There are countless reasons why you may want to own property. Investing in land lots can be an excellent outlet for revenue, leisure, and more. However, there is tons of information to consider before buying land. So, what do you need to know about investing in land lots?
It is important to know the legal and practical aspects of investing in land lots. Making sure you know everything there is to invest, look after, and utilize or sell your lot is essential to staying out of trouble. Awareness can take a lot of stress away from your investment.
Read on to learn what you need to know about investing in land lots, including the basics of land lots, how to invest in them, and tips to consider while buying and looking after your land lots. Take note of even the smallest details in this article; there is key information that is important to keep in mind for your investment.
Table of Contents
What Is A Land Lot?
A land lot is a specific area of land lacking any construction. Sometimes, all it has is a slab of concrete. Besides that, there may not be any water or electrical lines, and either something has been demolished, or it has not had a building to start with. Typically, it is owned by the government, but you can also buy land lots from real estate agents or other previous buyers.
A land lot is a versatile term. There are huge land tracts that might be divided into smaller land lots, and there are also large-scale land lots.
Still, a land lot is its own designated thing. There are no dimension restrictions to a land lot, though they tend to be small enough for one home. Sometimes, they could accommodate a commercial business, and in other cases, land lots in rural areas can be large enough for a farm or outdoor leisure.
Land lots are ideal for people who want to build commercial businesses or homes from scratch. They can also be useful for an investor looking to hold on to the land and sell it for a higher price in the years to come. In most cases, you will not have any trouble finding vacant land lots in your area. However, that does not mean investing in land lots is easy.
How Are Land Lots Created?
Originally, land lots were granted by the government, which designated available areas for buying and oversaw professional surveyors for specifications. The government does still maintain control over a vast amount of land lots, but you can buy land lots from real estate agents and previous buyers.
Of course, if you buy from a current owner, there will still be professionals involved.
Suppose you are driving along the road and spot a huge sign that reads, “LAND FOR SALE.” Chances are that this could be a land lot. Land lots can be located anywhere, no matter if you are in a rural area or compact city. As said before, they are typically not difficult to find. If you are looking for a land lot near you, you can search your area online or get in touch with a real estate agent.
Who Is Typically The Seller Of A Land Lot?
Similar to what was said in the above section, you are likely going to buy a land lot from a real estate agent. However, you can do so directly through the Bureau of Land Management. This is if you are buying public land directly from the government.
In some circumstances, real estate agents have already taken ownership of select properties and sell them to consumers.
Other times, you might want to buy from the previous buyer/current owner of the land. It is not uncommon to buy directly from the private seller, whether it be that you:
- Personally know the individual
- Heard of their land from a friend
- Happened upon their property
Still, if this happens, there will likely be dealings with an agent that is helping the seller along the way.
What Restrictions Are There With Land Lots?
Investing in a land lot is not all sunshine and daisies. There are dozens of rules to follow and regulations to keep in mind before, during, and after investing in land lots. It is of the utmost importance that you are aware of the restrictions involved in land lots.
These restrictions include:
- Location
- Finances
- Use
- Outside access
- Miscellaneous legal issues
- Access to utilities
Although it may not be tough to find plenty of land lots in your area, you are stuck with the fact of their exact location. Obviously, there is nothing you can do if there is an empty land lot that you wish was just a few blocks nearer to a certain location. This should not be a total inconvenience, as you should understand that land lots are, quite literally, set in stone.
Finances are another very important aspect to consider when looking to invest in a land lot. For one, you need to have enough money to buy the land lot itself. Plus, if you are looking to build on top of the land, it will likely require a hefty investment. However, if you want to invest in a land lot just to save it and let its worth increase over time, this can be a difficult situation.
Planning on Buying a Land Lot as a Growing Investment
Since there is not an overall solid way to tell how the real estate market will fluctuate over the years, banks are extremely hesitant to provide a loan for you to invest in the land lot. Oftentimes, land lot purchases must be done with up-front cash. Additionally, you will need money for other major utility costs and similar expenses.
There might also be official restrictions on how you can use the land. For example, you probably will not be able to build a home in the middle of a commercial area. In the same way, it is not always wise to try running a commercial business in between farmlands. Practicality aside, there is typically some type of restriction on what you can do with the land lot you choose.
When investing in a land lot, you might also have to consider non-party affiliates taking minerals or oil from underneath your land plot, surveyors or other officials coming in for government checks, and more. It is best to cooperate with restrictions such as these, as there is really nothing you can do about them.
Other legal issues such as zoning laws and other local regulatory issues can affect what you can do with your land lot. Any invasion of the confines of your land lot can get you into a good amount of legal trouble, even if it is done so out of ignorance.
Lastly, one of the most common problems one might face when investing in a land lot involves utilities. If you are investing in a land lot to build on top of it, you may not have access to water lines or electricity grids, which can result in huge costs if you attempt to make those connections.
5 Tips If You Want To Invest In Land Lots
So, if you are looking to invest in land lots, you have probably gathered that there is an extensive amount of information to catch up on. Now that you have a general idea of what to expect before, during, and after the investment, below are five tips if you want to invest in land lots.
Hire An Agent
Before taking any matters into your own hands, it is best to hire an agent.
Having a real estate agent with specific experience related to investing in a land lot will save you tons of trouble in the long run. They can help catch you up on any information regarding:
- Availability
- Cost
- Zoning laws and other restrictions, etc.
Without an agent by your side, especially if you have no experience, things can go wrong quickly.
Agents are also great for your initial search for a land lot. If they have available lots, this can help greatly. Even if they do not, they will still likely have loads of information about available lots in your area.
Know Your Financial Situation
Of course, it would be silly to dive right into any investment if you do not keep track of the money you have to offer. Simply put, if you do not have the money to invest in a land lot, there is no chance that you will get your hands on the property.
Even after buying, you must keep track of:
- Potential utility costs
- Construction services
- Periodic real estate taxes based on the assessed value of the property
- Violations of the land lot deed, and more.
Take Note Of The Surroundings Of Your Land Lot
The chances are that if you are investing in a land lot, you have done your research. At least, that is what is expected of you. No matter what purpose your investment is for, you must gauge your surroundings, understanding that the specific location your land lot is in plays a large role in what you can do with it.
As said before, you do not want to – and probably are not able to – build a commercial business in a cornfield.
Cooperate With Banks
Going back to the financial aspect of investing in a land lot, there is a very high chance you are not going to get a loan for your business venture.
Real estate is too unpredictable for most banks to risk their time and money on. It is that simple. You should not walk into a bank expecting to get a loan for your investment.
Welcome Official Tests On Your Land Lot
Both before investing and after owning your land lot, it is a good idea to keep in touch with the professionals who keep tabs on your property. Before receiving ownership, you should have someone come to do an environmental test, ensuring that, if you are looking to build on top of your land lot, the soil is healthy enough for utilities, the land is prone to flooding, etc.
In addition, having a surveyor come in to clarify your land plot boundaries is important. Especially if you have a larger land lot, you do not want to run the risk of illegally extending off your property. In the same way, you want to make sure your potential neighbors have not trespassed on your zone.
Takeaway
There is a lot you need to know before investing in a land lot. Understanding that doing so can oftentimes be high risk, low reward is the first step to recognizing the task ahead of you.
Nonetheless, investing in land lots can be an exciting journey. You just need to make sure you know exactly what to expect. Do not be afraid to get help from professionals to help you through the situation.
