Buying land to develop is one of the most profitable real estate ventures you can embark on. Unfortunately, it is also one of the riskiest when things go wrong. Before you purchase land to build homes or apartments on, there are several factors you need to consider. Here are four of the top warning signs you should be looking for on any piece of land before you decide to buy.
Severe Erosion
When looking over a property, one thing you should be considering is where and how water drains off of it. If there’s a creek or a steep hill on the property, you may have erosion problems to deal with. Erosion can be prevented with walls and drainage infrastructure, but installing these features will add to the overall cost of your investment.
Pollution and Contamination
Sometimes, soil that is not apparently near any source of contamination can become severely polluted. Usually, this is because of water runoff or some variety of illicit waste dumping. Before you buy a piece of land, be sure to have an environmental assessment company run tests on it to be sure there are no contaminants in the soil that could compromise the health of future residents.
Special Conservation Status
Even if they aren’t on state property, some pieces of land can be subject to building restrictions for conservation purposes. Properties adjoining wildlife preserves, for instance, may have special rules you will need to be aware of. Similarly, properties that are registered for historic reasons will have numerous restrictions for new construction. Though such cases are fairly rare, be sure you know everything you can about the status of the piece of land you’re considering purchasing.
Other Developments Planned Nearby
One of the things you should be most careful of when looking at a property is finding out whether or not there are other developments planned in the near area that would make it less desirable for future residents. If, for example, you were purchasing a large section of land in a semi-rural area with the plan of developing a new residential subdivision, and at the same time another developer was planning an industrial facility nearby, you would likely want to reconsider your investment. Be aware, however, that this can also break in your favor. If instead of an industrial facility a large, upscale shopping center was planned near your project, it would actually make your real estate more desirable to buyers.
In the end, buying a piece of land for real estate investment purposes all comes down to making sure you know everything possible about the property. Gather all the information you can, and you’ll be properly equipped to make a good investment decision.
