Short Sale Resolution
The availability of raw land and other forms of undeveloped property are becoming extremely attractive as prices continue to plunge and returns on water, minerals, gas rights, agricultural products and other materials rise. While raw land or undeveloped property may not be the right fit for every real estate investor, it's a good idea to remain alert to the possibility. Use this quick checklist to evaluate a potential property:
1. Is the zoning approved for the desired use? While it is possible to petition for a zoning change, don't count on approval. Instead, search for properties that provide a safe bet especially when first starting out.
2. Are there any environmental limitations? The EPA is probably not an organization you are used to doing business with but that doesn't mean they can't impact your property values. Protected wetlands, pollution zones and even required "buffer zones" are just a few considerations to keep in mind.
3. Do deed restrictions limit use? In addition to use restrictions, it's a good idea to review deed restrictions and land use limits. Certain forms of business endeavors, pollution or other concerns may preclude the use of the land for a desired endeavor.
4. Are there ancillary or additional incentives? Some parcels may present especially attractive investments due to location, agricultural exemptions, tax credits or other desirable aspects. Mineral and water rights, the ability to lease to other concerns or the promise of future expansion can enhance or limit almost any listing.
5. Multi-use property appraisals? Finding a multi-use property is one way to maximize gains and minimize risk but it can also present a unique set of challenges when obtaining an appraisal. Comparables can be difficult to come by so it's essential to work with a reputable entity capable of seeing the 'big picture".
6. Do you have staying power? Investing in raw or undeveloped land can be costly so make sure you have the cash reserves and/or connections to make it work. Even for those who simply intend to flip the property...remember that it can take more time due to a smaller pool of potential investors. Have a contingency plan in place to avoid unpleasant surprises down the line.
7. Last but not least...start small and grow from there. Don't bite off more than you are able to chew especially the first few times out. If you find a deal that is beyond your expertise, use the same techniques covered in our shortsale investing seminars to work with a "bigger fish" that is able to provide the stability and experience needed to make the deal work.
See you at the top!
