GMAC Real Estate - Investing in Lots and Land: Beware of Pitfalls
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Lots and Land Investing - Beware of Pitfalls

Takeaways

  • There are some pitfalls - literally - to avoid when investing in land.
  • Don't go by photos and descriptions. Physically walk the entire parcel of any land you're considering purchasing.
  • Understand any zoning ordinances, restrictions and other regulations affecting the land.

Did you know?

  • Give yourself a month or two as a contingency in sales contracts to give you time to discover any hidden problems with the land.
Lots of trees on land can be an investment drawback. Investing in land, particularly in high growth areas, can be a wise choice. But while there are great opportunities in land investments, be aware of some common pitfalls you may face and remember, if you cannot use a land investment as intended, it's no bargain. Don't rely on photographs and vague property descriptions. Walk every square foot of the land with an eye to potential problems:
  • Topography - Heavily wooded land will require expensive tree removal. Steep grades may restrict building options and impact building costs. Hidden boulders may block your path.
  • Lack of infrastructure - Are there hookups for utilities including water, sewer, electricity, gas, telephone, and cable?
  • Environmental issues - It is worth the expense to hire a professional to look for evidence of toxic or non-toxic waste, old wells or septic systems, underground pipelines, a burial site, or flood plain. Any of these could sabotage future land development.
  • Government restrictions - Zoning ordinances, covenant restrictions, and environmental regulations all impact land use.

Many of these pitfalls are not insurmountable, but others may be. It is wise to protect your investments by working with your real estate agent and include sufficient time for discovery of any pitfalls - generally 30 to 60 days - as a contingency in sales contracts.

Learn More About Investing in Lots and Land

To learn more, explore the advice on Lots and Land Investment in this section of our site. To search for lots and land in your area, please visit a local GMAC Real Estate office's web site to search for available properties, and to find a Real Estate agent that can discuss opportunities for investment.