Raw land is real estate with no improvements or infrastructure, in need of utility connects, roads, earth grading, covenants and entitlements. It is land that is cleared and ready for physical development that is completely unimproved without an infrastructure. Improving the infrastructure provides a base for further development of built improvements.
Awareness of what covenants and entitlements do is essential to starting a project. Covenants delineate the framework in which future development of built improvements are able take happen. These come in the form of deed restrictions or private zoning codes. Entitlements, usually in the form of permits and sometimes through re-zoning or planned unit developments, are securely legal permissions from regulatory bodies. Once these improvements have been made to the raw land, it is typically subdivided and sold piecemeal at a profit to individuals or building developers.
As an investor, you must look at each piece of land objectively. After you find one or more promising plots, you will have to do research and a lot of it. Avoid getting taken in by the view if you are looking to develop it. You have to look deeper and a smart buyer looks well beyond the obvious. Raw land has to be surveyed to see if it follows the make-or-break test.
First and foremost, a viable water supply is needed as well as sewage disposal. Many urban and suburban dwellers new to the real estate market will tend to overlook that. Buying a piece of land in a remote area that has no visible sources of water is straight up gambling. It is not feasible or true that if you dig deep enough you will eventually hit water. It's just not true.
Buying a piece of land without ascertaining if it has water available is like buying a car without finding out if it comes with an engine. You will, at the very least, do a percolation test, which measures the rate at which water drains through the soil and shows that a septic tank will work on the property. Next, you will want to see documented boundary lines done by a licensed surveyor. If you neglect to have a survey done, you could wind up building on somebody else's land.
Banks are often very wary of lending money for investors who want to invest in raw/undeveloped land because of the complexity of bringing the project to completion, geographical limitations and the increased uncertainty and risk. Private Lenders prove to be more tolerant because they have a better ability to evaluate these factors and can provide funding for Raw Land purchases, refinancing or equity cash-outs. Raw land loans are generally tied to the value of the property and not the borrower's personal credit.
One of the most common land investment strategies that investors use is to buy raw land in an area that has potential for commercial growth. They then hope that development will take place in the future and enable them to reap a profit. Another common strategy used is to buy a piece of land and develop it on your own. All these conventional strategies are fine if you are a professional property developer but this is not something that the average investor should take on.
Many property investors are turned off by the thought of investing in raw land. They would rather focus on buying and selling buildings. This is because the conventional strategies used for investing in land are filled with risks and obstacles. Some of the risks and obstacles include title issues, survey issues, environmental considerations, zoning issues, site plan approvals, getting permits, dealing with county officials, health issues, availability of utilities, availability of transportation and access. All these obstacles deter the average investor from even thinking about investing in raw land.
My partners and I at The Land Institute (TLI) have come up with an ingenious idea that allows investors to make a decent profit off land investment deals using a proven system that is easy to execute. It is so unbelievably easy that trained investors can cut a deal in as little as 30 to 60 days, part-time, after they attend a 3-day intensive boot camp conducted by us. If you would like to find out more about this successful training program, please visit www.landbuyerpro.com and register today.
One of the reasons why landowners or sellers have difficulty selling their land is because they try to sell the whole, big chunk away all at one go. If you have 1,000 acres of land and you were going to sell it for a million dollars, you would have to look for people who have more than a million dollars to spend. This makes the proposition a very niche one, something that few people can afford. Therefore, closing such a deal typically takes a much longer period, which could be anything from one to three years.
The land investment strategies that we have come up with can dramatically shorten the time needed to do a land transaction to as little as 60 days. It is based on the principle of ‘divide and conquer’. Our students are taught to buy a large piece of land wholesale and subdivide it into smaller parcels of land. They then retail it to smaller investors for a profit by conducting an auction. In a nutshell, the idea is to buy the raw land wholesale and retail it in smaller parcels. This idea has been widely used in other industries but surprisingly, very few are using it for buying and selling land. By selling the land in smaller parcels, the number of potential buyers’ increases dramatically, as more people can afford to buy. Based on the previous example of 1,000 acres, if we were to subdivide the land into 20 parcels at 50 acres each and retail it for 3,000 dollars per acre, each parcel of land would cost $150,000. It is a lot easier to find people to buy a $150,000 piece of land compared to a $1 million piece of land. This clever idea has enabled our students at TLI to achieve great success virtually competition-free.
Both Tony Seruga, Yolanda Seruga And Yolanda Bishop & Shashank Srivastava are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Shashank Srivastava has sinced written about articles on various topics from Real Estate, Make Money Online and Real Estate. Shanu Srivastava has been investing in real estate for over 5 years, and has been involved in over 200 properties. He has completed all kinds of transactions ranging from a Subject To purchase to a pre-foreclosure short sale to raw land quick turns. He. Shashank Srivastava's top article generates over 550000 views. to your Favourites.