Is investing in vacant land a smart idea if I plan to relocate to California?

Question

Hi everyone,

I'm a software developer from the Philippines and I'm hoping to relocate to California in the future through a job transfer. While researching investment options in the U.S., I came across affordable vacant land in Arizona. Since Arizona is relatively close to California, I started wondering whether buying land there could be a reasonable long-term investment compared to waiting until I can afford property in California.

For those who have experience with U.S. real estate or own vacant land, what are the biggest things I should consider? Are there common pitfalls, ongoing costs, or due diligence steps that first-time buyers often overlook? I'd appreciate any advice or personal experiences before I spend more time researching.

Ashish Acharya · Answer

As a foreign national buying US real estate, there are a few tax pieces worth knowing before you look at Arizona land specifically. Vacant land generates no income and no depreciation to offset anything, it's a straight capital asset, so you're carrying property tax and any HOA costs every year with zero deductions against them unless you eventually develop or rent it. When you sell, FIRPTA withholding applies to foreign sellers of US real property, typically 15% of the gross sale price withheld at closing regardless of your actual gain, that's a real cash flow consideration even if your actual tax liability ends up lower once you file, and getting it right requires proper paperwork at the time of sale, not something to figure out after.

Once you do relocate to California on a job transfer, your US tax residency picture changes entirely, you'd move from being taxed only on US-source income and gains as a nonresident to potentially being taxed on worldwide income as a resident, and California itself has among the highest state income tax rates in the country, that's worth factoring in if you're weighing Arizona land now against California property once you're actually living there. Depending on your home country's tax treaty with the US, there may also be reporting considerations on the Philippines side once you're generating any US income or gains, worth checking with someone who understands both systems before committing capital.

Happy to connect!

Henry Clark · Answer

OP.  It says no Water.  So, no public water system.  You also need to find out if you have any Water rights.  In the west you might have a river on your property, but if you have no water rights, then you have no access to water.

Plus, that piece of ground will never be useful.  Might as well be on the Moon.  If you build a house on it and go Off Grid.  You will lose 90% of the value in the first year.  No one will want to buy and live there.

Also in that country, if there is no hard surface road.  It can turn to mud with a rain, and you can't drive out.

How far would it be to your work location? How far to a grocery store.  Some places in the West you might drive 2 miles for a grocery store doing 80 mph.

Noah Corwick · Answer

Hey James!

Land is a speculative long term play. Like 15-20+ years long. So you'd have to be alright with that.

If you decide to invest in land, my advice is to factor in if you want to invest in a parcel that has water and sewage there or not. Often time there is not any utilities and its purely raw land, which is a whole other large Capex cost to budget for.

Another consideration to not overlook is if it's in a flood zone.

Also Imo the land lot that you posted is a bit small. I would only do small lots if it's in grade A areas. If it's not, I'd try to get at least 1 acre at minimum.

Noah Corwick · Answer

Land can be held for as long as you want to hold it for. But for actual profit that's worth the squeeze, 5 years is way too short. If you get lucky, 10 years could work if it's a decent quantity of land and in a decent area.

Doug McVinua · Answer

@James Ryan Villalon Land is a speculative investment that has ongoing costs and often no revenue until you sell. You will pay property taxes on the land, and you should also visit the land a couple of times per year to confirm that no one else is using it for any purpose. Use of land over time can create rights for the one using the land if not stopped by the owner of the land.

Some parts of rural AZ have very cheap land, but does it have speculative value? Does it have water, utilities, access? Does it flood, have washes on it that make it unusable?

I love Arizona real estate; it has lots to offer, but cheap remote land would not be near the top of my list as an investor.

James Ryan Villalon · Answer

I actually came across this land opportunity recently and thought it might be worth checking out: http://tiny.cc/southwestlandforsale.

What caught my attention is that the land looks mostly flat and clear, so there doesn't seem to be much vegetation to deal with if you ever decide to use or develop it. It's also in Arizona, where vacant land has been a popular choice for long-term investors because property taxes are generally low and there's no HOA on many parcels.

Jay Toluganti · Answer

I did land wholesaling for three years and closed over 160 lots to home builders in Florida. Most of the sellers, who bought land back in 80's when people dont know much, bought lots in floodzones or often overpaid and taxes ate up their gain over the years. Land has lot of neauance attached to it. Real estate is not liquid like stock market. Please educate yourself before you invest in Real Estate in US.

Is investing in vacant land a smart idea if I plan to relocate to California?

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