Commercial real estate and investing in land in general is a hot topic right among the young and old who want to build financial freedom. We all want more cash, free time, and maybe the ability to move away from a professional career that we might not enjoy to the fullest. Real estate is a great way to generate passive income when the right timing, strategy, and connections are used to get the best deal. Many people also choose to invest and wait for growth in real estate so their purchases appreciate in value over the long haul. No matter how you choose to buy, sell, or rent out a commercial real estate property, there are key things to remember so you don’t mess up. Often people like to rush into opportunities that seem like a great bargain in the present but could turn sour as soon as the title is handed over. If you want to buy a vacant lot so you can do thorough property develop, make sure you watch out for the common mistakes that many people make.
Vacant Property Development
Buying a vacant lot in any area is an important and complex decision. Just like any type of commercial real estate purchase, you want to do enough research about the area and what renovations the previous owner did to the area. Some things to do when you buy a commercial real estate plot include:
- Setting your intent for buying the land early on in the game. Maybe you want to but the plot so you can live in it and eventually build your own house. That property could be used to rent out to tenants in the future, but you’d have to bear in mind the sunk costs of raw materials, possibly paying a construction company and maintenance fees over the year. Maybe you want to use the property as a long-term investment or even to start up a business. Either decision brings restrictions from the government that you need to be aware of since certain lots don’t allow the construction of private residences. Do your homework before you buy!
- Knowing your location for adequate growth in real estate. No matter why you’re purchasing a piece of property, nothing is more important than its location. If you’re making a long term commercial real estate investment, never buy a plot of land that has no resale value. If your goal was to establish a business, don’t go purchasing a lot that is far away from the city and isolated from busy roads. Looking into a land survey or checking if a survey has been done really helps you know what the properties limits are. However, since surveys are based on their location and many other aspects, there’s no average cost to get them done.
- Researching the value of the area, geographical considerations, and what the typical culture is in the area as well. Some investors make the mistake of purchasing low cost properties in low income neighborhoods that create the most profit. While they do generate more income in the beginning after building an apartment complex or a business, for example, they could run into higher rates of crime, issues of theft, and other safety problems they might have not expected.
- Knowing the costs involved. Understand the areas possible HOA fees, the tax rate, and fees of title insurance if you want protection while you finish your property development. Consider it as a shield against legal complications involving your commercial real estate since it covers any type of loss or defects to the property. While title insurance isn’t necessarily required when you buy commercial real estate, the institution that you apply for a mortgage from will offer you a custom plan.
- Finding out the government zone restrictions. Zoning laws dictate what can and can’t be done with land you want to do property development on. Make sure you’d even be allowed to build the house of your dreams before you buy your materials and begin construction! In order to check what the laws are on the commercial real estate you have your eyes on, seek out the zoning office in the county it’s aligned to or even go online to find records. Sites like Landglide help you learn about any property that is officially registered with a property owner and title. While you’re looking around in those records, pay close attention to the area’s land use plans and scheduled road additions as well.
- Contacting the local homeowners association. If the vacant lot you are looking at is in the center of a highly developed country, there’s a good chance that the association is in charge of it. They govern citizens with monthly fees, set the rules for decorating or renovating the area, and how frequently you can renovate as well. Following their rules could even influence how frequently you cut your grass, where you can park or what pets aren’t allowed! Not following their rules could lead serious fines and other roadblocks that harm your property development overall.
Find Growth In Real Estate
Managing and investing in real estate isn’t the easiest and most entertaining thing to do. You’ll have to do a lot of background research on properties, talk to a lot of decision makers, and pick the right mortgages to take so you gain the most profit over time. Yet, if you play your cards right you can quickly acquire assets that set you up for strong financial success. Don’t forget to ask for help when you are new to commercial real estate or are interested in looking at a certain property. People always want to help and there’s always space for anyone dedicated enough to get involved.
