It’s important to consider the ways that investing in a vacant plot of land differs from other types of real estate investments before committing your resources. A vacant plot of land presents different challenges, but it also offers unique opportunities. Learning more about these differences can help you determine if this is the right route for you, and it can help you identify the best opportunities in your market.
Plan a Quick Exit Strategy
The market for vacant plots is even more volatile than the market for residential and commercial real estate. It won’t take much for the market to take a downturn, leaving you with a plot of land that is essentially worthless to developers. To avoid that situation, you should have a quick exit strategy before you even make an offer on the land. You shouldn’t plan to hold onto the land for more than 36 months at the longest.
Don’t Let the Land Sit Idle
Even as you begin looking for land developers, your first concern should be to look for ways to earn passive income from the land. Depending on the location of the land, you can put up a billboard, divide it up into parking spaces, or turn it into a fruit and vegetable garden. There’s no reason this land can’t be earning you money from the moment you take possession of it.
There’s More Work to Be Done
Once you buy the land, you may think that you’ll just sit back and wait for developers to start submitting offers. That’s not quite how it works. If you really want to appeal to developers, it’s up to you to do the legwork to get the land ready for development. This means getting the land surveyed, applying for the necessary permits, and getting the property zoned. For larger plots, you might also have to get the land subdivided. Developers will look for land that already has been prepared in this way, which is commonly known as entitling the land.
As is the case with any type of real estate investment, it’s also up to you to do your research in advance of investing in any property. This means conducting title searches to ensure the land has a clear title and researching the market to evaluate the land’s potential value. As long as you do your due diligence, investing in land and offering it for development can be a lucrative opportunity.