Buying raw acreage may take years to appreciate in value, depending on your purchase price. If you are buying land with a Land Contract, your cash outlay is reduced dramatically, and the years that you are paying the owner financed loan off, is to the advantage as a land investor, and here is why.
A.)  There is less risk involved with keeping your money in the bank (ha ha) but it is true that if your don’t need to put 50% of your nest egg in one investment, and you can own a parcel of property, with appreciation to YOUR benefit, why not purchase with a land contract.

B.)  When your ready to pay off the land contract in full, you can do so with no prepayment fees. (make sure this is available in your land contract)

C.)  Using this to your advantage, you have a fixed time frame to work and make your land investment more profitable. This is where land development comes in.

Buying raw acreage, for future development, and appreciation is a gamble. Minimizing these risks comes in when you are doing your research. Here are several thing I do, and consider before laying out my cash.

1. Research, and become familiar with the area your considering investing invest in. The County Assessors is a good place to start. The Building Department, and Roads and Highways departments are also beneficial for future plans. Speaking in person to the professionals in these department will give you some ideas of what is in the works for the next coming 10 or more years.
2. Look for property that has access to it. Buying land that is land locked, won’t benefit you unless you own an adjoining parcel, or can sell at a profit to the adjoining owner… That already has road access.  There is always the possibility, to make a purchase for a road easement, but this is not certain, and should be negotiated prior to any purchases.
3. If the property is selling for under $500, like from a Tax Collectors Tax Auction, where you are getting a fee simple title, then taking a risk, may out weigh the downside of ownership.  Think of it in terms of when $500 may give you 3 nice family dinners, versus, a profit potential of 10 time profit on the dollar.
4. Assess what can be done to make the property more valuable than it is now.
5. Consider subdividing the acreage into smaller parcels, and turning around and selling those with a land contract, with a fixed percentage rate, providing you with a monthly income. Is this possible, and something you want to do over the 10 plus years?
6. Research if a Subdivision is possible by talking with the Zoning Department, that is located in the County the property is located in.
7. Ask a Civil Engineer, land survey specialist, located in that City, County that the land is in, to do a preliminary analysis of the property, for a Subdivision. They will know, or find out how many parcels you will be able to subdivide into, and in how many years you can subdivide. They also will be able to do the subdivision for you, including surveying the boundaries, drafting the plat maps, and submitting for all the permits, and doing the application for approvals for you.   Shop around, all are not the same. Ask the local chamber of commerce for phone numbers.
8. Properties that have lake views, ocean views or streams are always a good investment, as long as they are not engulfed with it Watch out for flood plains, high tide areas, or anything with land slide potential. Investing in  Lake Land.
9. Go for it. Research the internet, talk to owners direct. If you see an area you like, and haven’t seen a listing on the internet, go to the County Assessors, with the cross streets names, and find the plat map, and match up the parcel number, with the owners names, and call or email them direct.

Land investing,  is a learning process. Start off small, ask allot of questions, become familiar with the area, and become a specialist in that area.  Buying land doesn’t need to be just between properties that are available on the MLS. Look at other avenues too. For sale by owner website give you the opportunity to talk direct with the land owners, and find out if they are willing to sell with owner financing. Talk with the land owners, and even if they say they don’t want to sell, ask them to try listing it online, and see what the response is with the price they think is profitable for them. This way you know where they are coming from, what type of terms they are looking for, and a ball park range of what the asking price is. There are affiliate programs too, that will pay for land listings, making you an extra income, paying you monthly. Some free sites, like Backpage, and Craigslist, will place listings for free, for a short exposure time.

Be cautious, and ask a major title company, in your area, to do a preliminary title report for you, when buying outright. Have them or a local escrow company handle the transaction for you. It is worth the small fee’s these professionals charge.  Make sure the land contract seller, really owns the property, by visiting the assessors office, or calling the title customers service to verify owners names, and if there are any encumbrances associated with that parcel. It is also a good idea, to have them run a lien check for IRS liens or Mechanics liens too.

Hope this gives you some food for thought, and perhaps some motivation to go out there, and build a future income and investment portfolio, that will help your retirement in the future. Subdividing your land multiplies your income potential, by selling your subdivided lots, cheaper, to more land linvestors, and by you being the bank, by selling as the owner with land contracts. Read more of what a land contract is, and how it may work for you. Here is what a land contract looks like

Written exclusively for Land-News.com
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By: WGG

Resource Links:  LandContract.us | Land-auctions.net | Land-fsbo.com