How Expensive Is It to Buy Land?
How much does it cost to buy land? Land purchasing is where many people start their real estate investment careers.
There is something thrilling and exciting about owning your own piece of land. It could be a raw undeveloped piece of land, or it could be a residential vacant buildable lot in an existing subdivision. Either way, you will have a real sense of wealth and ownership.
I’m Ted Thomas, and I’ve been involved in real estate for over 30 years as an entrepreneur and an investor. Today, I’ll give you insider information about real estate, and I’ll answer your question, “How much does it cost to buy land?”
The prices certainly vary, and this is a little complicated for many investors.
The question involves a number of answers. For example, land in Beverly Hills for a 1-acre purchase price could be thousands, even hundreds of thousands of dollars. Whereas an acre 10 miles outside of Topeka Kansas, has a much smaller value. So let’s try to sort this out.
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Some Things to Think About When Buying Land
There is a lot to learn. Most people begin with discussing acreages. What is the price per acre? But first, you must answer, what is the location? Is the acreage buildable or unbuildable? Have you already checked the zoning? In other words, could you build houses, apartments, or commercial buildings on it?
What about easements? Are there complicated challenges or restrictions on the land? Is it in a flood zone? And who decided the amount of the taxes?
Most raw land has no utilities. If you bought raw land and it’s buildable, where is the water coming from? Would you need a well, or is there city water close to the property? If you do need a well, how deep will you have to go before you get water?
Once you buy the land, what are you going to do with it? Okay, you are getting the idea – lots to think about.
Most people are buying residential real estate, and the developer did all this work prior to building the property. The county develops ordinances and restrictions and has many requirements for additions that you must add to your land when you plan to develop.
Start With the Cost of the Raw Land
How much does it cost to buy land? Is it within your budget? Everyone has a budget. So where are you going to start? Start out with the cost of the raw land and then work from there.
Today I’m discussing land and what it costs per acre. The simple answer is, I don’t know until I know a lot of different things about the land. Now, why don’t I know? Because it takes time to do your homework, your research. Some people call it due diligence. Where would you start?
The Department of Agriculture can tell you basic land values whether its acreages to graze cattle, which might be $1,500-$2,000 an acre, as compared to acreage to grow crops, which may be $3,000-$5,000 an acre.
Your research will reveal very quickly if the land has many areas of wooded acreage that may require removal before you could build. The cost per acre could suddenly be $5,000 or $10,000 to remove the wooded areas. Who is going to do that clean up and who approves it when it’s finished?
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Factor in the Cost to Add Utilities to Land
How much does it cost to buy land when you factor in development? Where are the utilities coming from if they are not already on the street? As the landowner, you will have to pay to bring the utilities to the street and then to the property. What is that going to cost?
Where is the water connected? Is it on the street already, or do you have to go to the nearest county water to bring it to the property?
As I said, the builder/developer has a lot of work to do. Prior to selling the first vacant residential lot, the builder may have invested $20,000 or even $50,000 per lot.
Whom should you ask? There are plenty of consultants and attorneys. Start the easy way, and go to the county records. Find out about zoning, ordinances, and building codes.
The local government will have many restrictive covenants. Keep in mind the government likes to get paid, so they will charge fees and require permits. All of these add to the price of the land.
If this is beginning to appear a little complex, I would have to tell you that you are thinking along the right lines. Developing land is a challenging and difficult process.
The Best Way to Buy Land Cheap
Maybe you want a bargain. 30-years ago, I discovered a subset of the traditional real estate business, and it definitely included land, vacant residential lots and small farms.
This subset I discovered had been available for 200 years, I just never noticed. These are tax defaulted properties, which are much the same as other land, except the owners had failed to pay property tax and the land ended up in default.
The tax collector will seize the tax defaulted property, sell it at a public auction and use the revenue to pay the delinquent property taxes.
How much does it cost to buy land at tax defaulted auctions? Counties usually sell properties at rock bottom prices of 10 cents, 20 cents, or 30 cents on the dollar. Fully 20%-25% of the property at tax defaulted auctions is land.
Land buyers who have training and business savvy can take advantage of these rock bottom prices at tax defaulted auctions, and then they can resell those properties using Craigslist, Facebook Marketplace, Zillow, the Multiple Listing Service (MLS) and dozens of other electronic auction sites.
They can often sell quickly by offering the land for sale at a discount, which the high profit margin enables them to do, and earn an additional profit by providing seller financing.
We hope you enjoyed Ted’s lesson, “How Much Does It Cost to Buy Land?”
There are a lot of factors to consider when buying land, particularly if you purchase raw land. If you’re looking to purchase land at the lowest price possible, tax defaulted real estate offers amazing bargains.
At a tax defaulted property auction, you can purchase real estate for pennies on the dollar, and 20% to 25% of the properties available will be land.
If you’d like to know more about tax delinquent real estate investing, Ted Thomas provides full support and complete training with home study courses, Q&A webinars, live tutorials, workshops, web classes, and personal coaching with certified coaches.
You can learn how to reap the huge rewards from tax lien and tax defaulted property investing! Get started today by taking advantage of Ted’s Free Master Class! Act now, it costs you nothing and will give you a big head start!