A fast and very simple way to start creating a real estate portfolio is through the purchase of investment land. But the truth is, not all parcels of land are created equal. To find the piece of land that is right for you, ask yourself these things first!
Land assets are hotter than ever. A new generation of entrepreneurs are planning to begin their portfolios and a lot of them are finding success through land investments. With relatively low costs to get going and little to no overhead, buying Chicago land has become a very enticing investment option.
Question 1: What is the end goal of your Chicago land investment?
When investing in real estate, no matter what kind, you should run projections to help you determine what a property will bring in. Land typically doesn’t make you money while just sitting there unless you lease it out. Many investors make their profits by buying and selling land. Buying low and selling when a profit is made. By repeating this process over and over, you will streamline your methods and be to build additional income for yourself. Before you begin investing, set goals. What do you want the land to do for you in both the short and long-term? Will the property you purchase produce the returns you are after?
Question 2: How is the location?
The land you purchase should be in a desirable location. Whether you plan to develop the land or resell it, it has to be somewhere people want to go. A piece of land in a remote location isn’t likely to appreciate as quickly as a piece of land that is in demand. Research county information to learn about any future development that might be taking place near the land you plan to buy.
Question 3: Are you aware of all current and future zoning?
Zoning can obviously have a big effect on what you have the capacity to do with the land. Don’t just research your potential property, but have a look at what is surrounding you. A residential lot might not have the same resale value if it lies next to a commercially zoned lot.
Question 4: How much land do you need?
Just how much land will you need to buy? Maybe you are seeking a simple single residential lot. Or maybe a large commercial lot. Or maybe you want a large parcel of land to subdivide. Don’t just by land because it’s there, ensure it is satisfying your needs!
Question 5: How will you buy investment land in Chicago?
Before you buy land in Chicago, you need to determine how you will buy it. If you are hoping to get a loan, the procedure is a bit different than obtaining a traditional mortgage loan. Lots of individuals use cash to finance the land they buy in Chicago If you are not paying in cash, keep an eye out for buyers who are. They can possibly be some tough competitors when offers are being placed on the table. Many people will opt for the ease of a cash sale.
Question 6: Are there any building restrictions?
Before we ask the question below, you should first ask yourself if there are any building restraints on the lot. Though you aren’t developing the lot yourself, the person you sell it to might choose to. Selling undeveloped land that isn’t buildable isn’t very easy. There can be all kinds of things that hamper building, bad soil, rare birds living nearby, and many other things you might not have considered.
Question 7: Do you plan to develop the land yourself?
If you intend to develop the land to add value, run your numbers first to make sure you understand all the costs. There could be leveling, soil testing and many other costs apart from the actual building itself. While developing the land yourself might require a hefty investment in advance, it can be highly profitable down the road.
Question 8: Will you have the ability to generate any cash from the land itself?
If you are holing the land, intending to sell when the value climbs, there are some things you can possibly do with it temporarily to earn some cash in hand. Depending on the size and location you can do one of many things. Lease the land to a nearby business organization for parking. Or if it is a larger parcel, lease the land for entertainment uses. Hunters, outdoor enthusiasts and nature lovers may find an interest in your land.
Question 9: How quickly is the land appreciating?
Have you been following the land’s value with time? Have a look at the past value and sales records to see if it is rising at the level you would like it to. If the value is staying pretty sluggish, you might want to look at a different parcel for your Chicago land investment purchase.
Question 10: Will you have the capacity to resell it fairly quickly?
Every investment should have an exit strategy available. Regardless of what you are investing in, it is crucial to have an escape when you need it. With land, you could opt to resell, develop, lease, etc. Just make sure that your way out is viable, and will bring you the cash you need when you need it.