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Investing in Vacant Land: 3 Things You Want to Know

Investing in Vacant Land: 3 Things You Want to Know

Finding the perfect piece of vacant land, as a real estate investor, is like winning the jackpot. Sometimes, however, getting an accurate value for that land can be tricky. To do so, you will need to bring in a few resources to calculate estimated values on the space. Below are three things that you want to keep in mind when investing in vacant land.

Pick the Right Appraisal When Investing

Yes, it seems obvious that you would need to have an appraisal done. What is not always obvious is exactly which appraisal is necessary for the land in question. There are three main types of appraisals:

  • The Income Approach 
  • The Cost Approach
  • The Sales Comparison Approach 

The income approach is the most frequently used form of appraisals. It is always recommended that you have one of these done on your land. It will give you an idea of how much money you can expect a property on the land to bring for an ongoing period of time. The cost approach and sales comparison approach are usually reserved to appraise existing structures. They are not the best methods for vacant land investments.

Always hire an expert appraiser to do this part of the job for you. Doing it yourself will only cost you time, which is a sensitive aspect when it comes vacant land sales. A qualified appraiser will have direct access to the information for a swift income approach appraisal.

Value Driving Factors

When investing into a piece of vacant land, you need to take all value drivers into consideration. What exists in the vicinity to make it an appealing piece of property? Be sure to consider each of the following:

  • Zoning: Will the land be best used for a house, business, apartment block etc.?
  • Similar Sellers: How much do similar properties in the area fetch?
  • Market Inventory: Is the location particularly great, or does the land offer spectacular views?

All of these factors work together to drive the value of your investment up or down. You will want to make sure that you have at least a few of them working to your benefit.

Find Hidden Value in Vacant Land

Sometimes when investing in vacant land you need to dig a little deeper to find hidden value in the space. Research the below:

  • Find amenities in the area, such as malls and corner stores; potential buyers value these.
  • Note down the number of schools and hospitals within the immediate zone range. 
  • Does the vacant land already have road access? This is a big one, since building roadways is an additional expense.
  • Ensure that the vacant land is not in a flood zone.

Your investment in vacant land can be the best or the worst thing that you ever do. You must invest time, consideration, and research before diving into a purchase such as this. You will be glad that you did!

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