Buying a lot for a home and developing it on your own is a great way to ensure that you end up with the kind of building you want. It can also be a more profitable venture compared to buying a building that is already standing. However, choosing the right land for this kind of venture is far from simple. You'll have to take certain steps to achieve the results you're after.
Work with Someone Who Understands Land Deals
Land deals can be very difficult to handle. There are many factors to consider since some of the variables are still unknown since construction is yet to take place. Handling the negotiations and closing the deal can also be challenging.
A pro who understands how land deals work will not just ensure that you get a good deal, and they'll also help you to avoid some of the minefields out there such as purchasing land that you won't be able to develop for various reasons.
Choose Something You Can Afford
Getting a loan for a lot purchase is not like getting a mortgage for an existing building. Land can't be leveraged in the same way that a standing building can. Therefore, you'll need to be able to pay cash on such real estate purchases. There are rare cases where you may qualify for a loan that pays for part of the land, but don't count on that.
Consider the Value of Existing Homes in the Area
If the total value of the lot plus the house you intend to construct is much higher than the average value of houses in the area, the land is probably overpriced. Getting approved for a construction loan if the land is overpriced can be tough. Additionally, if you have to sell the property later, you may not find someone willing to match your asking price.
Don't Skip Environmental Tests and Surveys
It's important to know the exact size of your land so you know if others have encroached on your property. Environmental tests can tell you if the soil is contaminated and unsuitable for other applications.
Consider Access to Roads and Utilities
Being able to access roads and utilities such as sewers and gas lines will be important to you or any potential tenants you'll have in the future. If you have to pay extra to develop these on your own, you may be paying more than you can hope to get.Share