The volatility of the stock market has helped to rekindle investor interest in all types of real estate, and especially large tracts of vacant land. Investors can often buy these farmland and unimproved properties for a very reasonable price and then sell them later to residential developers, businesses, or industries who are looking for a location for expansion. But purchasing these properties is not without risk and investors who choose one with some type of defect may not be able to resell at a profit. If you are interested in investing in property as a wealth-building strategy, being alert for these pitfalls will help you ensure that any land purchase you make will be a worthwhile experience.
While the topography of land can be changed through clearing and dirt work, the location of the parcel cannot. Because of this, ruling out poor locations is the first potential pitfall that buyers will need to address when selecting property to purchase. If possible, look for land that will be near areas that are being developed now or will be in the near future. City and county planning boards often have future planning models that can provide clues to future growth in the area that can help you determine the best location for your land investment.
Restrictive covenants that are legally recorded to stay in force even after the property is sold are called deed restrictions. Properties that have these may make it impossible for an investor to resell the land for some uses. To avoid this problem, visit your county recorder or land records office and obtain a copy of the property deed to review before making any offer to purchase it.
Farms and large tracts of land that has been handed down to family members for many generations may have issues with the title that will need to be addressed prior to the purchase. In many cases, this occurs because a beneficiary fails to have a new deed recorded after inheriting the property, but issues can also involve disputes in cases where there is more than one beneficiary. A good way to avoid this type of pitfall is to have a preliminary title search done before making an offer on the property. Even if no problems are apparent, buyers should always invest in an owner's policy of title insurance at the time of purchase as a protective measure.
To learn more about buying property for sale as an investment strategy, buyers should seek out and work closely with an experienced real estate professional who specializes in listing and selling all types of land.