Perhaps, before we start asking questions maybe we should provide an answer. “They ain’t making no more of it.” That’s what my grand-daddy told me and his grand-daddy told him, and as far as I’m aware, they were right.Now I’m not near slick enough to pretend I know the ins and outs of commercial or speculative real estate investing, except to say you can lose your shirt if you don’t know what you’re doing, and even if you do know what you’re doing.
But I have a little experience in buying rural or vacant land, and just like the big boys in the big city, you can run into absolute nightmares if you don’t know what you’re doing and which questions to ask before buying.
We’re not going into depth about titles and what not, but I will give you a few questions to get the answers to before signing on the dotted line.
As with any real estate you need to perform due diligence in acquiring price per acre comps. If vacant land is selling for $2000 an acre, you better know why someone is asking $3000 an acre. There may be a logical and valid reason, or it may be someone who really doesn’t need the money, but figures if some city slicker comes along and offers $3000, they’ll gladly take it.
You’d be shocked to discover how many out of town lawyers and doctors own property in the most unlikely places. Sometimes supposedly smart people can do dumb things when money is no object. So know what you’re doing and don’t over pay.
Another thing very few city people realize is just because they bought the property doesn’t mean they bought everything growing on it or laying beneath it.
It’s not uncommon for a land owner to sell timber rights to a logger or saw mill. Make sure timber and mineral rights have not been sold to a third party or else you make wake up to the buzz of chainsaws cutting down your favorite oak tree, or a backhoe digging a trench across, what was suppose to be your front yard, preparing to lay a natural gas pipe line.
Should you fall prey to this type of situation, just sit down and cry because it’s perfectly legal and there’s nothing you can do to stop it.
The third question you should ask is about the cost of utilities, pertaining to electric and water. Vacant land most likely will have neither of these utilities and if it does, is it located where you want it?
Say you purchase a 20 acre parcel and want to build a home right in the middle of it away from any prying eyes or nosy neighbors. Supplying electric, even though the main electric line is located on the road frontage along the gravel road, may cost in excess of $20,000. The cost is figured by the number of poles which need to be installed and the length of electric cable required to cover that distance.
In addition, a well for water is not just a well. Depending on the water table depth of the area having a well drilled my be as cheap as $5000. However, if the water table is deep and requires steel casing it could run as high as $20,000 or even more
Buying vacant ground for hunting or a get away is an excellent idea and investment, but beware of hidden costs which could turn your dream into a nightmare.