GMAC Real Estate - Investing in Lots and Land: Drawbacks to Lot and Land Investments
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Drawbacks to Lot and Land Investments

Takeaways

  • There are drawbacks to investing in land.
  • Due diligence before any purchase is critical.
  • Land doesn't have all the tax advantages of developed property.

Did you know?

  • Undeveloped land has limited financing options.
Land doesn’t offer the tax breaks of developed real estate. Before you invest in land or lots, it is important to consider the potential pitfalls of buying land:
  • Due diligence is critical to ensure that your land investment can be used for the purpose intended.
  • If you purchase raw land with no improvements such as utility services, sewer lines, or paved roads, you may face unexpected expenses by having to install this infrastructure which, in turn, will increase construction preparation and undermine investor profit.
  • Lot and land financing options are more limited than with developed property, and hefty down payments are usually required.
  • Don't expect the same tax advantages on land as on developed real estate. Check with a financial advisor or qualified tax consultant prior to purchasing land for an accurate picture of tax implications.

It's always best to partner with a professional real estate broker/agent who specializes in selling lots and land to smooth the progresses of due diligence, negotiations, financing, and closing the deal.

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.