Raw Land ???

Question

How do you evaluate buying raw land? I'm looking at a property that's close to a lake,(fishing, skiing, swimming) but not on it. It's a little over half acre..Front 120, left side 170, right side 192 back 132..Seller seems motivated..The utilities are in place, but would need to install septic system...

Any insight or questions of concern??

Thanks

Any insight or questions of concern??

Thanks

Account Closed · Answer

Rolanda, I'm getting started in buying and selling raw land too and am finding the evaluation to be the toughest part.  I'm realizing that is more of an art than a science, and takes a ton of practice.  But as far as the technical aspects, I found this article pretty helpful:

http://retipster.com/valueofland/

I like the comment above about playing the buyer's hand in poker.  When I look at comps, I check the ones that are currently for sale and recently sold, and try to compare and contrast all of the technical aspects of the property (the ones listed in that article) as well as the fluffier stuff like aesthetics.

At the end of it all, I just try to leave a safe enough profit margin to smooth out any errors I may have made in the evaluation.

Hope this helps.

Jay M. · Answer

Evaluating the land you are considering  buying would also depend on your purpose for buying the land . If you are planning to flip it you want to buy it at a price that will give you your desired profit based on what other similar properties in the are are selling for.  (Actually selling for, not just what they are listed for on land selling sites where the listing prices are often inflated).

Depending on the county you may also be able to research recent sales online to see how much other properties have sold for. The people in my land investing group will sometime also buy properties on an option to purchase while they try to pre-sell the property to find a buyer.  If you are buying the property for your own personal use then you may be more inclined to judge the characteristics of the parcel of land versus the price.  Make sure to also check if the property is part of an HOA/POA and if any outstanding fees are owing and what the monthly charge is.

Vincent Smith · Answer

Bill Gulley has some excellent points.

The way I have been evaluating land is to find recent comparable sales. Some counties show comparable sales on the County Assessor website. Some counties here in Florida enable you to view an interactive GIS Map and it shows nearby sales for the last 4 years. You can even filter the map to show vacant land sales only.

I have also used a realtor to pull a report of comparable sales as well.

Account Closed · Answer

You don't say why you might buy the land.  To re-sell?  Investing in land is like playing poker - you don't play your hand, you play the other guy's hand (translation: evaluate the land as a potential end-use buyer, not as a seller).  Why would anyone buy or lease this piece of land for any purpose?  What would it be worth compared to any other property in the area?  My preference is to consider a best-and-highest-use valuation only when land is scarce.  If there is a lot of land available in the area, especially on the lake road, buyers will go for the best deal that offers an equivalent location.  In short, I'd value the land based upon what I would be willing to pay for it as an end-user, not comps.

Jon Klaus · Answer

It's not hard to find motivated sellers of land since it's less liquid than homes.  You really need a good exit plan, along with alternate exits if the firs plan doesn't work out.

Bill Gulley · Answer

Location, location, location! What's the highest and best use? Commercial potential along a road going to  the lake or a residential lot off the beaten track?

What you put there will have much to do with it's value, what does a good location go for in putting up a C-Store or Dollar General? If the area will only carry a 100K house, lots run around 25-30% of the home value.

Need to know what will go there before you can value it. :)

Forrest Shealy · Answer

@ frederick

@Frederick Johnson

Definitely go see the property in person. There are so many things that you won't notice on maps and listings. Wetlands, huge trees, erosion problems, neighbors lot filled with trash, etc. In my area water can be a serious problem, so I like to go during or after heavy rain.

Mike Gi · Answer

I am considering to offer in raw land in midtown Sacramento, ca to develop and flip. Since this is my first developing project anyone with feedback and what to be aware of such knowledge and experience is appreciated

Account Closed · Answer

Jon, it depends on my estimated market value because there are some fixed costs that be a huge chunk (closing costs when I resell, attorny's fees, possibly title insurance, etc.)

I've just started this month, so haven't done it yet, but for a property that I can sell for $5,000-10,000 I'd like to clear at least $3-5,000.  Over that, 50% is at the low end.

I'm sure as I start doing this more and more, that will change drastically.  You don't know what you don't know, and land is not very liquid.

Frederick Johnson · Answer

Hello,

I'm just getting started and wanted to purchase a piece of land for future home. I've seen the property via the internet, would it be a good idea to go and see the property first or just do all the research via the listing agent and internet?

Raw Land ???

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