Buying OOS land

[Ines Munoz]

Hello BP Community,

I am planning to purchase land in Cleveland, OH, with the goal of holding it as an investment for the next 5 years to benefit for potential appreciation. The land will be zoned residential and will potentially has access to water, sewer and probably electricity (not necessarily) It's in a good location. What potential downsides or risks should I be aware of? Thank you 

[Michael Fraulo]

1. Liquidity - Raw land can take longer to sell than residential or rental property, especially if demand in the area slows. Be prepared for a potentially illiquid asset.

2. Holding Costs - Even if you’re not building, you’ll likely have to cover property taxes, possibly maintenance (mowing, trash removal), and maybe liability insurance. These can add up over several years.

3. Zoning & Utility Uncertainty - Zoned residential is a good start, but double-check with the city on any restrictions or future zoning plans. Also, confirm exactly what's in place for utilities, “probable” access isn’t a guarantee, and utility hook-up costs can be substantial.

4. Market Timing Risk - Appreciation isn’t guaranteed. Make sure you’re comfortable holding through a flat or even down market, especially if development or investor demand slows.

5. Vandalism or Dumping - Unfortunately, vacant land can attract illegal dumping or trespassing, especially if it’s not fenced or regularly monitored.

If you haven't already, it’s also worth talking to the planning department and checking for any future development plans nearby. Those can be a big indicator of appreciation potential.

Good luck with the investment!