I’m Looking to Buy Land – What do I Need to Know?
Before making a land purchase, there are a few things you should know that will help you avoid making mistakes, and may also help you avoid getting very frustrated by the process. First of all, it will be important to have an idea of what you intend to do with the property, primarily whether it will be used to accommodate residential housing, commercial interests, or whether you intend to leave the property vacant. When you’ve figured all that out, keep some of the points below in mind, and you’ll be better prepared to acquire the ideal land purchase.
Impact of coronavirus on real estate
In short, the coronavirus pandemic has hammered the real estate industry. In particular, hotels, restaurants, and all kinds of service facilities are shut down indefinitely, and many of these will find it difficult to recover from when the dust settles. It’s very likely that we will be obliged to practice social distancing on and off until an effective vaccine is developed, and that will take somewhere between 12 and 18 months. That means there will be a lasting effect on all those same businesses, and there will undoubtedly be some bankruptcies and business failures as a result.
New construction will be depressed and workers will be laid off, and the real estate industry as a whole will suffer. But someone with a longer-term view of the whole situation might be able to capitalize and snatch up one or more excellent pieces of property at a reduced rate. With values plummeting because of a glut of businesses and properties being available on the market, there might be no better time to buy than when these prices start to tumble downward.
Financing from lenders
The coronavirus impact notwithstanding, you should ordinarily expect to receive little or no financial assistance from banks or other lenders. They will all be looking for some kind of collateral, and that would usually be provided by the buildings which are on the property. If there are no buildings on your intended property purchase, there will also be no collateral for banks to receive assurance from, and you will be lucky to get 40% or 50% of the purchase price in a loan. More likely, you would get zero from banks in the current climate of strict lending requirements. You should be prepared to pay cash for any property which is vacant unless you have definite plans to construct a building on the property.
Work with a professional
It can be really beneficial to work with a pro who knows the land, and who can help you with areas like negotiations, performing due diligence, and actually closing the deal. Especially if you lack experience in all those areas yourself, it will be important to have someone on your side who does know all about them and can represent your best interests when things get a little tricky somewhere during the process.
It will be worth your while to have an environmental study conducted on the property you propose to buy, so you can be sure it’s free from contaminated water or soil, and that there are no chemicals that have been stored there previously. If it turned out to have any kind of contamination, you would be stuck with a piece of property that would be virtually worthless, unless you invested lots of extra cash in a cleanup effort.
It will be very important to have an understanding of how the area is zoned where you are considering your property purchase. You’ll also want to know the zoning situation for adjacent properties and for the area in general. If the property is zoned for residential and you’re thinking of commercial usage, your plans are likely to be disqualified. The point is that you need to be sure your plans are compatible with how the property and the general area are zoned for development.
When you’re ready to buy
Being armed with the information above can be very useful in going about the process of making a land purchase, but it’s no substitute for having a professional working on your behalf. To be sure you get the best deal available and that you don’t overlook anything important, it’s always best to have a professional real estate agent guiding you through the process. Contact us at Rob Roland Realty, and let us help you find the perfect property for your circumstances while avoiding all the potential pitfalls of real estate transactions.