[MUST READ] What to look for when buying land

Buying and selling vacant land is one of the time tested ways of making money in real estate. Many individuals and families have made fantastic profits by simply selling land.

Several people have heard stories of fantastic property appreciation and individuals who have made millions by simply investing in vacant or undeveloped land.

Although some of these individuals achieved this feat unintentionally there are savvy investors who consciously select and profit from such ventures. Since the value in such real estate transactions are not obvious to the untrained eyes it is important to understand how they see things.

Continue reading after the cut....

Some have repeated the refrain that the three most important words in real estate are location, location and location. This is true to a large extent but there are several other factors that also come into play.

Location is definitely one of the most constant factors that impacts on the others. For instance, a parcel of land located in a street corner in a rural area and the same size of land situated in a street corner in an urban centre will all command different prices as a result of their location and other factors in the environment.

One of the principal factors that determine whether or not a location will be a profit machine is the use to which the land can be put. Not all locations are suitable for all purposes. A location may be great for setting up a fast food business but may not be ideal for a shopping complex or a gas station.

This is where the concept of zoning and government approval comes into play. There are areas that are already zoned by the government for either commercial or residential purposes. Before you purchase any undeveloped land you need to clarify if there is a legislative or zoning restriction affecting land in that location.

This reminds me of an investor who purchased a parcel of land with the intention of building a petrol distribution station and supermarket on it. Unfortunately the government decided to expand the main expressway in the area and acquired the land in those areas.

To benefit from the full compensation from the government you must have an approved building plan. Unfortunately, most of those that were affected by the road expansion did not have an approved building plan. This became a major loss to most of them.

One of the factors that astute investors also consider is the line of growth. There is an inseparable link between growth, development and property value. Population growth often concentrates in areas where there are active economic activities in the form of job creation, employment opportunities and business expansions.

This trend often puts pressure on available infrastructures leading to demand for housing and other basic amenities. The basic law of supply and demand comes into play allowing property values to go up.

What astute property developers do is to study the growth trends and the line of demographic and corporate growth. There are about five primary growth lines that surround the city of Lagos for instance. One of such is the Lekki-Epe Axis where individual, corporate and public developments are colliding.

Because of the location of a primary base of business nearby and the desire of several workers to live close to their place of work the value of residential and commercial properties has multiplied several times over in the past ten years. And with the population of Lagos projected at twenty five million this year the pressure on property values can only increase.

Another good thing to note is that most of the growth lines in and around our major city centers are actually zoned for mixed development. This opens up your property investment for multiple developments. Several new investors or beginners often look for places with all the infrastructures in place to invest in. Experienced investors do not look only at what is but also what could be.

Creativity and innovation are important aspects of making money in real estate investment. Your ability to correctly anticipate where the money is to be made is key to maximising your property investment.

To make money in real estate especially through buying and selling of undeveloped land you need new sets of eyes. There are times when experienced property developers have decided to accelerate and open up the opportunities for growth and development in certain areas by making provision for infrastructural development in their plan. This is both sensible and smart.

They know that sometimes it may not be the best to wait for the government because of frequent changes in completion dates of some public projects. However, once a place is opened up property values can multiply at such a rate as to literally double in value within twenty four months or less. One thing is certain; if you get it right you have struck gold.

-Punch

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