When you purchase raw land, you are buying undeveloped (unplotted) Land. Raw land can be adjacent to an existing building or land plot, or it may contain utility systems such as roads, electricity, and water supply. Raw Land is acquired land with little to no improvements at all on the property. This is a great opportunity to purchase property that you can later develop, flip or keep as an investment. We found a very specific niche in Raw Land, and want to go over what drew us to it and what keeps us coming back to this area of real estate. There are many benefits regarding to renting it out, almost 0 taxes, and tons of opportunities to flip it and make money in the process.
No Improvements On The Property
If a property has a house on it or a farm, it is not Raw Land. Raw Land has an assessed improvement value of $0-$5,000, meaning that if anything has been done to the land, it is very minimal. This can include just water being run to the property, electricity, a test to see if septic is an option, and maybe a dirt road. This type of land is best found in rural areas in the country. This type of property comes with it a lower price tag as there is not much to charge existing on the property.
Zoning
When it comes to purchasing a property with nothing on it, it is very important to check with the local government to see the zoning for that property. When new cities, towns, etc are established there is a set number of preestablished types of buildings that should be placed, and your land may be vacant because it has not yet been built on due to the zoning. There are many different types of zoning, typical types of zoning include Commercial, Industrial, Rural, and Residential. Zoning laws are designed to protect your neighborhood and surrounding communities. Along with telling you how you can use the property, zoning laws can dictate the appearance of any building in your area.
Benefits
Low Taxes
Raw Land can require VERY little taxes to hold a piece of property. Sometimes as low as just a couple hundred dollars per year. This allows you to hold your property long-term if you do decide to do that, and if you are trying to flip a piece of land you now have the ability to hold your investment with no downside to you. This makes land flipping and holding a very safe investment.
Low Competition
There is little to no competition in raw land flipping. Most people purchasing a piece of real estate, usually want something on the land! Home buyers are looking for a single-family house and investors are looking for a dwelling unit or units to rent out, usually looking at single-family or multi-family houses. This enables you as a buyer to have more power over negotiation with less competition in the market, allowing you to get more favorable terms.
Potential For Very Fast Profit
When buying land with more favorable terms, you have the potential to flip a plot of Raw Land very quickly, and for a very nice profit. This is a process called Land Flipping, or Land Investing. Raw Land is the favored method of investing in land as it does have these benefits. If you want to learn more about land investing check it out here.
Types Of Raw Land
Commercial / Residential Zoned Raw Land
Commercial and residential land investment is a piece of property that has been zoned for development but hasn’t been developed yet. This type of land investment can be appealing for several reasons. First, there are fewer headaches associated with a raw piece of land. For example, commercial and residential areas are already zoned for use, which makes it easier to determine what kind of return on investment you can expect. Lenders are also more likely to offer financing options for this type of property because the plans have already been made and approved by local authorities.
Crop / Livestock Raw Land
Row crop and livestock land investments have a higher degree of risk involved than non-agricultural properties. The reason is that investors need to be familiar with the industry and know what business practices are currently working. For example, right now there may be an oversupply of corn so it may not be a good idea to invest in row crop land. The basis of this kind of investment is knowledge of the industry.
Farm Land Investing
Farm Land is another investment that really comes down to the knowledge of the industry. This is more focused on raw materials/commodities. This typically refers to Limber, Minerals, Orchards, or Farms.
Conclusion
There are different types of land, this will differ depending on where you are buying that plot and the government restrictions in that area. Most plots and properties you see and look to purchase will be normal commercial plots but may come with individual regulations based on location as well. For example, some areas will not allow mobile homes, while others will. This is why due diligence is incredibly important when looking to purchase Raw Land. Please, do your own research and due diligence should you see a deal come across your desk. There are a ton of benefits for investing in Raw Land so ideally you learn to navigate the confusion and focus on what works best for you.