What to Know When Buying Land
Today I’m answering your question about what to look for when buying land.
Step #1 – determine what to do with the land. Make a plan. Why are you purchasing the land? If you don’t know why you’re purchasing, you need to stop and figure it out. Otherwise, it’s questionable whether it will be a profitable purchase.
Financial success is realistic if you follow a systematic process. The process is going to include research before you get started. So in this brief lesson, I’ll try to outline the material you should cover and what you should know before buying land.
Keep in mind, purchasers have different objectives and desired outcomes, so no one person is going to have all the answers.
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The Buying and Selling Land Business
This can be a start-up business for you, which you can work part-time or full-time, however you get out of the business what you put into it.
Land can be easier to maintain and look after than houses or commercial buildings. For example, serious damage can be caused by just a small leak or faulty wiring.
Land on the other hand requires attention, but not the same kind of attention.
Buying Land for Development
Do you plan to develop the land? If you’re planning to develop, you certainly need to do a lot of homework and know what to look for when buying land to build on.
For example, if you’re planning to build your dream home or even multiple homes on a piece of land, you need to purchase land that is developable. You need professionals to help with that.
Real estate brokers already know how to coordinate with builders and developers because it is a complex challenge to develop the land.
It’s not just the location that counts. Land involves consideration for ultimately what will be finished. Where will the kids go to school if you build houses? What roads are close by? In other words, the development must fit in with the master plan for the community.
Today, I’m discussing what to look for when buying land. It’s more complex than buying a home. When you purchase a home, the developer has already handled the zoning, utilities, water, sewers, and roads. In other words, a lot of headaches have been solved.
Unimproved Land Will Need Water and Septic
There is no survival without water. The question you must ask is, where is the county water? Is it to the property line so it can be delivered to each individual lot, or are there going to be large lots that will require a well?
Think about the well, how deep must it be to get good water? What will that cost?
All land will have to be tested for septic, and this can be a real challenge. Land is especially valuable if it’s on the water because people like great views.
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Buying a Residential Lot
If you’re an amateur, I suggest you stay away from development until you have more experience. Development is not a piece of cake.
My experience has worked for my students and me, and we continuously search for developed vacant residential lots in subdivisions. In other words, the developer has already figured out the water, utilities, and sewers.
It’s already been surveyed and approved by the county, and more than likely, the utilities are built under a road which is already in front of the vacant property. Otherwise, you need a calculator to figure out how much it is to bring utilities, water, engineer the roads and put the asphalt on the land.
Zoning covers what can be built and any future development. Development always requires permits. What does the government allow? It all has to do with development and zoning, and there is more!
Liens, Encumbrances and Easements When Buying Land
Land comes with liens and attachments. A lien is a monetary claim against the property. That could be a mortgage or a deed of trust.
Land also comes with easements that involve two or more property owners who are next to each other. One of these owners would use the property of the other owner.
For example, a driveway from property A may go across property B so that the owner of property A can get to the public road.
It’s important to know what to look for when buying land, and you will want to know about easements or the lack thereof on the property.
Why Buy Land at a Tax Defaulted Property Auction?
I chose the easy way. 30-years ago I discovered a little-known but highly lucrative segment of the traditional real estate market, tax defaulted real estate.
Yes, there were many parcels of 25, 50, and 100 acres, but they were always tax defaulted. It turns out that nationwide, millions of these tax defaulted properties are sold at public auctions because the owners failed to pay taxes.
How did that happen? The state legislator in all 50 states mandates that the county treasurer levy and collect taxes. If the taxes are uncollectible, the treasurer will confiscate the property and then resell it at a public auction to the highest bidder.
How to Buy Land for Pennies on the Dollar
The starting bids at the auctions are the back taxes of the defaulted property. So the county discounts property by 60%, 70%, and 80% below the tax assessed value, and the county treasurer will cancel the mortgage or deed of trust loan.
Counties auction land, homes and commercial real estate. Nationwide, more than 5,000 tax auctions are scheduled annually in all 3,000+ counties. This process has been executive by local county governments for over 200 years.
Savvy auction buyers know what to look for when buying land for investment and purchase these properties for as low as 10 cents, 20 cents, and 30 cents on the dollar.
Yes, there will be vacant land. Recently, I had students purchase as many as 20 properties in incomplete subdivisions where the roads are completed, utilities, water and city sewer connected to each lot, and many of these properties were sold for $200 or $800 at auction.
Land is a big business. States like Texas, California, Ohio, and Illinois have huge tracts of land that end up at tax defaulted auctions sold for pennies on the dollar.
We hope you enjoyed Ted’s lesson, “What to Look for When Buying Land”
Unlike when you’re buying a home, purchasing land requires you to do your homework on items like zoning, utilities, water, sewers, easements, and roads if you want to develop it. There is an entire checklist of items involved.
Buying and selling land can be quite lucrative, however, especially if you’re able to purchase the land at a significant discount, which you can do at a tax defaulted property auction.
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!