Newbie: Getting Your Feet Wet in Land Investing. Part 2

[Wendy Lovelace]

Third…Research The Properties.
Your overall goal is to determine if the true value of the property meets/beats the asking price and then project, based on different factors, whether the property has the potential to grow in value. This is where doing your homework comes into play. Some of the main factors that effect the value of property are location, type of property, size of property, property features, is it located in a flood zone, is it located by itself or in a community with protective covenants, what percentage of the community infrastructure is completed, and amenities.

Fourth…Compare.
After looking at and collecting information on various properties, compare the individual particulars of each lot. One of the mistakes inexperienced buyers/investors do is lump all of the types of property together without viewing the details and then wonder why one costs a fraction of the other. Not all property is created equal. For example, you find two properties labeled “waterfrontâ€. One costs $29,900.00 and the other $99,000.00. Why the difference? This is where you begin comparing the different factors.

Waterfront $29,900.00
Location: Remote location, over 60 miles from nearest city with population under 10,000. City has had limited growth over last decade.
Type of Property: Waterfront
Size of Property: ½ acre
Property Features: Tree’d.
Elevation: Above sea level.
In Flood Zone: Yes.
Community: 30 Lot Total with No Protective Covenants.
Infrastructure: Community infrastructure is 85% completed.
Amenities: Community boat ramp.

Waterfront $99,000.00
Location: Within 15 miles of major cultural hub and city with population of over 1 million. City still expanding and growing.
Type of Property: Waterfront
Size of Property: 1 acre
Property Features: Combination of both.
Elevation: Above sea level.
In Flood Zone: Yes.
Community: 25 Lot Total with Protective Covenants.
Infrastructure: Community infrastructure is complete.
Amenities: Boat ramp, pool, tennis courts, and day dock.

After comparing the features of each property the reason for the price difference becomes clearer. You now have a greater understanding of what differentiates these properties… you’re off to a good start. This is the key to purchasing land, know your facts and gather as much information as you can to make informed and educated decisions. But there is more, and each of the above factors can be broken down even further. For example, under the “waterfront property†factor there would be additional particulars that you would want to be familiar with such as the body of water it is on-deep or shallow, amount of water frontage, access to bigger water, amount of wetlands, and boat dockage… key factors in determining the property value. I will explain each factor in greater detail after this 3 Part-NEWBIE Series Overview in the NEWBIE DETAILS Series.

Next Article: Purchasing Property.

I would like to follow up on this NEWBIE Overview Series with more posts that go into greater detail on the particulars of land purchasing. Please comment and leave any ideas, concerns, or questions that you have to assist me in making these future posts as helpful to you as possible...thanks!