the land loses nothing as a result of working with an agent. Since agents deal with real estate on a daily basis, these individuals are often able to quickly locate plots of land that suit the needs of a particular investor.

When a plot of land changes hands, the exchange and the title for the property are normally recorded at the local courthouse. In some instances, legal complications can arise when titles are improperly recorded. Someone considering investing in land can reduce the likelihood of running into such complications by enlisting the help of a title company. These firms employ agents who are tasked with ensuring that property deeds have been properly recorded. Title companies also ensure landowners against losses stemming from legal disputes.

In many areas, local government agencies have the authority to zone pieces of land which means that the property owners can only use these areas for certain purposes. A landowner cannot typically build a residential home on a plot of land that has been zoned as a commercial area and vice-versa. Zoning requirements have a direct impact on the value of a piece of land so anyone investing in land must ensure that the land can be used for the intended purpose. Additionally, some people even research pending legislation to find out whether pieces of land that are listed on a real estate market may be re-zoned in the near future.

From a lending perspective, most banks designate parcels of land as being either developed or undeveloped. Normally, developed plots have road access and are connected to utilities such as electricity and sewage. Undeveloped plots of land are often in remote areas and covered with trees, bushes or crops. Many lenders are unwilling to finance undeveloped plots of land which means that the owners of these properties often have to sell such areas at below market prices. Prior to investing in land, some investors contact investment firms that provide financing for unconventional types of collateral and use this financing to buy these low cost plots of land.

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